Since 2017, the number of gender lens funds has increased 3.5-fold. Even though capital deployed with a gender lens has reached more than $6 billion, it is still a small chunk of the total ~$5 trillion in global private equity funds. With so much room to grow, there is a lot of talk about designing and providing assistance to help fund managers and financial institutions increase their reach on women. But where should investors start from? And where should they focus their efforts? Financial intermediaries have different approaches and levels of awareness of gender lens investing (GLI) and it is clear that there is not a one-size-fits-all ‘assistance’ solution. So, the question is: how do you design an effective GLI intervention and assistance program for a diverse group of financial players?
A best practice comes out of our recent work with the Dutch Good Growth Fund (DGGF). One of DGGF’s strategic priorities is to provide more financing to female entrepreneurs. Therefore, it is crucial for the organization to work together with its clients – including both financial institutions and fund managers – and help them to apply a gender lens in their investing processes. To achieve that, the DGGF looked to develop a tailored GLI assistance program for its financial intermediaries that was scalable but also accounted for differences in GLI practices. As a first step, we worked together with DGGF to map where their clients stand in terms of GLI ambition and practices.
A mapping exercise is essential in designing effective GLI interventions and assistance programs, as it provides investors with an understanding of where financial intermediaries are in their GLI journey. In particular, investors should understand the intermediaries’:
- Awareness: their level of knowledge of the business case and best practices related to GLI;
- Commitment: to what extent GLI is integrated in organizations’ mandate, strategies, targets, and how are responsibilities assigned;
- Capacity: the practices they undertake to incorporate gender considerations in the investment cycle (in pipeline building, screening, due diligence, contracting, monitoring and reporting, engagement, and/or credit practices and product design for financial institutions).
This is crucial information to have for both potential invitees and those already in portfolio, as financial intermediaries with different levels of GLI awareness and integration will need different levels of support. Frontrunners who have already integrated GLI in strategies and practices might need tailored help in fundraising and marketing. On the other side of the spectrum, clients who have not yet built up interest and knowledge of GLI will need help understanding the business case and the first steps they can take (either currently or for their future funds). And those in the middle – clients who have interest in integrating a gender lens but not yet the capacity to do so – will need help with understanding pipeline building strategies, assessment methods, and monitoring tools.
For DGGF, the survey and mapping harvested crucial in-depth information on where clients stand in terms of gender awareness, capacity, and strategy. The results will feed into a tailor-made GLI Technical Assistance program being developed in 2022.
If you want to know more about our work in gender-lens investing, please reach out to Teodora Nenova.