Greetings, ImpactAlpha readers!
Year in Review: Women Rising
This year, #MeToo became the shorthand for a long-overdue reckoning with sexual assault and harassment. Next year, it is our hope that every #MeToo story is matched by examples of capital backing women-led and women-focused ventures, funds and investment products.
That would move the needle on Sustainable Development Goal № 5: “Achieve gender equality and empower all women and girls.” ImpactAlpha is tracking the trend.
#Featured: Impact Voices
Meet the woman leading 700 farmers in Peru to higher incomes, climate resilience and a better future. Thirty years ago, the idyllic valley where San Martín de Pangoa sits in the foothills of the Andes looked very, very different. The conflict between the Peruvian government and the Shining Path militants made the road to town so dangerous that locals called it “el camino donde la vida no vale nada”– the road where life is worthless. As general manager of the Pangoa co-op, Esperanza Dionisio Castillo has pioneered a model of agriculture that has transformed the community.
“Doña Esperanza learns, and she shares what she knows with everyone,” says Pangoa’s president. Under her leadership, the co-op has been certified as Fair Trade and organic, is reforesting the hills and is helping young people pay for college. In a guest post on ImpactAlpha, Root Capital’s Will McAneny takes us on a tour of Pangoa’s growing business and growth impact. In the last 11 years, Root has provided more than $7 million in credit. “Pangoa has paid back every cent,” McAneny writes. “That’s $7 million that enabled Pangoa to buy coffee, cocoa, and honey at fair prices from hundreds of farmers and pay them on time, $7 million that Pangoa has used to change farmers’ lives.”
Read, “This woman is leading farmers in Peru to higher incomes, climate resilience and a better future,” by Root Capital’s Will McAneny on ImpactAlpha.
#WomenRising on ImpactAlpha
State Street’s “Fearless Girl” was more than symbolic. After the $2.5 trillion asset manager installed a bronze statue of a girl staring down the Wall Street bull, it voted against board members of male-only boards 400 times through August. The firm’s Gender Diversity exchange-traded fund (which trades as SHE), now holds one-third of publicly held gender-lens investments (or $329 million). State Street settled claims that it had paid its own female execs less than men, suggesting that there’s a long way yet to go. More on State Street.
Researchers have tallied $2.2 billion in public- and private-equity assets invested in women. Altogether, nearly two-dozen gender-lens investment vehicles now hold more than $910 million in the public markets. Separately, a tally of 58 women-focused venture-capital funds found $1.3 billion in private assets. From a small base, asset allocations specifically focused on women are rising fast. Check out the asset managers on the lists.
Here’s a baker’s dozen of investment funds and tools that are mobilizing capital for women and girls. From a vastly oversubscribed “gender equality bond,” to the first development impact bond for maternal health, to a fund for women entrepreneurs fighting climate change, 2017 has seen the emergence of women-centered investment vehicles across the capital spectrum. Some of the capital comes in the form of debt: Australia launched its first Gender Equality Bond addressing corporate leadership and pay equality, while IIX floated a bond to help female subsistence earners build sustainable livelihoods. On the equity side, funds are targeting female entrepreneurship based on business focus, maturity, and leadership diversity. Here are 13 ways capital is going to work for women.
Talk the walk. Gender-lens investors need to do more than move money toward women; they need to talk about why they’re doing so. “The only way we’ll accelerate the movement of capital at scale is by building an evidence base and normalizing the notion that investing in women is smart at all levels of the financial system,” wrote Suzanne Biegel, in a popular post this year. Own your gender lens.
Looking beyond board seats…The headline in Institutional Investor was provocative: “The research diversity experts don’t want you to read.” The piece, by Imogen Rose-Smith cited research by Katherine Klein, head of the Wharton Social Impact Initiative, that synthesized peer-reviewed research on the performance of companies with women on the board. Klein’s conclusion: no material outperformance. That doesn’t undercut the the basic gender-equity value proposition, Rose-Smith said on ImpactAlpha’s Returns on Investment podcast. “Uber is an example where treating women right has huge implications for the business,” she said. Have a listen to the “What’s the value of gender diversity, anyway?” podcast.
…to find the value in gender equity. Talent is equally distributed, opportunity is not. Only 2% of $60 billion in venture-capital investments last year went to women-run companies, Big Path Capital’s Michael Whelchel wrote in American Banker. “This is an arbitrage play for those who identify talent that the majority of the VC community has discounted and overlooked.” Gender lens is an alpha lens.
The untapped potential is immense.The more than $2 billion invested with a gender lens in public and private investments is a rounding error when measured against the opportunity: $28 trillion. That’s the potential addition to global GDP by 2025 if women participated equally in the global economy, according to an estimate by McKinsey Global Institute. The 26% boost to the global economy is equal to the size of the U.S. and Chinese economies combined. The rise of women is a megatrend.
In India, women’s lives are changing — as they change life in India. India’s 650 million women are key to realizing those global economic gains, along with gains in education, health and livelihoods that are at the heart of the global goals for 2030. ImpactAlpha’s series, Women Rising in India, introduced readers to farmers in Uttarakhand, tea pickers in Darjeeling, entrepreneurs in Bangalore, pottery makers in Manipur and a daring artist in Mumbai. Catch up with ImpactAlpha’s seven-part series, “Women Rising in India.”
We’re following the women. “Follow the money” increasingly means following the women who are raising and investing capital. From Peruvian farmers to Indian entrepreneurs to Silicon Valley venture capitalists, ImpactAlpha is doubling down on dedicated coverage of women in impact investing. Follow ImpactAlpha’s Women Rising in 2018 for news, features and special events.
Onward! Please send news and comments to TheBrief@impactalpha.com.