Record funding in women-led healthtech startups sets agenda for founders

Women-led healthtech companies in Africa saw a significant bump in funding from investors in 2023, according to a new report by Salient Advisory. 

Rwandan-based startup Kasha, Kenya’s Maisha Meds, and Egypt-based startups Dawi Clinics and Chefaa cumulatively raised $52 million across 33 deals, and were responsible for a 2,000% increase in funding to women-led companies in Africa’s healthtech industry. 

According to Jessica Vernon, CEO of Maisha Meds, her company’s funding came from solving problems with a business model that’s different from competitors. “We’re meeting people where they first go to get care: at private drug shops, pharmacies, and clinics. And we’re using technology to make those places more digital, efficient, and accessible,” Vernon told TechCabal. 

In 2022, women-led companies in healthcare were only able to raise $2 million across 26 deals representing 1.4% of all healthtech funding. The report from Salient Advisory noted that Kasha’s $21 million Series B funding was the largest investment ever made in a woman-led health tech company in Africa. Additionally, funding to mixed-gender founding teams rose to 21% in 2023 from 10% in 2022. 

The funding in these companies follows what the Salient Advisory report described as an impressive year for the general healthtech space, which received $167 million in 2023. While the general healthtech funding was 2% lower than what investors deployed in 2022, it was better than the broader African tech ecosystem, which saw a 39% funding decline. 

Women-led startups in Africa have, over the years, been largely overlooked by venture capital and private equity investors. But 2023 was a relatively good year for gender financing. Women-led startups raised just above $200 million, a +7% positive growth on a year-on-year basis, data from Africa: The Big Deal showed. 

The 2,000% funding growth is the first time the gender financing gap in health tech startups —and the ecosystem in general— is narrowing. The funding accounted for 31% of the total investment in health tech companies in 2023.

Investors in Maisha Meds and most of the other women-led companies include global development institutions such as USAID and the Bill & Melinda Gates Foundation. Funding from these institutions is mostly grants. 

Maisha Meds raised $5.25 million in scale-up stage 3 funding from USAID Development Innovation Ventures (DIV). Stage 3 grants are DIV’s highest level of funding awarded to innovators who have demonstrated the ability to scale up their proven solutions to critical challenges. 

Grants from institutions like the Bill & Melinda Gates Foundation, MSD, Cencora, Microsoft, and Chemonics have contributed to setting up women-led companies in health tech and the space in general. The report noted that over half (52%) of the 145 deals for African healthtech innovators in 2023 were grants indicating the important role that grants play in bridging funding gaps for early-stage healthtech innovators. This stands out as the largest source of grant funding on the continent. However, the total ticket size of grants was only 7% of the funding raised, with the average being $168,000. 

Equity funding in comparison, accounted for 91% of funding raised, with an average ticket size of $3.2 million. Experts say there are still barriers women founders or CEOs face in accessing private equity or venture capital funding.

These barriers are not necessarily from investors’ bias against female founders or CEOs, but they could stem from these women prioritising things like family over their business, hence they don’t show up enough for investors to see them, according to Ibijoke Faborode, founder of Africa Female Founders Collective (AFFC).  

AFFC which launched in February is planning a programme in 2024 that helps women founders or CEOs create more time for their startups and meet more investors who are interested in investing in their sectors. The goal is to help these startups focus on building the innovations that make them attractive to investors and also address problems in society.

Vermon pointed out that the specific women-led startups that were funded in the DIV round are those that are innovating on unique models for healthcare delivery, including a major emphasis on the last mile and underserved populations.  

Amaan Khalfan, CEO of Goodlife Pharmacy, East Africa’s largest private retail pharmacy chain, said investors would largely fund a business that has good record keeping and can position itself in a way that identifies the opportunities in the health tech space.

Jenne Nwokoye, founder of Clafiya, a digital health platform that has raised  $610,000 to date mainly from venture capital, said women-led startups are not raising much from VCs because there is little intentionality behind funding women-led businesses. 

According to Nwokoye, it would help if more VC funds were run by women entrepreneurs. However, she notes that women need to be more open in sharing funding opportunities. 

“For the next funding cycle, I’m going to be more intentional with the investors I want, i.e. finding investors who understand health, consumerism, and finance in Africa or in general,” she said.