The fintech sector is the most funded tech sector in Nigeria. This is quite obvious considering that the sector raised the highest funding in the year 2021. This year alone, it is already leading other sectors with the most prominent being the $250 million Series D raised by the Unicorn Flutterwave in Q1 2022. Sadly, not much of this funding goes to female-founded startups. Only 3.2 per cent of funding was awarded to female-led startups out of the $3 billion raised by Nigerian fintech in 2021.
Contrary to what most fintech startups preach, most women are not being included in financial solutions and products. A vast number of women entrepreneurs don’t have access to credit, capital and opportunities they need to thrive. This is due to Unconscious gender bias and marginalisation of women-centred products and services. Thus, the myth that women are not building is not true. Their challenge is that investors usually prefer startups led by their male counterparts. This Inequity has seen women entrepreneurs facing challenges in accessing investment capital. With that said and done, Here are five ways to improve access to finance by women-led startups.
Remove or modify business loan requirements: Many women in Nigeria do not relish the option of going to conventional banks for credit. This is because they require collateral, such as a house or a plot of land. According toWorld Economic Forum, women do not have their names on property deeds. Hence, it is difficult for them to provide collateral. To matters worse, existing fintech startups are not making it matter easier. Building a loan history on their platforms takes a long time. These denied women access to enormous loan amounts. Instead of collateral, banks should use records of business performance, cash flow, savings history and other metrics as credit checks.
Raise awareness for existing female-led networks and resources: Existing female-led networks and resources provide others with mentorship, information and contacts of potential investors. Fintech startups who have raised funding should not hoard this Knowledge. Again, if women leading fintech startups, should not wait for information. They have to keep their eyes on the ground, find information and run with it. They can join platforms like Herconomy, a female-led platform that provides opportunities for African women. There’s also Getequity, which enables startup owners to get funding for their business. Whichever one, it is still vital to raise awareness so they may overcome the unique challenges that come with their position.
Entrepreneurial training/competitions: Raising capital without knowing what to do with it is not ideal. Likewise, drive, desire and passion are not good enough to sustain a business. What sustains growth is training and skills but women-led startups seem to lack that. This is why it’s vital to provide training tailored to suit the challenges women l face in the startup world. This training should be geared towards fostering “an entrepreneurial mindset and related skills in young women. Again, they can join in competitions like inclusive Fintech 50. If they win, they get funding, visibility, mentorship etc.
Increase women’s representation in venture capital Firms: Capital for startups is usually raised by Venture Capitals, corporations and private individuals. However, venture capitals are one sure way of driving entrepreneurship and innovation. A male-dominated sector means women are not likely to get enough funding. But if the number of women increases in venture capital firms, women can now get their fair share. Thus, Increasing women‘s representation in venture capital firms is one potential solution
Increase support from corporations: Just like Venture capital, firms and corporations can help provide a way for women-owned businesses. They can offer them tailored opportunities such as greater
financial support, mentorship, networks, capital directories and other platforms. We have often seen several advanced startups investing in early-stage startups. This could be the same for women-led fintech startups.
Female-owned fintech is making its mark on the Nigerian tech sector, but they need greater access to the capital that will allow them to thrive and grow. Connecting these women entrepreneurs to networks and training is good. But what’s best is promoting new standards for lending and greater representation for women in venture capital.Featured Image Source: Businessday NG
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