ImpactAlpha, July 15 – Rising awareness of the value of gender and diversity in business has led to a spike in venture funds led by women, investing in female founders or backing solutions for women.
In its latest report, Project Sage, a project of Wharton Social Impact Initiative and Suzanne Biegel, tallies 138 “gender-lens” funds managing some $4.8 billion, up from 87 funds with $2.2 billion in assets last year.
Almost half of the private equity, venture capital, and private debt vehicles were launched last year, many by fund managers who left other firms to focus on gender-lens investing. “This marks a shift in who has power to make investments,” write the authors.
Roughly a quarter of the funds use racial or ethnic diversity lenses, along with gender, in their investment decisions. More than 60% focus outside the U.S.
“We’re very much financial investors,” Ada Ventures’ Francesca (Check) Warner told Project Sage. “We identify when value is unrecognized. It’s mispriced value. Overlooked founders. Overlooked markets.”
- Gender alpha. Biegel has identified at least six sources of ‘gender alpha’ and cites research that shows gender-diverse companies deliver better returns and lower risk. That the venture industry still dramatically underfunds women-led companies has presented an opportunity gender-lens investors are seizing. This week, Rethink Impact raised $182 million fund II to invest in female-led tech ventures. Last week, Victress Capital closed a second fund at $21.7 million to back women-led consumer brands, services and marketplaces.
- Corporate gender lens. Project Sage identified (but did not include because outside investors are unable to invest) a dozen corporate venture capital funds with an explicit gender or diversity lens, including Bumble Fund, Intel, Salesforce Impact and Microsoft M12.