Smart Investments For the Future, Are Gender Smart

Judith Okonkwo is pioneering immersive technologies in Africa. With a background in psychology, she founded Imisi 3d, a virtual reality (VR) company in Nigeria. Imisi 3d's innovative solution, VR for Schools, creates immersive learning content tailored to the Nigerian curriculum, while also exploring other complementary tech innovations like solar-powered headsets. 

With iterations for low connectivity, Judith’s innovation can help address the current education crisis and persistent digital divides. With improved access to quality learning experiences, students gain the skills needed to pursue multiple future pathways, perhaps one day becoming innovators themselves. 

Imisi3d should be seen as an attractive social impact investment. However, frontier tech venture capital doesn’t flow at equal pace to people like Judith – who face the double challenge of gender and location, as a woman based in an emerging economy. Investment theses typically follow homogenous patterns, advanced mainly by marginal variations on themes, be it tech or in a geographical region. 

With the Sustainable Development Goals (SDGs) described as in ‘peril’ only five years from their deadline, much more can be done to pivot frontier tech investment to more diverse innovators and use of technologies, to accelerate progress in areas where they would have the greatest impact.

Judith was supported by UNICEF’s Venture Fund, which launched in 2014. The Fund provides technical assistance and investment to open-source, cutting-edge tech solutions, developed in emerging markets, that help fast track results for children.  

Following 149 investments across 81 countries over the last decade, now 42 per cent of its growth-stage cohort are women-founded or women-led, magnitudes higher than the industry average of just 2 per cent. These companies account for 62 per cent of the revenue generated by the entire growth cohort and 39 per cent of the follow-on funding raised. Perhaps most significantly they also account for 90 per cent of the beneficiaries (14.7 million people) and 92 per cent of the children, reached by the cohort. 

Despite outsized social and financial returns like these, women-founded startups in emerging economies are not attracting the volume of global investment to match their potential. For instance, in 2023 only 1.5 per cent of startups receiving venture capital funding in Africa were women-led. The Middle East and North Africa, Latin America and the Caribbean, didn’t fare much better with around 2 per cent (as did Europe and the United States).

Gender investment gaps at all stages of start-up investment aren’t simply due to a scarcity of female-led companies in emerging markets. A study of over 8,000 startups applying for accelerator funding found that nearly half had a woman co-founder. However, this dropped to 13 per cent at the post-accelerator stage, suggesting female-led companies face systemic and unconscious barriers to early funding in this critical company growth stage.

This may partly be because few women hold senior investment positions in emerging market private equity and venture capital, only 11 per cent in one study. As female fund managers are twice as likely to invest in female-founded start-ups and three times more likely to invest in a female CEO, this has a profound knock-on effect.  

To accelerate progress at the required pace, increased gender diversity, equity and inclusion (DEI) in investment will require intentional interventions throughout the whole value chain.

EWA, the venture capital impact investors operate with a gender lens, supporting early-stage tech companies in Latin America. Investees commit to closing the gender gap and participate in a blame-free gender audit, to reveal hidden biases and knowledge gaps.  Along with the financial investment, EWA supports investees to develop their change journey by including a social/environmental impact strategy. Similarly, the UNICEF Venture Fund integrates DEI values and best practices into broader workstreams like design, impact measurement and human resources.  

Inclusive gender smart investment is exactly that - smart. It unlocks present and potential economic advantage by investing and demonstrating a diverse network of highly motivated, socially transformative entrepreneurs. According to one study 17 per cent of working-age women in emerging markets identified as entrepreneurs, with an additional 35 per cent aspiring to become so; compared to 9 per cent and 14 per cent, respectively, in high-income countries. The 2X Challenge, for example, which commits development and finance institutions to gender lens investments, has raised US$33.6 billion since its launch in 2018, with about a quarter (US$8.26 billion) ear-marked for sub-Saharan Africa. 

Investing with a robust gender lens in the ecosystem of frontier tech requires global collective action. To do otherwise is to close the door on wider DEI ambitions to unlock global economic growth and social impact.

With frontier tech expected to be worth as much as USD$9.5 trillion by 2030, we face a unique window of opportunity to embed DEI by design. Investors need to challenge perceptions of support for entrepreneurs like Judith as a risk or venturing into the unknown, by building on the evidence and experience from the 2X Challenge, EWA, UNICEF Venture Fund and others who demonstrate a bold and visionary step forward into the future of impact investing.