Gender Smart | July 26, 2018

The ImpactAlpha: After #MeToo and #TimesUp, #GenderLens investing has its moment

David Bank
ImpactAlpha Editor

David Bank

A few years ago, I was one of only a small handful of men at an early gathering exploring the contours of “gender lens investing.”

More men should soon be clamoring to break into this girls’ club,” I wrote. “Women’s empowerment looks to be one of the transformative economic trends of the 21st century.”

Who knew? (Answer: women.) If the Women’s March, the #MeToo movement and the growing awareness of inequities in access to capital raised the questions, gender-lens investing has become at least part of the answer.

“The acknowledgment that gender matters in business, that paying attention to gender makes a material difference – people are really open to the conversation,” said Suzanne Biegel, who is co-producing the first Gender-Smart Investing Summit in London in November. Bankers, financial advisors and investors, Biegel told me, are saying, “I get the ‘why.’ Now I need the ‘how.’”

Suzanne Biegel: How investing with a gender lens can create a powerful women effect

Women are providing the guidance. For example, SheEO, a nonprofit based in Toronto, recruits groups of 500 women who donate $1,100 apiece to funds that make zero-interest loans to five women-led companies. The “activators” also provide connections and mentoring. “It’s a really different way to think about how we deploy capital,” Biegel told me.

The ‘how’ will become clearer as even more capital starts to flow. Investors from Root Capital to Small Enterprises Assistance Fund to Alphamundi have taken lessons learned from gender-lens investing initiatives and applied them across their portfolios. The Emerging Markets Private Equity Association, the Global Impact Investing Network and the Aspen Network of Development Entrepreneurs all have established working groups on gender.

One finding: women-led businesses tend to be undervalued in comparison to companies run by men. That suggests there may be gender bias in negotiations or term sheets or valuations (ya think?).

Such learning-by-doing is likely to “infect the hosts” at larger institutions as well. French President Emmanuel Macron is making gender a hallmark of his leadership of the G7 next year. A half-dozen development-finance institutions from the U.S., Canada, the U.K., France, Italy, Japan and Germany have endorsed the “2X Challenge,” a plan to mobilize $3 billion for investments in developing countries that advance women’s leadership, employment and access to capital. Goldman Sachs has pledged to invest $500 million (of client capital as well as its own) in private, late-stage business that are founded, owned or led by women and to back women investment managers starting their own funds. The Bank of Montreal is committed to lend C$3 billion ($2.3 billion) to women-owned Canadian businesses over the next three years. And that’s just a sampling of recent ImpactAlpha headlines.

Powering Potential,” a report earlier this year from BNY Mellon and the U.N. Foundation found that bringing women’s access to financial services to parity with men’s could generate $40 billion a year in new revenues. Women-run small and growing businesses make up 30% of registered global businesses yet only one in 10 have access to the credit they need, suggesting a $285 billion opportunity. Already, women investors generate about $120 billion of the $415 billion in annual revenues of global investment industry and are growing their assets 6% faster than men each year.

“That’s a big focus of why the banks are paying attention,” Biegel told me. “They know, ‘If we are not getting it about what women want and what women need, we are going to see them walking out the door.’”

Women’s leadership delivers a prize for all: long-term sustainable growth

In a survey last year, Biegel, an advisor at the Wharton Social Impact Initiative at University of Pennsylvania, last year identified 58 venture capital firms strategically investing in women (defined as investments in companies that are led by women, that improve the lives of women and girls or that “focus on women throughout value chains, products and services, or leadership.”). For the next edition this fall, Biegel expects to list about 90 funds.

Meet 58 venture capital funds that are betting on women around the world

ImpactAlpha is a media partner for the London conference. Biegel said she’s excited to “have all these actors in the room, to roll up their sleeve and get work done.” She’s aiming to have men represent about one-quarter of the delegates; so far, the registration numbers are closer to 15% male.

That suggests that women still have the edge in capturing the impact alpha of gender-lens investing. Biegel is not averse to stirring up a little FOMO.

“You want to be in this room,” she says. “This is where the smartest minds are going to be.”