A Big Step Forward For Gender Lens Investing

As published on LinkedIn Influencers on July 19th, 2020.

One of the biggest buzzwords in philanthropy is impact. And it’s easy to understand why. It’s human nature to want to know that your time, work, and resources are having a positive impact on the communities you’re trying to serve. Impact based philanthropy is nothing new. However, it’s only relatively recently that this idea of impact has taken hold in the financial sector beyond a simple measure of ROI. In fact, it was only in 2007 that The Rockefeller Foundation first coined the term impact investing, wherein social and/or environmental impact was sought alongside financial return. Two years later, this idea was applied to gender, and in 2009, the term gender lens investing was officially coined.

Since then, there has been an explosion of research in this area. Last March, I published my latest top reports list, which includes robust sections on both impact and gender lens investing. Additionally, Jackie Vanderbrug and her co-editor Joseph Quinlan published Gender Lens Investing: Uncovering Opportunities for Growth, Returns, and Impactin 2016. Jackie, as well as Joy Anderson of the Criterion Institute, have both been pioneers of gender lens investing for over a decade now. I am honored to call these women friends, and I was proud to have provided early philanthropic support for their groundbreaking work.

So what exactly is gender lens investing? This term is constantly evolving due to the relative infancy of the movement, but in general, it refers to an examination of financial investments through a gender lens. Let me give you a couple of examples. Is the company/investment run by or founded by women? Does the company/investment use gender equitable practices throughout its organization? Do the products or services that are funded result in a positive impact women and girls? The list of questions goes on, but in short, what will be the impact of an investment on women?

The why of this approach is that “incorporating a gender analysis into financial analysis will lead to better outcomes. Through the creation of financial products and vehicles that reflect an understanding of the gendered nature of our world, innovations with the field of gender lens investing will create a new set of investment opportunities.” A fair criticism of this framing is that gender does not exclusively mean women, and I agree. The good news is that in the more recent past, this field is evolving to be more inclusive with acknowledgment that gender is a fluid spectrum.

I firmly believe that finance is feminism’s next frontier, meaning that if we truly want to achieve gender equity, we, royal we, need to be putting our money where our values are. It is not the point of this article to make the case for gender equality, and I firmly refer you to the aforementioned report list if you are still searching for evidence that inequality exists. Otherwise, last time I checked, there were three things we can do with our money: give it away, spend it, and invest it. To date, only a tiny sliver of investable assets are deployed with a gender lens, but that is changing, and this week, a new resource was published to make this strategy even more easily accessible.

Project Sage 3.0: Tracking Venture Capital, Private Equity, and Private Debt With a Gender Lens is a groundbreaking overview of the current landscape of gender lens private investing. It is also a review of how far the field has come since 2017 when the earlier version of the report was launched. The results are encouraging, with 138 identified funds deploying capital with a gender lens, and over $4.8 billion in total capital raised. Furthermore, only 38% of the funds in this year’s report listed North America as their target geographic location. In 2017, this number was 80%, so it’s safe to say that gender lens investing is officially going global.

The list of findings in this report goes on, but one stat in particular jumped out at me. The number of gender lens investing funds has increased by over 58% from just one year ago, and 138% from 2017. While this is good news, there is a downside to this statistic, in that many of the funds are micro-funds, meaning small, and they have incurred challenges while fundraising in the current environment. Due to the barriers to investment by institutional investors, most of these funds rely on individual investors and family offices to get them up and running. The challenges and opportunities faced by emerging managers, especially those started by women and/or people of color, will be the subject of a future post. For now, let’s just celebrate the many, many funds that are up and running and are made visible by this report. And better yet, if you have capital to put to work, let this report serve as a guide for where to look. Embedded within are people who, with our support, will become the next wave of investment leaders. Like it or not, we are a country and a culture that lifts up investment professionals for their expertise and guidance, and we would all benefit from having a more diverse set of voices.

This report happened because of the incredible and ongoing leadership of Suzanne Biegel. Suzanne is the founder of Catalyst at Large, a leading think tank in the arena of gender lens investing. She also serves as a senior advisor to the Wharton Social Impact Initiative, a cross-disciplinary research center specializing in impact investing for social good and the publisher of Project Sage. Once again, I am honored to call this woman a friend and mentor. You can learn more about Suzanne HERE, and find more of WSII’s research HERE. And huge thanks to her project partner Sandi M. Hunt and project manager Alyssa Matteucci.

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