Adesuwa Okunbo Rhodes
Adesuwa Okunbo Rhodes is the Founder and Managing Partner of Aruwa Capital Management. She has over 12 years of investment banking and private equity experience from top global institutions such as J.P Morgan.

Prior to founding Aruwa Capital, she spent five years as Managing Partner of Syntaxis Capital Africa, a provider of growth capital to SMEs in Nigeria and across Sub Saharan Africa. She was named as an Agent of Impact in 2019 by Impact Alpha and also recognised as one of the Top 35 Women Moving Africa Forward for her commitment to gender equality in private equity and across the society through Aruwa Capital’s investments. She started her career at Lehman Brothers and holds a BSc in Economics from the University of Bristol. She currently sits on a number of boards in Nigeria across agriculture, manufacturing and hospitality sectors. She is married with a son and enjoys cooking, tennis and travelling.

Creating more tables, not just seats at the table: Narrowing the gender funding gap by investing in women capital allocators

Interview with Adesuwa Okunbo Rhodes, Founder & Managing Partner of Aruwa Capital Management
África Subsahariana
21. Jul 2021

Aruwa Capital Management is a growth equity impact fund based in Lagos. It is one of the few women owned and led private equity funds in Africa investing into untapped investment opportunities in West Africa in the small to lower mid-market.

What does the gender funding gap mean specifically in Africa?

In Africa, we have the highest rate of female entrepreneurship in the world, almost four times as much as Europe, but yet there is a $42 billion funding gap between men and women entrepreneurs in the continent according to the African Development Bank. According to the latest Partech Venture Capital report, female founded startups received only 14 per cent of total funding in 2020. Where we invest in Nigeria, female CEOs have raised less than one per cent of all funding raised by startups in Nigeria since 2019, according to the Maxime Bayen database.

Although women make up half of the population, we are not receiving the proportionate amount of funding. This imbalance in access to capital for women on the continent can have detrimental effects on socio-economic development. Women are typically re-investing 90 per cent of their income into healthcare and education for their children and family. When women are given an opportunity to access capital, run and scale their businesses, the benefits extend to their children, families, communities, society and the economy at large. There is such a significant multiplier effect when women are empowered in society, and it can be a huge driver for job creation and poverty alleviation on the continent. Women entrepreneurs have been strongly affected by the devastating economic impacts of Covid-19. According to Partech, female-founded startups raised US$204 million in equity funding in 2020, a 22 per cent drop from 2019. African women entrepreneurs will need urgent support in order to make up the ground lost in 2020.

What are the systemic issues that women entrepreneurs face in raising capital?

Women entrepreneurs face a number of systemic issues that prevent them from raising capital and scaling their businesses. Research has found that there is deep-seated unconscious bias within the finance, venture capital and private equity industry. The language used to describe male and female entrepreneurs is significantly different, and these differences have immense consequences when women are seeking capital, and also for society in general. For example, research from the Harvard Business Review showed that a male entrepreneur can be described as “young and promising” but a female entrepreneur is described as “young and inexperienced.” London Business School also showed that female founders were far more likely to be asked “preventative” questions about their businesses that emphasized risk and downside. The men, on the other hand, were asked more “promotion” questions focusing on the “upsides and potential gains” of their businesses, a line of questioning that resulted in six times as much funding on average for men versus for women.

These unconscious biases are a fundamental cause of the gender gaps we see in male versus female entrepreneurship. I believe that in order to remove these systemic biases we need more women in decision making roles and as capital allocators.

woman, Nigeria
Empowering women. Image © GIZ / Katharina Niederhut  

Why is it important to close the gender financing gap?

We not only see closing the gender financing gap as the moral thing to do, given the role women play in society and the multiplier effect it can have in terms of poverty alleviation for families, but also because investing in women and for women has been proven to deliver outsized and superior returns. The data shows that gender balance within organizations improves profitability, reduces risks, and brings diversity of thought and decision making. McKinsey estimates that if the gender gap is bridged there could be an additional $28 trillion in global GDP and also shows gender diverse executive teams were 21 per cent more likely to experience above-average profitability. BCG found that for every dollar of funding invested, startups founded and co-founded by women generated 2.5 times more than male-founded startups. The data supports that investing in women and for women is good business and we see it as an immense, untapped opportunity to improve profitability, generate strong commercial returns but at the same time contribute positively to society.

In your experience, what can we do to narrow the gender funding gap?

For me it is very simple: Women entrepreneurs urgently need equal access to capital and the best way to get capital to women as quickly as possible is to invest in women that allocate capital. With more women allocating capital, they are twice as likely to invest in female founders and three times as likely to invest in a business with a female CEO. The gender gaps we see in society are directly correlated to the fact that we don’t have women as capital allocators. In Africa, there are less than 10 private equity funds owned and led by a woman that have successfully raised capital, and this figure is even lower for African women.

Aruwa Capital Management was founded on the conviction that the gender imbalance amongst capital allocators on the continent provides a unique opportunity to invest in untapped segments of the economy whilst closing gender economic gaps across society and generating enhanced returns. With few private equity funds owned or led by women in Africa, Aruwa Capital Management aims to change the narrative for women as capital allocators, entrepreneurs, consumers, and stakeholders in Africa and globally.

I believe the way to effectively provide women with more seats at the table is for us to create our own tables. More women succeeding as capital allocators means more women getting funded, more mentors, more torch-bearers, and more examples to follow. We don’t need more seats, we need more tables. Investing in funds like Aruwa Capital Management is a practical way to narrow the gender funding gap.

African woman holding her bike
Aruwa Capital invests in companies producing for women. © GIZ / Aude Rossignol

What is the mission behind Aruwa Capital Management in closing the gap?

Aruwa Capital is one of the few African women founded and led growth equity and gender lens funds on the African continent. At Aruwa Capital, we are intentional about investing in businesses that are providing goods or services that cater to the untapped $15 trillion female economy, or businesses that are founded or led by women or have gender diverse management teams or have a significant proportion of women active in their value chain.

The data supports that investing in women and for women is good business and we see it as an immense, untapped opportunity that will enhance our fund returns, providing us with a competitive edge due to the limited competition. As women allocating capital we also have a natural competitive advantage to invest in the best businesses for women and by women, due to our understanding of the problems women face and our networks of like-minded women entrepreneurs.

As a black African woman raising a growth equity fund in Africa, I myself have struggled to fundraise from institutional investors; it took me five years to successfully launch my fund and I am still on the road aiming to scale up our current fund. Our mission is to showcase the business case of investing in women so that other women don’t have the same challenges in raising capital that I had and we can live in a more gender balanced and inclusive world.