Tracking Gender in Private Equity and Venture Capital

This piece was originally published on, an independent knowledge hub about gender lens investing. Women Effect’s content is now part of the Wharton Social Impact Initiative. Read more about the transition here.

It was once thought that impact investing was a ‘softer’ kind of investing that meant sacrificing monetary returns for the sake of non-monetary ones. Research shows that this is simply not true.

In just one example, Morgan Stanley used Morningstar data to prove that sustainable equity funds meet or even exceed the returns of traditional funds.

Impact investing as a whole has enjoyed a surge of popularity and innovation over the past decade or so, spawning new investment vehicles like social impact bonds / (PFS) programs and more recently green bonds. While general impact investing is becoming more mainstream for high net worth individuals and institutions, gender lens investing has not benefited from the same level of traction in the private equity and venture capital space. This is peculiar, because there is a wealth of data showing that gender-oriented investing can accelerate impact, both financial and social; women-led businesses outperform and they are also driving a greener future.

Gender lens investing is part of the broader genre of impact investing. The field uses”gender” rather than “female” because, as the Stanford Social Innovation Review states, “using ‘gender’ brings both men and women into the conversation. The movement’s objective is to look at the entire financial and social system, not just at women.”

In spite of compelling data, Private Equity lags behind

Veris Wealth Partners produced the Women, Wealth & Impact report to demonstrate that “better companies are created by shifting the flow of wealth and power to women, whether we aim to lift women and girls out of poverty or bolster women’s leadership and entrepreneurial pursuits”. This and other pieces of research, like Trillium Asset Management’s Investing for Positive Impact on Women, which presents concrete gender-lens investment examples, have spurred increasing investor interest in gender lens investing across fixed income and public equities.

There are new offerings, like Calvert Foundation’s Women Investing in Women Initiative for fixed income and the PAX Ellevate Global Women’s Index Fund or Morgan Stanley’s Parity Portfolio for public equities, and initiatives like The Women Effect are bringing a new community together to accelerate deployment of interested capital into gender-lens investment opportunities.

Despite all of this collective data and momentum, we have seen little, if any, progress in the private equity and venture capital space. This is partially because pension funds, which according to a recent Department of Labor issuance can now invest for ESG purposes, generally have a minimum investment size of $75M. Compare that to the average VC fund size of $30M and the mismatch is clear. Still, there are currently only 6 early stage women-led venture capital funds in the United States investing with a gender-lens, all of which are on the East and West Coasts (there are none in Central U.S.!).

Clear criteria, clearer returns

There is also much progress to be made in the standardisation of gender lens investment criteria. No uniform metrics or standardised criteria currently exist to compare actual fund portfolios to determine gender impact in terms of women’s leadership profile. Without this information, potential investors interested in leveraging the historic returns gender diverse teams have enjoyed are left uncertain about the differences between investment fund options. Transparent and uniform assessments could help raise the visibility of gender-oriented funds as well as increase additional investor interest.

One of the reasons we launched True Wealth Ventures is, of course, to fill the geographic gap of early-stage gender oriented VC funds in the U.S., so I am also excited to announce our participation in a project with ACG Inc., supported by George Mason University and funded through the Kauffman Foundation. The Foundation is funding a pilot study that will benefit investors who would like to proactively invest in gender diversity. We are working on developing standardised metrics for women’s leadership in venture capital funded portfolios that could be used to inform investors and to compare and track performance. It is my hope that this study, in streamlining available fund data, will make gender lens investment more attractive, accessible, and accepted.

Dr. Sara Brand is the Founding General Partner of True Wealth Ventures in Austin, a venture capital fund designed to invest in women-led companies that will design, develop, go to market and scale consumer health and sustainable products and technologies to more efficiently address and solve the next generation of challenges.