Gender Lens Investing: A Shared Vision
SVX is committed to embedding greater Justice, Equity, Diversity, and Inclusion in impact investing as one of our strategic priorities. This month, we’re sharing a collection of blogs on gender equality in impact investing and social entrepreneurship featuring knowledge, insights, reflections, and case studies. We hope this collection of blogs will both inform and inspire you to engage with Gender Lens Investing (GLI) and women entrepreneurship. This blog is a reflection on GLI from our team member Li Jiang, Impact Fellow. She reflects on the importance and impact of GLI, including six tips to start incorporating GLI in your investing strategy.
In the book Sapiens: A Brief History of Humankind, Yuval Noah Harari writes, “humankind’s success was due to our ability to create and sustain grand, collaborative beliefs. These shared beliefs enabled human beings to form large groups and accomplish great things.”
In the book The Soul of Money, Lynne Twist described her experience with The Hunger Project in Bangladesh. When villagers in a community were encouraged to dream about their future without relying on international aid and share their dreams with each other, they were able to collaborate, discover the resourcefulness within them and build a future for the community.
These writers agree — a shared vision is powerful. It is beyond what you or I believe on an individual level — it represents what we all believe as a community and acts as a guiding light for our collective efforts to grow with creativity, abundance, sufficiency and resourcefulness.
Imagine a world where a school-aged girl doesn’t have to drop out of school because she needs to take care of housework; imagine a world where child care responsibilities do not hold back a woman from advancing her career; imagine a world where femininity is appreciated at workplace rather than being associated with weakness and lack; imagine a world where business decisions, regulations and policies are made out of empathy and care instead of the pursuit for power, money and resources…This is the shared vision we have, women’s representation in decision-making and their ability to deploy capital will help bridge the gender gaps and shape a better future for ourselves and our next generations to live in. This is the reason for investing in women, investing in diversity, and investing in social change and a better future.
“Money is like water. It can be a conduit for commitment, a currency of love. Money moving in the direction of our highest commitments nourishes our world and ourselves. What you appreciate appreciates. When you make a difference with what you have, it expands. ”
― Lynne Twist, The Soul of Money
In the funding landscape for women-led enterprises, in diverse leadership and in diversity in the workforce, we are witnessing a picture of scarcity.
Despite the fact that women entrepreneurs outperform their male counterparts on measures including revenue generation, job creation, and overall business performance and growth, startups with women leadership get little funding support. Venture capital investment into women-led companies made up only 2.8% of all investments in 2019, and since the start of 2020, overall deal activity for women-founded startups has actually fallen. More capital flew into the private market, but “people are backing those already backed, and the bigger companies and funds are getting most of the new capital”, Forbes reported.
The household duty, childcare work and other caregiver responsibilities are preventing women from a non-disruptive career and career advancement. According to the report conducted by the International Labor Organization in 2018, globally, “women perform 76.2 per cent of total hours of unpaid care work, more than three times as much as men.” The report also shows that global female workplace participation rates are declining from 1990 to 2018, while female participation in high income countries has reached a peak and is projected to decline.
Women leadership is still the minority in decision-making, resulting in less budget allocation on female matters, compromised regulation and laws in protecting the rights of women. A 2019 report from the Canadian Venture Capital and Private Equity Association (CVCA) and BDC Capital shows that only 12 percent of partners in private equity firms in Canada were female. Statistics Canada shows that a total of 5,128 women sat on a board of directors in 2018, representing only 18.3% of all directors. Data from 2017–2018 for S&P 500 firms shows that women hold only 5% of CEO positions.
Domestic violence, lack of control over land, and pay inequality, these are just a few of the many issues women are experiencing. It is urgent and crucial to invest and empower women, and reimagine a future for all.
We believe gender-lens investing is crucial in advancing social change. So what is gender-lens investing (GLI)?
GLI is deliberately incorporating gender factors into investment analysis and decision-making processes, intentionally seeking opportunities in innovative solutions designed to close the gender gaps and serve women and girls, and promoting gender diversity in the workplace. To learn more about GLI, you can read our primer here.
There is no “One-Size-Fit-All” approach to gender lens investing. Here are six tips to get you started in GLI.
Identify your privilege
Become aware of your own privilege, whether it is race, gender, class, sexual orientation or other aspects that may help you gain an advantage over others in the society. This process can be uncomfortable and challenging, but the awareness helps you gain clarity on important issues such as what GLI means to you personally and professionally, and what it means to the investment firm.
Review your past investments and current investment portfolio. How many of these investments gave female entrepreneurs access to capital? What is the value and mission of the companies you invested in? How many of these ventures provide products and services to improve women and girl’s health, their participation and engagement in the economy? Review the workforce within the investment firm. How many board members and senior leadership are gender-diverse, and how many entry-level staff are gender-diverse? How is the decision-making process influenced by diverse perspectives?
Advance workplace equity
Developing EDI (equity, diversity, inclusion) strategies and policies within the workplaces allows investment firms to gain diverse perspectives and experiences that are crucial to GLI. For instance, in the recruitment process, seek channels that are more accessible to women candidates, use inclusive languages on job postings and during interviews, and communicate and set targets to recruit more women. Provide opportunities for women to succeed at all levels within investment firms, regularly review retention rate and the promotion of women.
Be explicit about your commitment in investing in diverse-gender-led businesses. Are you communicating your gender lens mandate through your mission, vision and value proposition? Integrating a gender lens in investment thesis and strategies is also a good start, others such as setting targets for women applicants, including a diversity assessment section in due diligence templates, setting gender-related impact indicators, and building and sharing successful gender lens investing cases.
A noticeable difference between traditional investments and gender-lens investments is the relational rather than transactional piece in investments. In GLI, investors and entrepreneurs share their values more internally and are more open about the challenges they are facing. This human-focused approach promotes transparency and mitigate investment risks. Mentorship and advisory is common in GLI practices and this creates trust in the partnership over the long-term between investors and investees.
Hanging social norms requires creativity. Many GLI cases have shown us the possibility and success of being creative. For example, investors are encouraged to attend female-focused conferences and networking events to develop new pipelines and seek new deal sourcing channels. Adopt creative investment strategies like revenue-based investment, cash flow based repayment, blended finance models, and more.
Lynne Twist challenges readers in The Soul of Money: “I challenge you to move the resources that flow through your life toward your highest commitments and ideals, those things you stand for. I challenge you to hold money as a common trust that we’re all responsible for using in ways that nurture and empower us, and all life, our planet, and all future generations. I challenge you to imbue your money with soul — your soul — and let it stand for who you are, your love, your heart, your word, and your humanity.” As impact investing continues to grow, we must bear in mind our shared vision — the vision of a future where capital flows equitably and abundantly to women and girls.