JANUARY 2018

Gender Inclusive Investment Strategies

Category: Executive Committee, Impact Investing

By Lisette Cooper, PhD, Managing Partner, and CIO of Athena Capital Advisors 

As a female-founded firm, we are often called upon to share our insights on gender lens investing. Specifically, a growing number of investors are asking how they can allocate capital in ways that have a meaningful impact on gender inequality. Athena Capital’s recent white paper, “Investing in Gender Equality” reviews the practice of gender lens investing and examines specific gender inclusive strategies that can be integrated into an investment portfolio.

Gender inclusive investment strategies are designed around theories of change, or action and outcome relationships, which target gender issues. They seek to empower women by increasing their access to capital, advancing workplace equity, or creating new services and products.

Access to Capital
Gender inclusive investment strategies focused on improving women’s access to capital are available in a variety of forms. Some investors make “angel” investments that back female entrepreneurs. Other investors place capital with managers that focus on funding women-led businesses. Patamar Capital runs a fund and accelerator for women-backed companies in Southeast Asia that might appeal to investors focused on emerging markets. By contrast, True Wealth Ventures pursues risk-adjusted, market-rate returns by investing in US-based, women-led startups. Golden Seeds is another US-based investor that provides seed and early-stage capital to female entrepreneurs.

Channeling capital to women-led investment teams is another gender inclusive strategy that directly and indirectly promotes gender equality. Female fund managers not only serve as role models; they also play an important role in connecting female entrepreneurs to capital. In a 2010 white paper titled, “High Performance Entrepreneurs: Women in High-Tech,” Cindy Padnos, founder of Illuminate Ventures, notes that venture capitalists will rarely consider an investment opportunity unless it comes through a personal connection. The gendered nature of business networks in Silicon Valley has been well-documented and is a key reason, Padnos concludes, that female entrepreneurs struggle to raise capital. Thus, increasing the number of female venture capitalists is a critical intervention.

Workplace Equity
In the public markets, many investors not only invest in companies with positive gender-related attributes, but also use their shareholdings to effect change. Investment managers such as Trillium Asset Management, Walden Asset Management, and Boston Common Asset Management have staff dedicated to shareholder engagement. Backed by holdings of their investment funds, these advocacy professionals engage with corporate leaders across sectors and geographies to encourage the adoption of gender inclusive policies. In addition to establishing an expectation of transparency, engagement efforts focused on gender inclusive policies make companies and their employees aware that investors care about the effect gender diversity has on corporate performance.

Products and Services
Without female-led innovation as well as adequate representation of women in senior corporate leadership, the needs of women can be misunderstood and even ignored. Businesses that focus on the nuanced needs of women alongside those of men contribute to efforts to promote women’s empowerment and gender equality.

Investors focused on products and services designed for women often emphasize a particular category, such as women’s health or financial services. Others may pursue opportunities that grow from the fact that women control most of the spending in the US, yet remain vastly underserved across many markets[1].

Interestingly, products that are gender neutral, such as cell phones, can be tremendous enablers of women’s empowerment. For example in developing markets, the availability of cell phones to access digital financial markets, has the potential to lift millions of women and their families out of poverty[2].

Compelling Opportunities
A gender lens can inform understanding of the evolving landscape of opportunities across the asset class spectrum and across the themes of access to capital, workplace equity, and products and services for women. I invite you to read our white paper, “Investing in Gender Equality,” to learn more about Athena’s experience working with clients that invest to achieve gender equality.

 

 

 

 

[1] Michael Silverstein and Kate Sayre, “The Female Economy,” Harvard Business Review, September 2009. Accessed via: https://hbr. org/2009/09/the-female-economy

[2] Melinda Gates. 2015. “Cellphones for Women in Developing Nations Aid Ascent From Poverty.” New York Times, April 1, 2015 https://www.nytimes.com/2015/04/02/business/dealbook/melinda-gates-cellphones-for-women-aid-ascent-from-poverty.html?_r=0

 

Specific funds mentioned in this document are for illustrative purposes only and were not selected for performance based reasons.