African women are at the bottom of the food chain in the global tech funding ecosystem. In the 108 months stretching from 2013 to 2021, $1.7 billion in angel investments and Series A investments were made into early-stage startups. Of all that, only 3% found their way to women-led startups. Funding institutions aren’t offering a friendly hand to women either. Women entrepreneurs also often self-select out of the credit market due to systemic gender-bias issues that result in low financial literacy and risk aversion and the gate-keeping of loans through higher interest credit rates for women.
With the odds stacked against them, many women founders have resorted to doing the near-impossible—pulling their businesses by the bootstraps. Bootstrapping as a term dates back to the 19th century and originated from the idea of pulling oneself over a fence by bootstraps. Used in the business landscape, bootstrapping means managing your business with no external funding—just personal finance or money gotten from family, friends, and “fools” brave enough to believe in one’s vision.
Of course, bootstrapping is not unique to women-led businesses. Founders typically start off bootstrapping to make themselves attractive to investors. Investors are more attracted to startups that have developed a minimum viable product, formed a bankable founding team, achieved product market fit, and even begun onboarding customers. Co-founder of Piggyvest Odun Eweniyi said Piggyvest didn’t raise external funding until 2018—2 years after it was founded. By this time their users had saved about five million dollars. Some founders have to keep their day jobs to keep their businesses afloat in the early days. However, more often than not, the early days are rather longer for women in the ecosystem than for men.
But bootstrapping is not all bad. External funding means more capital for operations but it also means less room for no mistakes and lesser control over the business as investors now own equity. This can stifle creativity and growth, especially if these deals are made from a place of desperation. If done with the right perspective, bootstrapping can protect a business from short-changing deals.
Given the imbalanced funding landscape, the question is: from what perspective are female founders bootstrapping and going about sourcing external funding? We asked 5 Nigerian female founders and here is what they had to say:
Damisi Busari, founder of SendSprint
What is the name of your company and when did it launch?
My company is Sendsprint and it launched in July 2022. We’re an international money transfer and gifting solution for Africans in the diaspora. We connect diasporans with friends and family back home (in Africa).
Are you bootstrapping? If yes, why?
Yes, we are a bootstrapped company and by choice. We chose to delay the fundraising process until we validated the market and hit specific milestones.
Do you think that receiving external funding will change your business in any way? How?
Yes and no. Fundraising, especially from established institutional partners with great fintech portfolios, will allow us to work with knowledgeable partners that can provide us with the necessary structures to support our growth. So from that perspective, yes the business will change – there will be a few more partners in our journey. However, from a functional perspective, no it won’t. Fundraising will allow us to focus on our core business of customer acquisition, service delivery and value creation. Raising funds will help us to ensure the longevity of the company so that we can keep serving our customers for the next 5 or 10 years.
Sisan Dorsu, co-founder of Torche
What’s the name of your company and when did you launch?
My company is called Torche Inc, and we officially launched in March 2022. We provide biometrics payment solutions.
How long did you bootstrap for? What are the things you considered before accepting investments?
We bootstrapped for about 9 months. This was a highly experimental period for us. When seeking investments, it was less about the money and more about who we were taking It from.
We sought angel investors that could also be strategic partners either as industry advisors/experts, potential customers/buyers, or network builders that would contribute to the vision of Torche.
How did external funding change the way you ran your business?
External funding allowed us to move faster with product research and development, experiment with customer acquisition, and take more risks. We were able to invest in quality talent and run multiple pilots and experiments. It allowed us to think more freely, bigger, and deeper about the problem we were trying to solve.
Adeola Alli, founder of OneHealth
What does your startup do and when did you launch?
I founded OneHealth. It is an online pharmacy and healthcare platform providing last-mile access to medicines and healthcare solutions for individuals and healthcare providers in Nigeria
We launched in 2019 with our one physical retail store, then the online platform in 2020. We now have in our network over 700 Pharmacies plus laboratories and specialists across 36 states of Nigeria to help fulfil or diver orders placed on our platform.
You’re not bootstrapping anymore but you did bootstrap for a while; how long did you bootstrap for? How did external funding change the way you ran your business?
When we launched in 2019, we bootstrapped and also had some initial startup funds. Our pre-seed fund didn’t come in until 2021 and it helped us with some key hires to drive business growth and office space for non-pharmacy employees.
For how long do you think a startup should bootstrap? What is your advice for any startup that is bootstrapping? How should they go about getting external funding if need be?
It depends on the goal of the company. If you want full control and growth at your own pace, then bootstrap makes sense. However, if you want to grow fast, compete favourably, and perhaps become the market leader, external funding will most likely be required.
Damilola Ololesusi, founder of Shuttlers
What does your startup do and when did you launch?
Shuttlers is a tech transport company redefining how people commute in metropolitan cities across Africa. Using a unique scheduled ridesharing system, Shuttlers enables individuals and businesses to access safe, affordable, comfortable, reliable, and more environmentally friendly shared mobility solutions.
We officially launched in October 2016, following several pilots between November 2015 and October 2016.
How long did you bootstrap for? How did external funding change the way you ran your business?
We bootstrapped for about four years, between 2016 to 2020. We got grant funding of about $100k, but it’s nothing compared to what we could have raised as pre-seed. We continued bootstrapping until we grew the business to a point where we sold tickets worth millions of dollars on our platform.
External funding came after that and it changed how we ran the business in several ways. It increased our speed and access to quality talent. We were particularly able to build a sales and marketing team. The team was very lean—about 15 people but now we’re about 60. It also deepened our operations from 20 to 200 routes in Lagos. The quality of service that we render has also greatly improved.
For how long do you think a startup should bootstrap?
There is not one straight answer to this. However, my advice to founders who are building in a large market and want expansion is to get external funding fast because it makes growth easier and faster.
Ruth Iselema, founder of Bitmama
How long did you bootstrap for? Do you think bootstrapping is necessary for every startup?
Bitmama bootstrapped for two years. Bootstrapping is necessary but not for every startup. It just depends on the circumstances and sector they find themselves in.
What influenced your decision to accept investments?
We needed to grow our team and also expand our product offerings. It would have taken us years if we were still bootstrapping.
How did/will external funding change the way you run your business?
It would help us hire the best hands for us at this point of our growth, and get more resources that ordinarily we wouldn’t have access to if we were still bootstrapping.
What’s your general advice to entrepreneurs on how to approach funding?
It isn’t a must to have external investment. You need to look at it as a growth engine for your business.