More than a decade ago, the concept of "gender lens investing" emerged, aiming to support the economic and social well-being of women. Since then, the field has grown significantly, with numerous venture funds, accelerators, and incubators actively investing in and supporting women founders, funders, and customers.


However, despite remarkable growth, the gender lens investment sector remains relatively small compared to the broader asset management industry. To effect meaningful change and bridge this gap, asset managers of all kinds must consider strategies for creating more equitable investment portfolios. Taking inspiration from the development industry's Gender Mainstreaming approach and Accion's Venture Lab, here are eight strategies to foster inclusivity throughout the VC investment process.


Sourcing Strategies:

  1. Make contact information more accessible: By making contact information publicly available or providing a designated pitch submission form, venture capitalists can ensure underrepresented founders, who often have smaller investor networks, have equal access to capital. This approach allows investors to discover differentiated deal flow and diversify their pipeline.

  2. Proactively explore new sourcing channels: Emerging markets have seen a rise in resources for women founders. By engaging with networks like WeRaise (Pakistan), Amela (Latin America), and WeTech (Nigeria) through office hours, pitch competitions, or educational webinars, VCs can tap into a broader range of opportunities.

  3. Monitor progress: Tracking the gender composition of founding teams using a CRM tool enables VC firms to assess if women founders progress through the pipeline at the same rate as male founders. Identifying potential stages where women are more likely to face barriers allows for targeted interventions.

Diligence Strategies:

  1. Reflect on your word choice: Research shows that investors tend to ask women founders about risk while focusing on opportunity with male founders. To avoid bias, investors should examine their language in job descriptions, blog posts, and website copy. Tools like Kat Matfield's Gender Decoder can assist in identifying and rectifying subtle biases.

  2. Discuss diversity during diligence: The diligence process offers an opportunity to gauge founders' perspectives on building diverse teams and fostering an inclusive culture. Ensuring alignment with founders on diversity goals during this stage makes it easier to address these issues later as a board member.

  3. Address team demographics in investment memoranda: Holding oneself accountable to diversity goals requires including team demographic data in official investment memoranda. This information serves as a reference point when considering companies for follow-on investments and encourages ongoing efforts to prioritize diversity.

Post-Investment Engagement Strategies:

  1. Request disaggregated data: To identify gender disparities and support founders in reaching a broader customer base or better serving existing customers, investors should ask for disaggregated data when portfolio companies report on key performance indicators. This practice enables targeted interventions and fosters a more inclusive approach.

  2. Leverage your platform and relationships: By actively promoting women and other underrepresented founders who are transforming the financial services landscape, investors can use their platform and relationships to create greater awareness and foster an equitable, inclusive ecosystem.

In conclusion, incorporating a gender lens in investment decision-making processes is crucial for achieving greater gender equality and financial inclusion. These eight strategies provide a roadmap for asset managers to enhance inclusivity in their investment portfolios. By implementing these approaches and continuously evaluating and adapting their practices, investors can contribute to the growth of a more equitable and diverse entrepreneurial ecosystem. It is through such systemic changes that we can unleash the full potential of women entrepreneurs, funders, and customers, fostering a world where everyone has equal opportunities to succeed.

Cait Abernethy
Post by Cait Abernethy
May 18, 2023