Why women-led businesses thrive and how to close the funding gap

Bolaji Sofoluwe, founder and managing director of ETK Group shares insights on the impact of investing in women-led businesses in Africa.

Why women-led businesses thrive and how to close the funding gap
Bolaji Sofoluwe, founder and managing director of ETK Group 🎨: Johnstone/

In her early career, Bolaji Sofoluwe, now founder and managing director of ETK Group, an African-focused business consultancy, crossed paths with Mope Abudu, the visionary managing partner at AfriGloCal VC. Abudu's bravery and entrepreneurial spirit immediately impressed Sofoluwe, who saw her as a role model. "She was someone I aspired to be like," Bolaji remarked.

Their relationship blossomed into a valuable mentorship. Abudu's confidence in navigating important spaces and advocating for herself inspired Sofoluwe. The exchange was a two-way street: Sofoluwe gained wisdom, while Mope valued Bolaji's perspective. This dynamic proved invaluable. β€œShe allowed me to be vulnerable. She allowed me to express areas that I was struggling with. And then she was able to provide the adequate support that I needed to get past those frustrations,” Bolaji told over a call.

Beyond her leadership at ETK Group, Bolaji Sofoluwe extends her impact in several ways.  She currently invests in women-led businesses as an angel investor. Additionally, she holds a board position at a leading UK engineering firm, where she championed the creation of a Women's Forum. This initiative empowers women within the company to develop their skills and pursue ambitious goals.

β€œIf I hadn't had a mentor like Mope, I don't think I would have been able to transfer those skills that I'm transferring today,” says Bolaji. β€œAnd even though she's no longer actively my mentor, I still call her my mentor.”

She advocates for mentorship and community building as key strategies to address gender bias in investment, not just in Africa, but globally. These initiatives can empower women-led businesses to secure the funding they deserve, she said. 

What has been your experience working with women-led businesses?

This hasn't been intentional, but I must say that a large percentage of the over 15,000 businesses I've worked with over the years have been women-led. Perhaps it's because women are natural nurturers and developers.

We all want to see our families thrive, and many women are driven to create positive change, whether systemic or in their immediate environments. This entrepreneurial spirit extends beyond their businesses; they actively plan and invest in their personal growth as well.

My experience working with women-led businesses has been truly enriching. They often approach problems from unique perspectives and prioritise providing support and solutions. This assistance-oriented approach translates to practical solutions for everyday issues, which is a key factor in business success. Ultimately, solving real problems is what makes a business thrive.

In addition to their problem-solving skills, women entrepreneurs demonstrate remarkable resilience. As you likely know, navigating the business world as a woman presents significant challenges.

Despite continued advocacy and legislation, the gender funding gap remains. What could be the issue?

Actually, at ETK, we're hosting an event this Friday at the House of Lords to discuss this very issue – the gender funding gap. Trust me, it's a global problem.

One factor contributing to the gap is limited access to networks for women. They're often excluded from the 'old boys club' networks that can be crucial for securing funding.

Stereotypes also play a role in investment decisions.  Believe it or not, some women pitching their businesses have been asked inappropriate questions, like whether they plan to get pregnant. It's astounding that such things are even considered!

It's perfectly reasonable to ask about a business continuity plan.  However, a woman's potential for pregnancy should have absolutely no bearing on investment decisions.  These are precisely the invasive biases that hinder women from securing funding.

Limited representation in decision-making is another factor. Key positions in venture capital, private equity, banking, and investment banking are still predominantly held by men.  This can lead to unconscious bias, where people tend to favour those who resemble themselves.

Related Article: Meet 34 women angel and venture capital investors in Africa

They tend to support people who seem similar to them, who share their thought processes, and with whom they can easily connect. When there's no one in a decision-making position who identifies with you or understands your perspective, securing funding becomes much harder.  These, in my view, are the key reasons behind the funding gap.

We urgently need to find realistic solutions to close these funding gaps.  Integrating these considerations into policy and banking system due diligence is crucial. Until we see such intentional actions taken, progress will remain elusive.

How can we think about the impact of investing in women-led businesses?

First and foremost, we must acknowledge that the gender funding gap isn't just a women's issue. It's a critical factor in achieving sustainable economic development, not just for Africa, but globally.

Here's why: Women are more likely to reinvest their profits. They invest in their education and the education of others, in healthcare and family well-being – the very pillars of a strong society.

Therefore, investing in women goes far beyond simply seeking equity returns. It has a profound and positive ripple effect.

From my perspective, policymakers need to move away from viewing gender equality as simply giving women a handout. Instead, they should recognize it as a strategic investment in sustainable economic development.  This shift in policy direction is crucial for progress.

Moreover, fostering mentorship among women is essential. If the world won't solve this problem for us, then we must take matters into our own hands. As an angel investor, I prioritise supporting female-led businesses.

Understanding the challenges women face in raising capital fuels my passion for angel investing.  This experience also informs my work at the University of Oxford's business school, where I support high-growth businesses. Notably, half of the current cohort I work with are women-led ventures.

I constantly encourage these women to nurture and mentor others within their networks.  Angel investing, when feasible, is another powerful tool.  Many misunderstand angel investing as solely writing checks.  In reality, it's about sharing experiences, opening doors, making strategic introductions, and ultimately, expanding the capabilities of these entrepreneurs.

However, addressing the root cause requires tackling unconscious bias through education.  Some might perceive educating men in their companies as patronising.  However, the most effective approach is often demonstration.  Many people learn best visually, absorbing information through observation and experience.  By demonstrating how to achieve equitable financing as women ourselves, we can inspire others to follow suit.

In my view, change requires a multi-pronged approach.  While macro-level policies are crucial, so too is grassroots action within our communities.  By fostering change from the ground up, alongside broader policy shifts, we can create a more equitable environment.

How can people, especially women, get the most out of mentorship?

First things first: have a conversation with yourself. Identify what kind of mentor you seek and what you hope to achieve from the experience. This self-reflection helps you create a "mentor persona," similar to how companies develop customer profiles. Who is your ideal mentor?

Remember, don't aim for the unreachable. It's great to admire someone like Hillary Clinton, but a mentor you can realistically connect with is more valuable. Look within your network for someone who is accessible. Perhaps you can seek an introduction or a referral.

Once you find your mentor, attentiveness is key. Respond promptly to their messages and complete any tasks they assign. Go the extra mile by demonstrating initiative. If they introduce new concepts, research them further. Listen to podcasts, watch videos – and actively engage in learning beyond the mentoring sessions.

Show your mentor that you're invested in the journey. Share what you've learned from your independent research during your next meeting. This demonstrates not only engagement with the mentor but also your interest in the industry.

Maintain consistent communication. Listen to your mentor's advice, but don't be afraid to voice your concerns. If something feels off, explain your perspective. You might find your mentor becomes more comfortable with you making independent decisions based on your gut instinct.

In essence, get the most out of your mentoring relationship by actively engaging. Deep dive into the concepts your mentor introduces, and don't hesitate to share your learnings. This collaborative approach fosters a mutually beneficial relationship.

Related Article: Tech communities for young women in Africa 
This interview was edited for length and clarity

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