This is a 32-fold increase in the value of African tech and a 17-fold increase in Europe over the last decade.

But despite these gains, the last eighteen months have seen a significant reversal in venture capital (VC) investment, with European investment in business software companies decreasing by 59%, and a 40% overall decline in global tech investment from 2022 to 2023. 

Africa has experienced a similar trend, with a 40% decrease in VC investment during the same period.

This was revealed in the report by Google for Startups in partnership with Notion Capital. The report investigates the intersection of diversity, entrepreneurship, and investment in the European and African tech sector, focusing on the impact of Google for Startups’ Black Founders Fund. 

It reveals both progress made and ongoing challenges faced by Black founders in securing funding and resources.

Challenges Faced by Black Founders

Investment Disparities

Since 2000, Black-led tech businesses in Europe and Africa have received $2.5 billion in investments, which accounts for just 0.51% of the total investment in all tech startups. 

In Europe, Black founders received only 0.43% of all tech investment ($2.09 billion out of $482.5 billion), and in Africa, only 3.11% ($413 million out of $13.3 billion).

Decline in VC Investment

The peak of VC investment was seen in 2021, with global heights reaching $734 billion during the pandemic. However, this figure has since dropped to $317 billion in 2023, nearly half of the amount seen just two years earlier. 

This decline affects all founders, but underrepresented Black and ethnic founders are likely to feel the impact more acutely due to existing funding pressures and systemic biases.

Funding Gaps

There is a huge investment opportunity gap for Black founders. In Europe, if investment were proportional to the Black population, it would have reached $6.3 billion from 2000 to 2023, indicating a $4.21 billion shortfall. 

In the UK alone, Black-led tech businesses should have received $3.11 billion, but they have only garnered $1.38 billion, reflecting a $1.73 billion gap. 

In Africa, the investment opportunity gap is estimated to be nearly $10 billion, considering that around 80% of the continent’s population identifies as Black.

In Europe, women-led startups received only 1.1% of total venture capital funding in 2023 – average funding for women-led startups was €3 million, compared to €6 million for male-led startups.

The situation in Africa is similar, with women-led startups receiving less than 5% of total tech investment.

Despite these challenges, women-led startups have shown resilience and potential for growth. The growth rate for women-led startups in Africa was reported at 20% year-on-year, reiterating their ability to thrive even with limited resources.

Google for Startups’ Recommendations

Policy Advocacy

Google for Startups recommends collaborating with policymakers to advocate for policies that incentivise diversity in tech and address systemic barriers faced by Black founders in accessing capital.

Investor Education

Implementing educational programs for investors is necessary to raise awareness about biases and challenges faced by underrepresented founders. This will facilitate a more inclusive investment sector.

Community Building

Strengthening community-building efforts is essential to create a supportive industry where Black founders can connect, collaborate, and share experiences.

Data Collection and Transparency

Advocating for enhanced data collection on diversity metrics in the tech industry is important to promote transparency and informed decision-making.

Inclusive Investment Strategies

Google for Startups recommends inclusive investment strategies that specifically target women-led startups. In creating funds and initiatives focused on supporting women entrepreneurs, the tech industry can address the gender investment gap more effectively.

Mentorship and Networking

Providing mentorship and networking opportunities for women founders is necessary. Programs that connect women entrepreneurs with experienced mentors and industry leaders can help them navigate challenges, gain insights, and build valuable connections.

Highlighting Success Stories

Celebrating and highlighting the success stories of women-led startups can serve as inspiration and provide role models for aspiring women entrepreneurs. These stories can also ascertain the prospect and impact of investing in diverse leadership.

Training and Development

Offering training and development programs targeted at the needs of women founders can help them with the skills and knowledge required to secure funding, manage growth, and lead successful ventures.

Gender-Sensitive Policies

Advocating for gender-sensitive policies within the investment community and broader tech sector can help create a more supportive environment for women entrepreneurs. This includes policies that address unconscious biases and promote equal opportunities.

The challenges faced by Black founders in the tech industry are multifaceted, encompassing differences in investment, systemic biases, and funding gaps. Addressing these issues requires a collective effort from various stakeholders. 

The program aims to empower and support women founders on the continent by providing resources and opportunities for them to scale their startups and address African problems.

Women founders who are building tech startups in Africa or for Africa can apply through the program website before the February 20th, 2023 deadline.

ALSO READ: How Google is Delivering on its $1billion Commitment in Africa

Eligible applicants must have a working product or service, a viable business model, and a working team. The application process includes a written application and an interview with the program team.

The 12-week program will commence in March 2023 and include one bootcamp per month, held in a hybrid style of online and in-person sessions.

Selected participants will receive access to Google’s products, mentoring from industry experts, resources, tools, and technology, as well as networking opportunities and connections with investors to support the growth of their startups.

“We are excited about the open call for applications for our 3-month accelerator program, specifically tailored to address the unique challenges faced by women founders in Africa. We believe that investing in women founders in Africa is critical for economic empowerment that will enable the creation of jobs for the growing African youth population,” says Folarin Aiyegbusi, head of Startup Ecosystem, Africa at Google.

African female founders face challenges in their entrepreneurial pursuits, including limited access to funding. Despite these challenges, women make up a significant portion of African entrepreneurs, with 58% of businesses in Africa being owned by women.

“Elevating the participation and leadership of women in the entrepreneurship ecosystem is crucial for promoting gender equality and driving economic growth in Africa. Investing in women-led startups is a key step towards achieving this goal, and Google’s commitment to these goals is reflected in the launch of the Google for Startups Accelerator: Women Founders Africa Program.” added Aiyegbusi.

The Women Founders will be mentored by industry experts who will provide guidance and support to the selected participants throughout the program. They will be instrumental in helping the startups achieve their full potential and create a positive impact on their communities.

Akua Nyame-Mensah, a mentor for the program said, “It’s an honor to be a mentor in the inaugural Google for Startups Accelerator Program for Women Founders. As part of supporting the next generation of leaders in Africa, this program offers women an opportunity to grow their networks and the accountability to achieve their professional goals. The focus on mentorship will be invaluable. Participants will benefit and grow from the exchange of ideas and experiences.”

The Google for Startups Accelerator Women Founders Africa Program is an extension of the Google for Startups Accelerator Africa program established in 2017, reflecting Google’s dedication to supporting startups and addressing the unique challenges faced by women entrepreneurs in Africa.