Women are leading the way – in about 30% of ImpactAlpha’s dealflow



ImpactAlpha, March 7 – Let’s give an International Women’s Day shout-out to the women who, pardon the expression, get shit done.

As ImpactAlpha’s dealflow editor, I cover hundreds of impact investments every year. As we’ve reported, an increasing number of women-focused and women-led impact investing and venture funds are coming to market. Each announcement includes the requisite reference to the 2% of U.S. venture capital funding that goes to female founders.

That the disparity continues represents some kind of market failure, given the increasing evidence that companies with women in at least half of leadership positions deliver higher sales growth, earnings per share growth and return on assets. Startups founded by women generate more revenues than those founded by men. VC returns improve as the ratio of investments in women-led firms rises.

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So, in time for International Women’s Day 2019, we looked back through ImpactAlpha’s own deal coverage over the past year to see whether impact investors have gotten the message.

I could recall only a couple dozen or so funded ventures from our reporting that have female founders or are deliberately women-focused. Most of the ones that immediately came to mind were examples of female founders working on behalf of other women, such as the founders of menstrual products company Rael, who decided to make a better, healthier pad. Or Naramai in India, which just raised $6 million for its breast cancer screening device. Or the founders of LadyDriver in Brazil, whose ride-hailing service is focused on women drivers’ and passengers’ safety.

But after going through the 350 funded ventures ImpactAlpha reported on over the past year – drumroll, please – at least 97, or 28%, have at least one female founder, CEO or managing director.

Is that a lot or a little? A quick recap of the stats from 2018 (h/t to PitchBook and Crunchbase):

  • The 2% figure refers to solely women-led companies; 11% of U.S. venture capital goes to mixed male-female teams.
  • Globally, 17% of VC dollars go to teams with at least one female founder.
  • Women-led businesses accounted for 6% of number of venture deals in the U.S.; mixed teams accounted for 15%.
  • Globally, about 14% of venture deals involved at least one female founder.

So, the ratio of women-led companies in ImpactAlpha’s dataset is nearly double that of female-founded (or co-founded) companies getting funded in the mainstream venture capital world (of course, we’re working with a much smaller dataset than Pitchbook and Crunchbase). It’s not 50%, but it was more than I expected.

Caveat: the totals could also reflect an implicit bias – in our case, toward women-led companies. (You tend to see what you’re looking for.) It could also could reflect the greater intention and attention toward gender-equity among impact-minded investors and entrepreneurs.

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Impact unicorns

But most of the ventures had not called out the gender makeup of their leadership teams. Take  Nubank in Brazil, a digital banking pioneer in a country in which 30% of adults don’t have a bank account and consumer-credit interest rates can reach 400%. Co-founded by Cristina Junqueira in 2013, Nubank last year raised $180 million from Chinese internet giant Tencent and was valued at more than $4 billion.  

Or African workforce development company Andela, founded by Christina Sass in 2014. The company has trained and hired more than 1,000 developers and software engineers. Andela just raised $100 million from a roster of mainstream venture capital funds.

As I went through the deals, I noticed more diversity in African companies’ teams than in startups from other regions. Indeed, after the U.S., Africa had the highest number of women-led teams in our deals database from the past year. Of the 97 startups we counted, 44 were from the U.S., 15 were from Africa, and the remaining 38 were from other parts of the world.

The African Leadership University, for example, a for-profit education and workforce development institution, has a male founder but a female chancellor: Graça Machel, who was Mozambique’s form Minister of Education (and was also formerly married to Nelson Mandela). The directors of medical services, scientific services and business development at Nigeria diagnostics startup StackDx‘s are woman: Dr. Lola Salako, Jumi Popoola, and Ijeoma Onuoha respectively.

By sector, financial services, education and workforce development have the largest numbers of female founders and leaders. That could be because these fields draw a disproportionate number of women. Or it could be that a lot of global venture capital is chasing deals in these sectors.

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Democratizing investing

One observation: a number of the startups working to democratize impact investing are women-led. There’s women-focused investment platform Ellevest; community development-focused high-yield savings plan CNote; and the most recent: Megan Schleck’s brainchild COIN, a “conscious” stock account offered by financial services firm John Hancock.

Several socially- or locally-focused investment platforms are also women-led, like India’s ImpactGuru, Europe’s LITA.CO, U.S.-based Milk Money, and Brazil’s Incentiv.

I’m pleased to see that women running impact businesses are starting to get recognition from investors (though there’s plenty of room for improvement!).

I am also pleased that this International Women’s Day data-dive turned up so many companies we hadn’t realized were women-led. When people ask me what I do, I say “journalist,” not “woman journalist.” I’d wager the women founders and business leaders in our dataset of deals would say “entrepreneur” or “founder.” They’d probably talk about their business, not their women-led business. And then they’d get back to getting shit done.

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