Say it with… Gender Lens Investing

Despite the importance of active participation of women in the development of digital and mobile technologies only 9% of all global Venture Capital deals involved start-ups with a female CEO. The time has come where investors need to change funding structures and we recommend all investors to apply a strategy to develop a gender-inclusive financing landscape: put on a gender lens!

So what does it mean to put on a gender lens? Gender Lens Investing is as a new tool to include non-financial measures in the value assessment of ventures. Applying a gender lens in the investment process can be considered in many ways. These range from investments in companies where gender equality is visible in the value chain to investments in companies founded or lead by female entrepreneurs. Funding companies offering products and services that specifically address women’s rights and justice issues or products and services that display a positive impact on women and girls also present a strong gender lens.

Project Sage, a research project tracking private equity and debt funds with a gender lens, found that the current supply of capital available to female entrepreneurs lies at $2 billion. This is a small number compared to an overall demand for capital for women entrepreneurs of $280 billion to $320 billion estimated by the World Bank.

So what is out there? To date, a total of $987 million have been raised by institutional gender bonds estimated by KM Capital. Additionally, Project Sage found that $1.14 billion has been raised by 58 examined funds with gender specific criteria, of which 81% are based in the US and deploy 82% of the funds domestically with Latin America and Africa as the primary receivers of the remaining funds.

One thing is certain, Europe and needs to step up its game in terms of gender considerate funding options. Currently, we find ESPIRA, AllBright, Rising Tide Europe , THE NEXT WOMEN, OIKO CREDIT as pioneers on the European landscape. In Africa established funds such as Hivos, GLOBAL PARTNERSHIPS, rootcapital and SHAREDINTEREST provide female founders with funding options and new funds have been launched to support the movement such as  Alitheia Identity, victus global and Samata Capital.

In terms of acceleration and incubation programmes, SPRING Accelerator, F-LANE Accelerator, She Leads Africa Accelerator, HEALTHYMAGINATION by Miller Center, ANGIN Accelerator and KINARA Impact Accelerator lay the foundation for investments in female founders. Through focusing on mentoring and advising female-led ventures and ventures which actively address and empower women in society, accelerator programmes are vital for female founders in search of financial and knowledge-based support.

Fundamentally, we need investors to become gender smart by addressing diversity and equality in their decision making. The difficulty of including gender considerations in investment decisions lays not within the fact that investors simply do not address it, but rather within the lack of knowledge on how to address gender. As investors oftentimes consider social values such as diversity and equality and the financial profitability as two separate factors, they face difficulties in including social measures in their financial-oriented investment portfolios. It is time for investors to see the financial opportunity in social investments and actually consider them as parameters of financial success. Investors need to realise that they are missing opportunities when not taking gender into account.

Since women make up 50% of society, including gender analysis in all areas of due diligence from leadership, governance and policies to target markets, product development, marketing and PR to supply chain and community engagement is highly important, especially from a financial point of view.

Article by Christina Leonhart