Women-led startups are aiming for a bigger slice of scarce funding

Adaora Oramah has been looking forward to this moment for years, as she adjusts her blazer and prepares to pitch in front of international investors. The 26-year-old has already secured around $700,000 for her startup Amaka Studio, a digital media venture that seeks to connect women globally through Pan-African stories.

She is now looking to raise $1.6m to help creators make money through the platform, including in local currencies, and to accelerate advertising capabilities.

But in this economy, fundraising is a challenge. “I know that’s particularly harder for women; typically harder for black woman as well,” the London-based founder said.

Select startups

Oramah’s Amaka Studio is one of 10 tech-related enterprises that made it to Morgan Stanley’s demo day for startups at its Canary Wharf offices in east London in the first week of February, an event that followed five months of coaching. Five firms from Europe, the Middle East and Africa were selected from 1,200 submissions, in an expansion of a programme that Morgan Stanley has run in the US since 2017.

One founder walks the room through slides with Tamagotchi-style pixel art, another uses golden tickets taped under chairs offering lucky winners treats from her online artisanal food store, and one reveals her startup secured an investment that gives it 30 months of runway. Pitches from the cohort in New York are fed through a livestream.

The entrepreneurs were told there would be investors from Atomico, Silicon Valley Bank, Google for Start Ups, Black Seed Ventures, Lakestar and Cornerstone Partners in the room. Rather than committing to funding on the spot, they’re given time to hold conversations after the presentations.

“It was exhilarating,” Oramah said as she stepped out of the auditorium. “It’s been great being able to connect and learn more from the investor community as well as the startup ecosystem as well.”

Dora Palfi said her company imagi, which teaches school girls to code, had gone through a pivot during her time in the programme to focus more on school partnerships. “It just felt like a big moment to also celebrate where we have gotten over the past few months.”

Funding gap

The past year was difficult for almost anyone looking to raise money, as rising inflation, recession fears and the crypto winter led investors of all sizes to press pause. But it was already almost impossible for small companies founded by women.

About 87 per cent of all venture capital funding in Europe was raised by male-only founding teams last year, according to a report by investment firm Atomico. The proportion of funding raised by women-only teams has dropped even further, from 3 per cent in 2020 to 1 per cent.

“VC, fundamentally, is a game of network. And because it’s a game of network, there are certain patterns that investors expect founders to match,” said Precious Oyelade, the programme lead for Google for Startups UK. “Disadvantaged, underrepresented founders are less likely to get funding” in today’s tougher environment, she added.

Morgan Stanley’s programme has invested in more than 69 startups that have gone on to raise over $670m in further funding, according to the Wall Street bank. Next year’s lab will expand to 15 companies in the US and 10 companies in EMEA.

For Oramah, the pitch day was a long time coming. “Sometimes you hear people say, ‘Oh, I raised this amount in three weeks.’ But for me, I don’t have any shame saying it has taken me about a year to raise this. But it has also made me really value the importance of sustainable revenue growth.” She’s also learned that fundraising is not the only mark of achievement for a new business, and knowing how to bootstrap is valuable.

“But at the same time, it also would be really great to have somebody that can back us as well,” she said, getting up to network some more.

Read: Women in business: Addressing the ‘startup’ gender gap