Nigerian investment firm exceeds US$20m target to support female-led start-ups

A Lagos-based impact investment firm has closed its first institutional fund to support female-led businesses and tackle gender inequality.

Aruwa Capital Management has exceeded its initial US$20m target and aims to bridge the investment gap faced by women in Africa.

The fund will invest between US$500k and US$2.5m in women-focused small and growing businesses in Nigeria and Ghana, targeting investments in sectors such as healthcare, fintech, renewable energy and essential consumer goods.

“Having launched the fund in October 2019, shortly before the COVID-19 pandemic, we are very grateful for the confidence of world-class institutional investors who have put their trust in us and share our vision for the continent: generating superior returns, while having a significant socioeconomic development impact in the countries we invest in,” said Adesuwa Okunbo Rhodes, founder of Aruwa Capital Management and ex-JP Morgan banker.

“We are also delighted to have been able to mobilise 30 per cent of our fund from local investors, who have a first-hand understanding of the operating terrain, as well as mobilising global capital from well-respected names, a trend we hope to see continue.”

She added: “We are excited to continue showcasing women’s untapped potential in society through our investment portfolio at Aruwa Capital.

“Global data has shown that investing with a gender lens improves financial returns as well as providing a multiplier effect for social impact in local communities due to the role women play. We look forward to showcasing this in Africa specifically.”

Adesuwa Okunbo Rhodes founded Aruwa Capital Management in 2019 when she started to address the investment gap women-led enterprises face in Africa.

According to the firm’s research, women comprise 40 per cent of all small and medium enterprises (SMEs) yet receive only one per cent of start-up capital due to the region’s lack of female capital allocators.

“The fund aims to create more sustainable and scalable pathways for economic growth and inclusion in the region,” the founder explained.

To date, the fund has made six investments, committing over 45 per cent of its capital into a diversified portfolio of growing companies.

Its first institutional and anchor investor is Visa Foundation, followed by other investors such as Mastercard Foundation Africa Growth Fund, Nyala Venture, backed by Financial Sector Deepening Africa Investments and other family businesses from Africa, Europe and the US.

Najada Kumbuli, head of investments at Visa Foundation, said: “We are pleased to be the first institutional investor in Aruwa Capital Management.

“We deeply believe that to address the financing gap women-led small businesses face, we need to empower and invest in more women-led investment funds like Aruwa.

“We were impressed by Adesuwa’s track record and approach to tailoring the fund’s financing to small business needs. We believe the team’s deep commitment to driving equitable and inclusive economic growth through investments will support the business owners and their communities.”

Sam Akyianu, chief of party at the Mastercard Foundation Africa Growth Fund, said: “We selected Aruwa Capital as one of our first investments because we were impressed by the team’s grit, conviction and depth of analysis, their value addition for early-growth stage SMEs in Nigeria and their commitment to driving impact for women and youth.

“We look forward to working with the team to help make Aruwa Capital a success story.”

Relatively few African women are turning new businesses into established ones.

Data suggests that limited business networks put women at a distinct disadvantage when it comes to growing a company, as they are less likely to have access to investor networks, know other entrepreneurs or invest in businesses.

A study from the African Development Bank Group found that women entrepreneurs’ perceptions about their business credit-worthiness contributes to the large gender financing gap in Africa, particularly in the north of the continent.