This Angel Investor is Closing the Gender Funding Gap

Yemi Keri: The focus is to encourage women to become angel investors.

Justin Norman: That's Yemi Keri, a co-founder of the angel network Rising Tide Africa.

Yemi Keri: However, on the investment side, it was difficult for us to find those female founders.

Eloho Omame: You need money. You need time. You need a number of swings at that. You need to keep going.

Yemi Keri: For them to be able to invest, they must understand what they're doing, so it's important that they do this education. And if they don't, we will not grow the pool of angel investors.

Justin Norman: Despite research showing that female founders outperform their male peers, startups with a solo female founder or an all-female founding team raised a mere 2% of all the funding in Africa last year. There is a huge gender funding gap, how do we close it? 

Justin Norman: This episode is the second of a five-episode series on gender lens investing, co-hosted by Eloho Omame, founding partner of FirstCheck Africa, an early-stage fund backing female-led startups. Each episode of this series will explore a different level of the fundraising value chain. In this episode, we're exploring angel networks with Yemi Keri, co-founder of Rising Tide Africa, a women-oriented angel network in Nigeria.

Justin Norman: This series is created under the ScaleX project, co-designing solutions to close the early-stage gender financing gap in Africa, an initiative of Make-IT in Africa. Make-IT in Africa promotes entrepreneurship and innovation ecosystems across Africa for green and inclusive development. The program is implemented by the German Development Agency, GIZ, on behalf of the German Federal Ministry for Economic Cooperation and Development. Before we start, we have one small favor to ask.

Justin Norman: If you enjoy the show and want to support the content that we create, please hit that subscribe button. It only takes a second, but it will mean a lot to us if you do.

Yemi Keri: I started off Rising Tide with Ndindi Nnoli-Edozien, and it was just an offshoot of what our experience was at the Lagos Angel Network, where we were introduced into angel investing. And over several months, we began to notice a pattern, a pattern that, first of all, in the room, the number of women that used to come for the investments were reducing and then also we weren't seeing women come. And if women came to pitch, it would be as a support for the co-founder or HR or something like that. There was a particular day that there was a young lady that came in, she was in the health sector, and she had this fantastic product, but she couldn't pitch.

Yemi Keri: And so we took her out for a bit, about two months, thereabouts, and what we were doing was carrying her to all the types of different places that we were going and making sure that... So if I saw Eloho in the room, I would say, "Oh, she's a founder, please tell her about your product." And she began to, the questions and everything, she began to have that confidence and certainty because it was different people. And so by the time we brought her back to pitch, everybody wanted to invest, And so we knew that we had something. About a year later, that was in 2017, we decided that we needed to formalize what we were doing, which was predominantly mentoring. In Nigeria at the time, the female founders were few and far between. And so that's what really started off Rising Tide, principally mentoring and coaching before we started to layer it with investment and education.

Justin Norman: You talked about mentorship and then started to layer the education, the deal flow. So what does it look like in its sort of fully formed version of itself today? 

Yemi Keri: We have 34 investment portfolio companies, and we do a lot of mentoring for the founders that we believe we require it or those that come to us. We also do what we call the mentoring clinic, where we open up mentorship to female founders across the continent. I think so far we've mentored about 65 women in 11 countries. So we do our portfolio companies, then we do a one off. The mentoring clinic allows us two things. First of all, it creates awareness about Rising Tide across the continent. The second thing, it acts as a filter for us to start to see female founders that need support and who we might invest in at a later stage.

Eloho Omame: So Yemi, could you talk a bit about the capital piece then and how that plays in? It sounds as if the original device, sort of the original kernel for Rising Tide Africa, was around a mentoring story and supporting a founder. So do you sort of think about the mentoring piece and the education piece at Rising Tide today as the wedge into the capital, or do you have founders as well who might come in with investment first and then really view you as a resource over time post investment? How does that dynamic work in practice on both sides? 

Yemi Keri: At Rising Tide, we have four pillars, we call it the MIEN, mentoring, investment, education and networking. And as a member of Rising Tide, we're 97 members now, as a member of Rising Tide, you are to select one or two pillars that you want to join. And it's voluntary, but it's one of the prerequisites for joining Rising Tide 'cause you have to give your time. The mentoring I've told you about, the education part came as an offshoot of the patterns we began to see with female founders when they started pitching to us. When we started off the investment arm and started really forming that pillar, we began to notice a certain pattern. I would say knowledge, that if the female founders had, we would have invested in them or would have shared their investments. And based off of that, the members curated an accelerator program, it's a five week accelerated program.

Yemi Keri: So the education piece is to help us to get them investment ready, even if we're not going to invest, we are able to share their decks. We are able to refine them to such a point that they are confident that they can go and meet other investors. So it also serves as a pipeline for us. However, on the investment side, in 2017, 2018, it was difficult for us to find those female founders, either because they didn't know about Rising Tide or we didn't know where to find them. But as we did our first and second investments in female founders in 2017, by 2018, people started to share deals with us. Our member community grew, decided to refer deals to us. And so it is also a combination of those that go through the mentoring education as well as those that approach us directly, either through referrals or through members.

Eloho Omame: Can you speak a bit about what proportion of your members are investing and maybe a little bit about the cheque sizes you all are writing, etcetera? 

Yemi Keri: So the focus for Rising Tide is twofold. First of all, to try and close the gender funding gap. The second one is to encourage women to become angel investors so that they can see it as another asset class. And in doing this, we had to ensure that our ticket size per head is affordable for the women investors because they in themselves, a lot of them have never even heard about angel investing. Some are just understanding the ecosystem, some of them are risk averse, so we have begun to study the patterns. When you're joining, we'll say at the time, it was $3,000 per annum. Our ticket sizes averagely over the last four or five years is 30,000 to 35,000 minimum that we've done and then maxed one is 289,000 because there were a lot of women investing.

Yemi Keri: In terms of the number of women averagely eight, nine per deal, averagely. But in 2023, everything just dipped. We are doing a survey why they're not investing. From the survey, we found out very few say that the deals are not of interest. A large percentage was lack of disposable income because of the economy. The other percentage was they wanted to see... They wanted us to justify this asset class. In other words, "I've invested in 2017, what's going on?" So they want to see exits. So those are really typically the reasons why they haven't invested.

Eloho Omame: One of the things you started talking about, as you shifted the conversation towards the investment side of Rising Tide, was you talked about a lot of women in general being new to the venture asset class and new to angel investing. And one of the things that you wanted to do was close the gender funding gap, but secondly encourage more women to invest. So it's an interesting question, I suppose in that I say to myself, there's also, in order to be a great angel investor, you need money, you need time...

Yemi Keri: Yes.

Eloho Omame: Because you're not going to make those home runs in year one and probably not, you might...

Yemi Keri: Yes.

Eloho Omame: But you also need some... You need a number of... A number of swings are bad, so you need to keep going. You can't do one deal a year for four years and think that those are the ones that are gonna return your capital. So it's very interesting that when you talk about some of the dynamics around perhaps why you might have seen that dip them that you talk about is liquidity. Which leads me to my specific question, which is that when you are talking about those objectives for Rising Tide closing the gender funding gap and encouraging more women to invest, is there also an education piece that is for the investors, or is the education primarily focused on the founders? 

Yemi Keri: We do deliver that, because for them to be able to invest or to even mentor, they must understand what they're doing. And these are women from diverse backgrounds, although well experienced, but they...

Eloho Omame: Not all from financial or investing backgrounds.

Yemi Keri: Want to understand the ecosystem. Yes, exactly. Some of them invest because others are investing. So we do an onboarding, introduction to angel investing, for those that come in, so we do want a quarter. So that's what the networking and membership pillars do, education for the investors. What are we looking for really? How do we look at exits? What really is an exit? How can you tell if a founder is going to be successful? All of those things that we've learned over time, we either get people to come and share at an event or we have a masterclass or we discuss amongst ourselves. So we do a lot of investor education, otherwise they'll be just totally lost.

Justin Norman: That's a really interesting point. I think maybe if we can probe a little bit deeper. I just, throughout everything you were saying, think about this like chicken and egg question about where the intervention needs to start. And we hear so often about, well, downstream, if there's not enough angel investors to fund women-led initiatives, not as many are going to get to a certain point where they are able to raise a seed round and on and on and on. And I guess from the other side of the value chain also, if there's not LPs investing in fund managers, women fund managers, they are not gonna be as many. So how do you just generally think about... It sounds like you're burning the candle at both end, working on the deal flow and the mentorship, but also the angel training. Is that a necessary component to how to achieve this goal of closing the gender gap? Or it sounds like you can't start at one end to the other, you have to do both, but I'm curious to know how you think about that.

Yemi Keri: You really have to do both. Generally, if I want to stereotype, women are risk averse. And some will only put money if they see one, two, three people put money. And what we started to do was to encourage members to start doing the due diligence, because by doing due diligence and asking all those questions and being in that closer group, they let go of their lack of knowledge. And by the time they have finished with the due diligence, they gain some knowledge and they see that, "Oh, this thing is not rocket science, I just need to be able to look at this, ensure this, ensure that," and that's one of the ways in which we give them the hands-on education, otherwise they would not be involved.

Yemi Keri: And if you're not involved, you wouldn't want to invest. So it's important that they do this education, and if they don't, we will not grow the pool of angel investors and qualified or high standard angel investors. We wouldn't have that. So for instance, the curriculum for the accelerator, it was developed by members of Rising Tide. So each person, they took an aspect, pulled in three or four others that are in that same field, tried to say, "Okay, this is what we look for," and they developed that curriculum. And we try and look for different ways of sharing that experience, sharing the education, and making them involved in the build of Rising Tide.

Eloho Omame: Can you speak a bit on that, around how you all think about your, I guess, investment approach or investment model on the portfolio side, or at least even on the deal flow side or the pipeline side, all the companies that you're investing in, female-led startups, and I suppose different people define female led in different ways. So perhaps you can talk about that investment approach and ultimately what that means.

Yemi Keri: It's been a journey. Like I said, when we started, we were not seeing the women. Philosophy was female-owned, then we now said, "Look, few and far between, what if they are female led, your CEO of the company and things like that? Wouldn't that be a criteria for us to even build that CEO to a point that she is able to raise investments? Even if she goes to another company another day, she will be there and have that knowledge." So we expanded to female-owned and female led, and then we were still stuck at, "Okay, how do we get more women?" And so by 2018, 2019 we expanded the scope and we said, "Look, let's consider that criteria as well, because at the end of the day, it's still a sort of genderless impact if your team and your management are more, at least 55% women."

Yemi Keri: And that attracted a number of good deals to us. They didn't meet the criteria in terms of the gender management, but what they had was I think about 80% or 85% of their team, the workers were women and they were providing a service that had a gender lens. And so the investment committee said, "Look, we cannot say we are closing the gender funding gap. And because it's not female owned or female led, these are products and services that have a gender lens." So over the years it has evolved. So we have female-owned, female gender diverse team and management, or if you're providing a service that caters with gender lens. So that has framed what our investment philosophy is. To date, we have female-owned, female-led as 57% of our portfolio, and the remaining are a mixture. That's how we have metamorphosized to date.

Eloho Omame: Do you have any other criteria when you think about your investment approach and sort of the impact that you want Rising Tide to have? Do you employ any other criteria across your investment decision process? 

Yemi Keri: Yes, from beginning it was tech and tech enabled. We were sector agnostic, but we found in the beginning that we are spending a lot of energy on ideation and really looking for what really was early stage investing. And so our own early stage as we define it is if you are a post revenue and you have some level of traction, and so we look at that. And then more recently we have begun to look at businesses that solves a problem for the larger community, so in terms of impact. And so in our last cohort, we added a model for sustainability, ESG and impact to the education curriculum.

Justin Norman: This sort of evolution of your investment thesis really, I think, drives home at this tension that Eloho and I feel and are trying to expose and probe throughout this series, which is this question of what success looks like in the context of closing the gender gap from a funding perspective. And I think it raises a few questions in my mind around if you're a female-only network investing in only female founders, and I think the definition of what you invested in has evolved, but to what extent does the solution also lie in if we want to build a network of female angels, should they be investing more broadly beyond just through a gender lens? And on the flip side, are the companies that are coming through your pipeline and that you are mentoring, should they also be raising from a wider pool of angels and investors that are not necessarily investing from a gender lens perspective? So how do you think about that scope in the context of the goal, which is to close the funding gap? 

Yemi Keri: So one of the things that we do is f you meet our investment criteria, female or female lender, we're closing the gender gap. One of the things that we do is to co-invest, so we extend it to other networks on the continent and say, "We've done this. This is our investment memo. We are putting in this amount. Are you interested?" So some of our deals are co-investments. Now, lessons learned in terms of co-investment, if I may digress a bit, is that when we're looking at exits, some people don't want to exit at the time, there are other conditions and things.

Yemi Keri: So from signing the same term sheets, we are now at a place where, "Okay. Rising Tide is investing this, this is the term sheets. You can come and invest, but please, even if we are co-investing, do your own term sheets so that we're able to exit." Now that we're looking for exits, we're seeing a lot of things with hindsight that we would otherwise not have done. So having said that, yes, that is one of the ways in which we are sort of closing the gender funding gap, even though we don't have enough of the funding. And so that goes to speak to also your question about whether I would get a line, which is full of men, to invest as well. The founder doesn't really care really who the investors are, whether they have a gender lens or not, all they want is to raise the funds. So we're doing more of that and we're now seeing the ticket size. The other thing that we did was to work with EBAN on the catalytic fund. And so following around for one of our deals, we tried to get... They tried times 3x from EBAN on the catalytic fund, and so it made up a pool of their funds.

Yemi Keri: Yeah. So what does success really mean, really? If we start to define in terms of targets, we would lose ourselves. But if we start to measure really, we've done 2 point something million dollars and over 34 investments. That for us, from where we're coming from, is an element of success. So we have closed the gender funding gap by this. We've increased the number of women that are in angel investing. So for us, it's about measurement, so we're not gonna put a tag in and say, if we hit $5 million, then we're successful. I think it is by the iterations of what we're doing in the ecosystem that we're going to be able to measure our success.

Justin Norman: The definition of success evolves necessarily over time. I read a recent interview. It sounds like you're thinking a lot about exits, you've talked about it a couple of times in this conversation. So while it may be an initial goal to unlock more capital for women founders and to bring more angels in, certainly from an angel perspective as well, they're expecting a return on their investment. And obviously there's a question of time horizon, so maybe the next definition of success maybe needs to be something around exits and returning capital. Yeah.

Yemi Keri: Some exits, Yes. Looking at the trends and patterns, those that we invested in earlier are coming back for follow on rounds and top up funds and bridge loans and things like that. And we did have a fight and we're saying to ourselves, "Look, we now said, okay, maybe it's time for us to have follow on vehicle." And so we're working towards a $10 million. We want to do a proof of concept. Now from 34 deals, we're gonna say, "TLcom or Alitheia, which ones are you interested in, that if you think that if they grow in the next one year, you would want to invest in?" By so doing, we will select not only from within Rising Tide, but other female or gender lens startups that have been invested by other networks. And we will select based on those maybe five, 10, I don't know how much 10 million would do, to give them that top up fund of their 700, 800. So how do you focus on the business and stop going around the whole place? We see that as our own opportunity to also exit, while we are building those that will be interesting for the V sales to off-take. So that's our next ambition, if I may say so, of what we want to do.

Eloho Omame: I wanted to come back to the question. So it's a $10 million vehicle, but fundamentally it allows you to create exit pathways. But also I suppose when you think about the journey of female founders often, that series A or pre-series A is also sometimes where they get stuck. So potentially sort of a very interesting place to deliver some impact as well. One thing you've talked about, even in the framework that you described, you talked about Alitheia, you talked about TLcom as potentially being people who you then sort of work with to help you decide which companies or what profile of companies to focus on. And then earlier when you were describing the investment criteria as well, you talked about technology and technology enabled businesses.

Eloho Omame: This question comes back to the tension that Justin was describing as we talk to people and we try and understand a little bit better how they're thinking about their different gender lens frames. As I say to myself, and you know that I'm a big venture capital tech person, so it's a little bit of me. I'm curious in your perspective, so I'm a believer, but I say to myself, why tech and tech enabled necessarily? Talk to me about sort of why that is such a big focus for you? Because there are many smaller businesses, SMEs, female run, great entrepreneurs also looking for capital.

Yemi Keri: So you start from what you know.

Eloho Omame: Yeah, fair.

Yemi Keri: So this is what is our majority of our portfolio. However, it's as if you have seen our deck, one of the things that we have seen really are these women that are not tech and tech enabled. A lot of them, they're doing good businesses, but they need that chunk of money, in terms of either manufacturing or production line processing. They need that chunk of money. And we have said that we are gonna mark, I don't know whether it's 10% or 20%, for them to try and test the market because it's a long play. But why we want to test with a smaller is because a lot of the VCs are looking at tech and tech enabled, they're not really trying to play in that SME space. And so we don't wanna get stuck in funding them and then it becomes a problem for us down the line. So we are gonna do a sort of test, because a lot of times these companies don't go for series A, series B, they just need that chunk of money and then they plow back into their business and they use it to grow. And so that's the difference between the two, so we're coming...

Justin Norman: For each episode of this series, my co-host, Eloho Omame and I sat down for a retrospective conversation to reflect on the insights shared by our episode guest.

Justin Norman: It is quite interesting. There's an abundance of research that shows that there are positive or above average outcomes when you invest in women founders. And despite that, we're still only at 2%. So let's start right at the beginning, angels, and I have a question for you first. FirstCheck, do you guys consider yourself an angels fund? You have LPs, right? 

Eloho Omame: Yes.

Justin Norman: Okay. But it started as like a group of angels? 

Eloho Omame: It started as two angels, Odunayo and I. 

Justin Norman: Okay, two angels.

Eloho Omame: It started as our money. And so we started off talking about FirstCheck as an angel fund, and it started off that way. Honestly, we made an assumption that was just proven wrong very, very quickly, which was that no one would be interested in talking to us about a female focus tech specific pre-seed fund.

Justin Norman: Meaning LPs. No, LPs with you? 

Eloho Omame: No LPs at the level. So the other thing we wanted to do was really keep it micro. So could it be some $10 million or so of capital? And how do we get this thing off the ground relatively quickly? So we both said, "Look, we could allocate some amount of capital from our own sort of personal balance sheets to doing this. We would probably move a little bit quicker. We don't need to sort of go through the journey of trying to convince the people that the thesis made sense." We also were both sitting there as women, one as a founder, the other as an investor saying, "I think I'm pretty bankable, so why not?" But the false assumption there was that people wouldn't also sort of believe the thesis very easily.

Justin Norman: And people did? 

Eloho Omame: And people did. We literally had people, founders for the most part, but people, come to us very quickly on very shortly after we announced saying, "Where do I send my check? I wanna be an LP." And so we did a small test, we called it a beta fund, and so we do have LPs in that. The other thing that we have, of course, is the sort of $2 million co-investment commitment with TLcom as well. That's a pool of capital we invest out of. And the reason that we also didn't, I guess, face or didn't have a lot of resistance to the idea of taking in outside capital was we really think that the thesis makes a lot of sense, to your point, around the performance, etcetera.

Eloho Omame: But also you look at the 2% and you say, "This isn't enough." You look at the performance and you say, "These outcomes could be actually be really interesting." You look at as a fund and you have a strategy and you say to yourself, "No one else is really focused here. I can be differentiated." And frankly, I believe in this stuff, I think it's fun. So there was an opportunity to then have additional capital to sort of pursue that strategy. And so it didn't take, honestly, there wasn't a lot of convincing to do it, to end up creating a fund.

Justin Norman: Was there at any point in your journey an attempt to crowd in capital from other angels to as co-investors? No? 

Eloho Omame: No. 

Justin Norman: The reason why I ask that question is because my primary takeaway in speaking to Yemi is she's doing all of this work with an angel community and it seems really hard. And so there's a question about, I certainly believe that obviously the extent to which women will back women, it's important work. And how much do we need in the ecosystem, more women angels to write those first checks at the beginning, or maybe that's also a role for FirstCheck to play right in? 

Eloho Omame: I guess what I would say there is a couple of things. The first is we need more capital for women. I personally am pretty indifferent as to whether that capital is from female, is from women or men. It's one of these things again where sort of, it's 2%. So 2% needs to go to something, 10% needs to go to...

Justin Norman: We'll take everything we can get.

Eloho Omame: We will take everything we can get. The other side of that equation though, is something around a wealth effect. In a world in which you have these networks, venture capital ultimately is an access game to a large extent. You can't invest in stuff that you don't see. And so you find different investors at the angel level, at the institutional level, effectively differentiated, competing against their ability to access quality deal flow.

Eloho Omame: Because you want that, you need that, that's how you sort of ultimately have any hope of generating an outsized return or a better return than the next guy or girl. So there's also something around a wealth and distribution effect that says it makes sense to also say, "Look, if there are people who can write these checks who don't have access to it, let's also give them a pathway to deploy it." It's also one of these things that's a little bit circular, and I think it came through in the conversation also with Yemi, whereby she was saying in going on this journey, they also thought about the fact that the disposable incomes for sort of female HNIs is a little bit lower and so they had to sort of think about what's investible and that thing.

Eloho Omame: I remember I spent a bit of time about two years ago, just in general in this sort of personal finance space, thinking about personal investment portfolios and how to think about how I might advise a woman versus a man. And I spent a bit of time looking at the data around wealth in Africa and how it's distributed. Well, I think if you talk to fund managers, they'll say to you that you probably should not be investing in the venture asset class as a whole if certain things are not in place first; a good amount of savings, some exposure to more liquid instruments, some exposure to safer instruments, etcetera, with some level of progression within your portfolio and some level of allocation. And so I'm torn in two different directions when I think about this question of women investing in venture as an asset class.

Eloho Omame: I also think it's important, as you would advise anybody who's any sort of HNI who's looking to sort of build a portfolio and allocate it, you would say, "Well, let's also talk about what else is going on in your portfolio as a fund manager and whether or not you can afford to invest in venture 'cause it's a risky asset class." There was something that came up in that conversation as well, whereby she said, "As the network has grown, we're increasingly sort of having to then grapple with this question of exits and liquidity." Which is fair, but also you say to yourself, you are an angel, you probably need to understand that with a lot of those you probably won't see a return of capital and you're really four years into this journey. To me that also spoke to this question around who has the capacity to invest in venture as an asset class, and how do we sort of encourage some of this participation, but do it in a way that is sustainable? 

Justin Norman: Yeah. And maybe the takeaway for me actually is there is this perception generally that it's going to be women that back other women. And you just talked about where the capital comes from, what gender it comes from, doesn't really matter. But in the context of a very nascent angel ecosystem with a lot of questions about what the returns will look like, is it almost like an unfair burden to put onto women to say, "We want you specifically to increase that 2% number?"

Eloho Omame: Yeah. I think where that comes from is a little bit from almost like an assumption and it probably is based of course on some level of feedback, but an assumption that the men aren't interested, where you accept that men are never going to sort of believe in this investment thesis. And if you don't think that it is a failure of the outcomes or the potential of the companies, then you land in a place of bias. I don't know how true that is. I think anybody who is a reasonable, thoughtful investor looks at the outcomes and isn't really that fast about whether or not the entrepreneur is female or male. I think though we don't have enough stories about sort of female technology entrepreneurial success, we need more of them. Those will take time. Those are constrained by the 30 to 50 million of capital that comes into the ecosystem for... Do you know what I mean? 

Justin Norman: Yeah.

Eloho Omame: So there is many many things. I personally, when I think about the reason I'm most optimistic about all of this work is because I know that there's a flywheel effect. We will get there, it'll take a bit of time to get that flywheel going, but when it does get going, all the other things we talk about around the companies outperforming, the diversity having a performance dividend, all of those things will show themselves in the outcomes.