ImpactAlpha, November 17 – Venture capital, private equity and debt firms raised $4.8 billion for strategies focused on gender equity in 2019, up from just $1.1 billion in 2017 (see, “Development financiers seek to hook private investors on gender lens investing“). A new guide from U.K. development finance institution CDC Group and the International Finance Corp. aims to provide fund managers “with a road map to strengthen gender diversity within their firms, and incorporate a gender lens into investment decision-making.”
“Gender-smart investing is not only about counting women and men,” write the authors of “Private Equity and Value Creation: A Fund Managers Guide to Gender Smart Investing.” Rather, it is about how gaps between women and men influence business performance and thus the performance of investment funds. That includes women’s representation in organizational leadership; workforce diversity; a gender-inclusive value chain; how products’ design and distribution are serving women; and how operations benefit or harm women.
For fund managers, gender strategies begin at home, through commitments to build women’s leadership and gender-balanced investment teams in their own firms. Externally, fund managers can adopt a gender-lens by choosing a gender-lens focus area (such as advancing women in leadership or inclusive value chains), defining specific gender-related outcomes to target and incorporating benchmarks into deal terms and legal agreements.
Management and measurement
The guide offers a list of deal-level indicators and benchmarks. How to quantify whether a fund is empowering women entrepreneurs? Look for discrepancies between how much and what type of capital is invested in male versus female founders. How to determine if a portfolio company is enabling a gender-inclusive value chain? Compare how many suppliers are male- versus female-led, and the size of the contracts they’re awarded.