Access to finance is one of top stress causes for more than 50% of startup founders in the Middle East and North Africa (MENA) region according to a recent report by entrepreneurship ecosystem Wamda, Microsoft for Start-ups and UAE-based digital media agency EMPWR.
Historically, women entrprenuers used to face more problems when it comes to starting their own ventures in the MENA region. However, over the recent years this issue witnessed a dramatic improvement in the Gulf Cooperation Council (GCC) region, and especially in Saudi Arabia.
Recent data indicates that 40% of MENA entrepreneurs are women and 39% of all entrepreneurs in Saudi Arabia are women. However, only 5% of women are securing the necessary funding. But, on the flip side, only 5 percent of women are getting funding. One of the main reasons behind this, is not because that they are women, but due to the fact that not enough women entrepreneurs are trying to start tech companies.
The CEO and Co-founder of the mother and child e-commerce platform Mumzworld said that there was a “seismic shift” in the GCC when it comes to women becoming entrepreneurs. She indicated that one of the main reasons behind that the change is that “success breeds success.”
This came during the Atlantic Council’s empowerME Initiative workshop on “Venture Capital Financing.”
The CEO and Founder of Blossom Accelerator Emon Shakoor stated that far more women are now entering the tech industry, whereas it used to be that women were starting more traditional businesses.
She added that “women are demanding what they deserve in terms of funding, rights in the workplace, and work-life balance. It’s only indicative of a brighter future for Saudi Arabia and [the] whole region because that is what inclusivity brings.”
Director and resident senior fellow of empowerME at the Atlantic Council Amjad Ahmad indicated that in the recent period investors started to see more women-led businesses.
Ahmad noted that all the investments he has made in women-led businesses tend to have a higher proportion of female employees and this trickle-down effect is powerful because it can enable the creation of more businesses led by women. He predicted that Mumzworld will sprout several women-led ventures in the coming years.
Regarding women in tech startups, Shakoor indicated that some women entrepreneurs fear that they cannot lead a tech startup if they don’t know how to code, whereas men don’t let that hold them back. As part of her work, Shakoor reminds women entrepreneurs that they can find a co-founder or hire a chief technology officer to help with the tech side of the business.
In Saudi Arabia’s case, there is a tremendous improvement, as the previous 11% women participation in IT and tech in 2017—now increasing to 24% this year, which is a higher percentage than in Silicon Valley.
Top down leadership increase women chances
According to the Managing Director of RockCreek Alifia Doriwala, top-down leadership is essential to ensure women are hired and retained.
Doriwala said that at her firm, diverse senior leadership has also allowed them to attract diverse talent at RockCreek, explaining that these top-down strategies “translate to what we invest in—it permeates throughout our investments.”
Shakoor emphasized the need to tackle funders’ implicit and unconscious biases through conversations like this event. She noted that questions about pregnancy or a woman’s desire to start a family could impact her funding success, whereas men are often not scrutinized in the same way even if they are also parents or start families.
Ahmad stated that, while “startups have a great DNA and hiring women is natural for them, in the private sector, we are not doing well on women in leadership and women’s employment.
Women successes should translate into more funding
Global Gender Equity Initiative Head Algene Sajery noted that “women often face challenges getting funding despite the fact that women run businesses that are critical around the world.” Sajery explained how the US Development Finance Corporation’s 2X Initiative prioritizes investments led by women or that create jobs for women. This is a priority, she said, because “women play a critical role and are the backbone of their societies and communities. They invest back in their communities and children. They create jobs and provide vital services.”
Sajery emphasized that gender-diverse investments make good business sense, noting that data indicates that women tend to repay their loans on time better than men and generate good returns for investors.
Doriwala said, “We have data to show that there are returns on our diverse and impact investments.” She added that having investors with a different lens and filter is essential to creating the best portfolio to create the best returns. RockCreek has invested over $2.3 billion in women and $6 billion in diverse talent—a significant investment given RockCreek’s size. She quipped that firms that tout their $100 million investments in women should be investing $1 billion.
Ahmad shared his perspective as an investor, saying: “Investing and hiring women is just good business. We’ve made great returns. Women add a lot to the conversation. The reality is the data fleshes this out. Investing in women and diverse management teams yield better returns.” Ahmad shared the story of his firm’s investment in Mumzworld six years ago, explaining that they made a data-driven decision and felt Ataya was uniquely qualified to take it to the next level because she was talking about building a community, not just selling goods.
Tips for women on fundraising and pitching
According to the “Venture Capital Financing” workshop participants these tips will improve your chances of success in getting funding.
-Prove unit economics and customer obsession
-Build build unfair advantages early on, and execute with excellence
– Understand that the grueling life of an entrepreneur, is not a path for everyone but rather a journey driven by passion for a vision that creates some kind of impact.
-Work longer and harder than you’ve ever done before
-Get what you need to make the business successful
– Constantly work to improve your skills and surround yourself with people who could complement you
-Going into a pitch prepared with information about the people you will speak with so that you can make a personal connection, this is especially important at the seed and accelerator phase when the company does not have much data, and funding decisions are made in part because of a personal connection with an entrepreneur.
-Pitching all comes down to your business
-Clearly articulate your business really effectively and make a solid case to investors about why you are uniquely qualified to execute that business