Gender Smart | May 13, 2020

10x Challenge: Four ways to drive exponential growth in gender-lens investing

Suzanne Biegel
Guest Author

Suzanne Biegel

ImpactAlpha’s David Bank challenged investors to “10x” impact investing, to grow total assets under management from billions to trillions and to develop “moonshot ideas” that could catalytically grow our impact.

Solutions flowed in ranging from meeting the immediate needs of the crisis, to laying the foundations for long-term change around themes such as climate change, the racial wealth gap, and voter suppression.

It got me thinking: What would it take to 10x gender-lens investing?

Stakeholder primacy: CEOs redefine the role of business in society

10x-ing isn’t just about multiplying the amount of capital being moved, Bank notes, but about being smarter, bolder, and more intentional about how we move it. It’s not just about 10x growth. It’s about 10x good, 10x empathy, 10x listening, 10x generosity, and 10x equity.  Here are four ideas to get us started:

1. Focus on resilience. 

At this moment of intense uncertainty, good investors are more than ever looking to put their money in businesses that are likely to outlast this crisis. That means that now is the time to talk about the fact that many of the things we care about as gender-smart investors – ethical employment and supply chain practices, diverse management teams, environmental sustainability, shareholder transparency and accountability – are also proving themselves to be key to resilience.

What’s more, there are already resilience-minded vehicles you can invest in with this focus. There are myriad examples in the better ESG funds and vehicles in the public markets, and Project Sage 3.0 will identify opportunities in venture capital, private debt, and private equity. 

Small Change, Big Impact: The one-line revolution in land rights in rural India

Both businesses and consumers are going to be growing more frugal. So when evaluating an investment, it’s useful to ask yourself commonsense questions such as, What are people going to buy? What will women buy? What will businesses and public sector actors be willing to spend money on? What can be done better virtually? Who’s coming up with frugal solutions (noting that “frugal” doesn’t always mean cheap)?

The businesses that will be most resilient over the coming months (and possibly years) are the ones that are creating products that people and organizations need, and delivering them in the ways we need them. And in many cases, that’s not going to look like the aggressively masculine “unicorns” that have dominated VC over the past decade(I’ve lately been appreciating conversations about “zebras” and “camels“). 

2. Grow the number of women investors.

I was on a call recently on which someone announced, “We need a European Melinda Gates.” That’s true in the sense that it’s valuable to have high-net-worth, high-profile women opening their checkbooks with a gender lens and advocating for others to do the same . We need more people like Melinda Gates on every continent.

But alongside the billionaires and hundred-millionaires, we need to mobilize the women with $50, $500, $5000 or $500,000 to invest, too. 

Female fund managers make the case for ‘gender alpha’ in emerging markets

I think of Tracy Gray’s We Are Enough, which aims to mobilize 3 million women to invest an average of $1000 each over three years, and of Invest For Better, which aims to mobilize women as impact investors. Or SmartPurse here in the UK which aims to educate and empower all women to be smarter about their finances. Or the work of the mainstream banks who are waking up about women investors as customers. Or those like SheEO, NextWave, Portfolia, Calvert Impact Capital, and C-Note, who are literally growing new investors.

How do we mobilize more women to start investing, and connect them with the products that align with their values and impact goals?

3. Bring a gender lens to sectors and opportunities not on your radar.

Gender-smart investing can mean investing in women-owned companies or in sectors that disproportionately impact women, like reproductive health and the care economy. But it isn’t only about that. It also means using gender as a tool to analyze whether an investment is likely to succeed, whether its products or services are obviously gendered or not.

What do smart investments in mental health look like at the moment, and how does paying to gender inform that? What do good investments in education with a gender lens look like? 

Another useful question to ask is where are the sectors where women aren’t currently being represented as investors, but should be. I think here of an investment firm in the U.S. that is developing affordable housing, and using a gender lens to put in place services that are sensitive to needs of the single mothers who are disproportionately represented in public housing. I think also of my friend Stephanie Wilson, an investor in medical real estate, a sector with a product that is disproportionately used by women, but in which men are disproportionately represented as investors . Stephanie is developing an offering for women investors in this arena.

What other gender lens opportunities are out there that we’re not currently thinking about, and which could be used to grow our size and impact?

4. Create new partnerships, collaborations and relationships. 

If ever there was a moment to grow our public-private partnerships and blended finance solutions, this is it.

The social, economic, and health challenges of this crisis demand that we get all hands on deck, and we are more powerful – and more creative – when we work together.

Public and private investment must come together to support new and innovative solutions to intractable challenges, such as nutrition, financial inclusion, online education, and gender-based violence. Both sets of actors bring financial, relational, intellectual, and influencing capital in different ways.

Philanthropists can provide early and necessary support to new ventures and vehicles that may take years to turn a profit.

Nonprofits with a gender focus can leverage their expertise to help investors identify the most impactful and investable solutions. A great example of this kind of partnership, is the Financing for Moms Initiative, between Merck for Mothers, the US International Development Finance Corp and Credit Suisse, which brings together different players to invest in child and maternal health.

We need to 10x our relationships and 10x the intelligence that goes into our investment decision making. It’s also time to 10x the commitment from actors who have mostly stayed out of gender lens investing until now, such as college and university endowments (see this piece from IEN). 

More than two dozen new private gender-lens funds launched in 2018

What’s your next step?

That COVID-19 will reshape (and is reshaping) the global economy is inevitable. The question for all of us is what kind of economy we want to create as we rebuild and reshape. And as my friend and colleague Jed Emerson added on the ImpactAlpha call, to “reflect.” We need some time to really process what is going on. But then also to act. Not to wait. We can be investing now and reflecting now, simultaneously. 

For those that do have capital to invest – what businesses do you see really serving their stakeholders right now – from the multinational corporations, to the small businesses in your neighborhood – and thus have the best chance of survival and growth as we move through this?

Which historically under-appreciated entrepreneurs and innovators – from women and people of color to indigenous peoples – do we need to make sure we don’t leave behind? How can you use your investments to build a more equitable world?

Gender should not and cannot be “a sidebar” as we do this rebuilding and reimagining, writes Prachi Maheshwari at Investing In Women and Rebecca Fries at Value4Women. It is central to the world we want to create, and central to smart business.

Do you have insights of your own of how we can 10x gender lens investing? Please share them on the ImpactAlpha inclusive-capital Slack channel and within the GenderSmart community. I’d love to hear your ideas.

Suzanne Biegel is founder of Catalyst at Large Ltd. and co-producer of the GenderSmart Investing Summit.