Making an impact: Investment strategies that prioritize women

Over the years, many investors have asked us how to invest capital in ways that may have a meaningful impact on gender inequality. Gender-inclusive investment strategies are designed around theories of change—or action and outcome relationships—that target gender issues. These strategies seek to empower women by increasing their access to capital, advancing workplace equity, or creating new services and products that benefit women.

Access to capital

Gender-inclusive investment strategies that focus on improving women’s access to capital are available in a variety of forms. Some investors make “angel” investments that back female entrepreneurs, which helps to establish companies in their early stages. Other investors place capital with managers that focus on investing in and supporting well-established women-led businesses. Investors may focus on funding U.S.-based firms, or they may look further afield to international and emerging markets in search of female entrepreneurs and founding teams.

Channeling capital to women-led investment teams is another gender-inclusive strategy that directly and indirectly promotes gender equality. Female fund managers across a range of private equity strategies—including venture capital, growth equity and buyout funds—not only serve as role models; they also play an important role in connecting female entrepreneurs to capital.

Venture investor Cindy Padnos has written in the past about how venture capitalists rarely considered an investment opportunity unless it comes through a personal connection.² The gendered nature of business networks in Silicon Valley was well-documented, and Padnos explained how this was a key reason why female entrepreneurs struggled to raise capital. Thus, increasing the number of female venture capitalists is a critical intervention.

Workplace equity

In the public markets, investors can choose not only to invest in companies with positive gender-related attributes, but can also use their shareholdings to effect change. Many investment managers have staff dedicated to shareholder engagement. Backed by the 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 or adequate representation of women in senior corporate leadership, the needs of women may 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 arising from the fact that women control most of the spending in the U.S., yet remain vastly underserved across many markets.³

Influence over financial decisions may continue consolidating with women over the coming decades as well. The “Great Wealth Transfer” from Baby Boomers and older generations is projected to create almost $40 trillion in spousal transfers to women, and a significant share of $105 trillion in intergenerational transfers will also go to women.⁴

Interestingly, products that are seemingly 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.

Change, empowerment and serving unmet needs

Gender-inclusive investment strategies can effect change, empower women, and meet underserved needs that exist in markets—both for investors and consumers. The generational wealth transfer that’s already underway underscores the relevance, urgency and opportunity in solving these challenges. We’re optimistic about the evolving landscape of opportunities across asset classes and the investment themes that we explored.

Investors who seek a greater depth in understanding the gender dynamics of their investment decisions should seek to employ a gender lens, which can help investors identify biases in the investment process and effectively assess the gender-related attributes of potential investments.