Every Thursday morning, we record a new episode of “Dollars and Change,” the social impact show on SiriusXM’s Business Radio channel powered by The Wharton School. Our summer fellows frequently sit in on this live tapings, hearing insights on impact from CEOS, entrepreneurs, civic leaders and more.
Undergraduates Lucy Porter and Madison Briggs, and summer intern Monica Volodarsky share their response to a special gender lens investing- themed episode.
Gender lens investing, as described by Jackie Vanderbrug, is a lens that allows the investor to bring into focus what they might otherwise miss.
Gender lens investing often goes hand in hand with impact investing. It allows a better understanding of risk and opportunity by exploring aspects of an investment that may otherwise go unseen.
A gender lens investor may ask “what’s the role of women consumers in your company?”, “what’s the role of male consumers?”, or “who is satisfied?” These questions help illuminate the implicit biases everyone has, and allow the investor to bring into focus what they may otherwise miss. As the demand for social impact, specifically social impact surrounding women advances, structures are being created to accommodate it.
In one segment, we heard from Simi Shah, Managing Director of Women Effect. Women Effect allows the active, diverse investors involved in the gender lens investing space to come together in a sophisticated online community. (There is an open version of the site available for anyone to go explore and leverage some Women Effect tools, too!) As the space grows, new systems like these allow capital to move faster and more strategically.
These investments are not limited to any one sector or investment vehicle; a gender lens can – and we would argue, should – be applied to any investment. While some investors may seek to upheave their portfolios and center them entirely on investing directly in, for instance, women entrepreneurs, other investors may want to tackle other aspects. For example, they may consider questions like: how gender diverse is the board? Does the product they are investing in have a positive impact on women? But the metric to determine the legitimacy of any move towards gender lens investing is constant: it’s about asking questions. Where does the value lie in my investments? Who holds the value? Where does the value go?
Venture capital is an example of a system where applying a gender lens reveals intrinsic issues.
In another segment Sarah Kaplan, professor of Strategic Management at Rotman School of Management, discussed these biases and the limitations they place on both women, and on the economy as a whole. For example, how can it be that only 6% of new venture ideas come from women? It is unlikely the case that women are simply not coming up with the ideas. And yet 7% is the percentage of VC funding that goes to women. There are growing correlations between women on boards and the financial success of these firms and ventures. The data increasingly points to the fact that when women are given the same opportunities as men, they perform on par, or outperform, but this funding gap lags way behind these trends.
The issue lies in the system. To start, it is well understood that venture capital is a male-dominated area. While challenging to measure, this feeling of being an outsider may affect female entrepreneur’s subconsciously or consciously while presenting. Beyond this, the pitch presentation method, combined with implicit biases from the VC’s who are being presented to are also systems that work against women.
When Village Capital developed an alternative, women became funded at a much higher rate. Each program, they select a group of roughly 12 companies addressing problems in a specific sector. The entrepreneurs rank each other, and the top two companies receive the investment. In this alternative model, where there is already a pre-designated amount of capital, a much higher percentage of women-led startups were funded.
Pointing out and appreciating how a simple systems change made this difference is the exact function and benefit of a gender lens.
As more and more researchers identify the gender disparity and investors choose to look through the gender lens, progress is being made on opportunities provided for female entrepreneurs.
As host Sandi Hunt indicated on this day’s show, “Everyone is an investor.” Through the products we choose to consume and the money we expend, we have a significant effect on our environment and the marketplace. By being curious about the impact of financial investments, we can ensure that the ripples we cause through our actions benefit both us and women throughout various disciplines.
Episodes of “Dollars and Change” are available on demand at SiriusXM.com.
Lucy Porter is a rising Junior at the University of Pennsylvania, studying Political Science. She is passionate about gender dynamics and sees the opportunity as a fellow as a way to pursue her interest in social justice. In her spare time Lucy enjoys spending time with friends, being outdoors, and travelling.
Madison Briggs is a rising senior at the University of Edinburgh, studying Classics. She is eloquently spoken and gravitates towards those who display kindness and respect towards others. She excels in communications and critical thinking and has a pragmatic approach to complex issues. She has a wide range of interests, from film to environmental concerns, and as a result, offers a fresh viewpoint. Following the internship, Madison will be traveling to California before returning to the UK.
Monica Volodarsky is a summer intern with Wharton Social Impact Initiative. She is a rising Central High School senior and a 2015 Fellow with the Germination Project.