While gender-lens investing is a relatively new field, Project Sage finds that it’s growing quickly and dynamically. Generated by the Wharton School Impact Initiative, the report “Project Sage: Tracking Venture Capital with a Gender Lens” provides a look into the current state of gender-lens investing in private equity, venture capital, and private debt funds. 58 such funds were identified and, as of mid-2017, they had raised at least $1.3 billion toward their goals.
Defining the “Gender Lens”
Coauthors Suzanne Biegel, Sandra M. Hunt, and Sherryl Kuhlman only included funds that explicitly mentioned gender. Funds that had an outsized positive impact on women, but did not explicitly name them, were excluded. Ones that passed the first test were classified into one of three subcategories:
- Quantified Gender Mandate
- Gender Mandate
- Gender Consideration
The authors discovered that more than a third of the funds were founded in 2017—more than in any other year—and only three funds were over 10 years old. Among those that provided adequate data, 41% reported that they were fully raised. The mean fund size was $368 million, the median $15 million.
North America dominated the field. This is perhaps not surprising, as North America has the world’s largest venture capital market. From an industry perspective, tech- and health-focused companies were the most popular, with environmentally friendly companies ranking third.
Nearly 60% of Project Sage-identified funds had all female partners, while in the industry as a whole the number of women venture partners and investment committee members is less than 10%. By comparison, women hold just over 20% of the board seats of Fortune 1000 companies that make up the Gender Diversity Index.
Even in this space, women working to raise funds may face hurdles. The report found that the more women in leadership roles, the lower the total capital a fund raised. This may present an opportunity for impact investors looking to make a difference through funds with a gender lens. Investing in women-led funds could not only do good via injecting capital into companies that support women, but it may also help bridge finance’s gender gap.
A Starting Point
In addition to breaking out broad themes found in funds investing with a gender lens, the Project Sage report offers detailed data on each one. This data could provide a useful starting place for impact investors who would like deploy their capital using a gender lens. It may also be useful to fund managers who’d like to refine their investment offerings to take into account the way that their capital impacts gender issues. Since the report is not exhaustive, if the pace of growth continues, there will probably be many additional funds on the market that use a gender lens.
In addition to several corporate funds actively looking for ways to use capital to benefit female entrepreneurs, the authors note that there are likely more than 50 additional funds already out there doing work in support of gender issues without explicitly mentioning a gender lens in their materials.
Given the short time these funds have been around, there are still a lot of unanswered questions about financial performance. Right now, it’s a waiting game. With a rapidly changing space and data capture growing ever more precise, it’s likely that in the near future researchers will be able to aggregate more robust analytics. The Project Sage authors end with a number of questions that they look forward to answering as data becomes available.