Venture’s most mispriced asset class is hiding in plain sight
There is a long-running story in venture about women founders in emerging markets. The prevailing narrative seems to be that the talent is thin, the deal flow is harder to source, and the businesses being built aren’t investable at scale. After four cycles and five years of running the Aurora Tech Award and seeing the talent and the businesses in the ecosystem, I can say with confidence that this story is wrong – and it’s costing investors money.
In 2021, our Award received 116 applications. In this year’s cycle – which concluded last month with Colombian founder Mercedes Bidart and her alternative credit scoring fintech Quipu taking home the prize – we received more than 3,400, from 127 countries. The reality is there is no shortage of high-traction businesses being built by women across MENA, Africa, Latin America and Asia. But there is a pattern stopping them from reaching their potential.
Throughout our pipeline, we’ve repeatedly seen the same thing: scores of capital-efficient companies with real revenue, real users, and small rounds going materially further than the average. Only most of them are raising less, and later, than the strength of their business warrants.
Our own research, drawn from more than 900 women founders who are building businesses from countries all over the world, shows what’s happening from the founders themselves. Forty-one percent report persistent investor doubt about their ability to lead and scale a tech business. Twenty-nine percent report having to clear a higher traction bar than male peers to earn the same level of investor confidence. Forty-two percent report intersectional bias – meaning the barriers they face intensify when gender combines with age, geography, ethnicity, or socioeconomic background.
These distortions are more acute in emerging markets, where investor networks are tighter, capital is more concentrated, and pattern-matching does more of the decision-making than anyone in venture likes to admit. As a result, high-potential, high-traction women founders in emerging markets are a consistently underfunded category relative to their actual performance. Or to put it in simpler words, they’re a mispriced asset.
Now is the moment to act on it. Global VC funding has nearly halved since 2021, from around $650 billion to $285 billion. The cheap money that chased growth at any cost is gone, and the market is now backing companies that can do more with less. The companies we back at Aurora already operate that way, with capital efficiency built into how they run from day one. You only need to look back at 2001–03 and 2009–12 to see that these are the conditions that lead to the strongest venture returns.
That’s why we launched Aurora Ventures, an early-stage investment programme building on our Award’s five-year pipeline and backed by inDrive. But Aurora alone is not enough. The category is too big, and the gap too structural, for one programme to close on its own – the whole industry needs to be looking at this.
Take the way VCs find their deals. Most rely on referrals from people they already know – networks that recommend more founders who look like the founders already in them. Women building in MENA, Africa, and Latin America, regardless of their merit, tend to sit outside those networks, which means high-performing companies get overlooked by investors who would otherwise back them. To find them, investors need to start looking in different places to begin with.
They also need to be alert to the different way these founders present themselves. For example, women founders are far less likely to oversell themselves or their business. They favour discipline, realism, and rigour – which, in a market used to rewarding the boldest forecast in the room, can be misread as a lack of ambition. We need to start overriding that default setting, or huge commercial opportunities will be left on the table.
And, crucially, these opportunities won’t last forever – or at least not in their current form. Once more, investors notice this category, valuations will rise, and the chance to back these companies at today’s prices will have been missed. As more women-led businesses in emerging markets rightly start to attract institutional investors and strategic partners who previously weren’t paying attention, prices will climb across the board. And in turn, the investors who waited will end up paying considerably more for the same kind of company.
There are a handful of investors already waking up to the right – and, as it happens, more profitable – thing. But they shouldn’t be the only ones. More investors need to start looking beyond the well-trodden path. The earlier they do, the better the returns will be.
