Womenomics: Illuminating Opportunities and Increasing Returns Through Gender Lens Investing

By Morgan Matthews

One of the most inspiring sessions I had the pleasure of joining at the 2012 Social Capital Markets conference last week was the panel on gender lens investing. The panel, titled, “Gender Lens: Moving from Gender Lens Investing Ideas to Implementation” discussed the opportunities, challenges, and harsh realities women face in business today.

The precursor to this session was a riveting plenary presentation given by Jackie VanderBrug, managing director of Criterion Ventures and gender lens investing champion. In her presentation, Jackie stated that she is “increasingly convinced that a gender lens for investing is one of the biggest underexplored opportunities for driving social impact.” So what exactly is gender lens investing? It is a relatively new concept in the world of finance, even within the realm of social impact investing. It is a “viewfinder” as Jackie puts it, for looking at different options and finding opportunities to have a larger social impact and increase returns. Jackie points out that it is a lens and not a screen; the purpose isn’t to leave men out. The purpose is to be aware of the opportunities to accelerate impact, social change and returns through various gender lenses such as access to capital, workplace equity, and products and services.

Why does investing in women have higher impacts than investing in men? Well, where to start? The case for investing in women has been proven several times over. In fact, the numbers are staggering. An article in The Economist titled A Guide to Womenomics points out that women are outperforming men in investing, achieving 50 percent higher average returns. Companies with three or more women on their boards have a 53 percent higher ROE. A Global Markets Institute report released by Goldman Sachs concluded that investing in women is the single best way to reduce inequality and drive economic growth. Data has shown that the increase in female employment slows population growth, increases GDP, and improves education rates and the health of families. Why? Women have different spending priorities than men. They spend more of their money on their family - to the tune of 80 percent of their total income compared with 30 percent of a male’s total income. Women put these dollars to work by spending them on the health, education, and nutritional well-being of their families. This has a ripple effect throughout a society.

According to Catherine Berman, Vice President of Strategy for Astia, we need to mainstream this conversation because “women are the untapped opportunity.” In the U.S., women now account for half of the MBAs, half of the PhDs, and over half of the undergraduates and those numbers are continuing to grow. This means women are becoming better equipped for the jobs of the future than their male counterparts. At this point, you’re probably thinking what I was thinking: What’s the hold up? Why aren’t more social impact firms, or traditional investment firms for that matter, investing with a gender lens already?

The main reason is that up until a few years ago, investors didn’t know where to go to invest in women. This idea around gender lens investing is still in its infancy and in response to the impressive data emerging, organizations are rising to the occasion. Root Capital, Women Equity Partners, and Women’s Venture Capital Fund are now providing vehicles for investing in women-run ventures.  These are just a few of the growing number of firms that are using multiple gender lenses to invest across asset classes, across the globe.

While women entrepreneurs and women-backed ventures are beginning to garner more attention, they still have to overcome some major barriers. There are many, but according to Berman, the ones that surface time and time again are access to capital, access to expertise, and access to the network. Despite the fact that it is 2012, gender inequality still runs rampant in the business world, and women are still facing traditional “good ol’ boys club” constructs. This is evident by the incredibly low representation of women on the boards of Fortune 500 companies, a meager 16.1 percent in 2011. In addition, panelist Natalia Olberti Noguera, founder and CEO of the Pipeline Fellowship, pointed out that only 14 percent of all angel investors are women. This is why she founded the Pipeline Fellowship, an organization dedicated to helping female philanthropists become angel investors through education and training.

Another barrier that doesn’t get much press is the women themselves. “Women don’t ask,” says Berman, “they don’t ask for the capital, and they don’t ask for the connections.” Whether this is due to social conditioning or intense self-assessment, women entrepreneurs need to become more aware of the limitations they are placing on themselves, and become more confident in their ventures so they can push the envelope further. Now that the gender lens for investing is being used to illuminate opportunities, the spotlight is on us women. Let’s show the world that we really do hold the keys to unlock a domino effect of social change that will increase impact and drive social and financial returns around the world.