Is Gender Lens Investing (GLI) effective in increasing women’s economic participation and creating employment? What support do female entrepreneurs need in addition to financing?
These were the types of questions I expected to hear when I recently participated on a panel on women’s entrepreneurship organized by the International Development Research Centre (IDRC) in celebration of International Women’s Day. What I didn’t expect were questions from the general audience around how much of a business loan women would irresponsibly divert towards purchasing interior decor and new dresses, and whether promoting women’s entrepreneurship is fair to men. Incredibly, there was also a question around what percentage of their income women spend on beauty products every year.
These types of questions show how far we still have to go in changing perceptions around women as entrepreneurs, and in dispelling the misconception that a focus on women’s entrepreneurship inherently disadvantages men. As I mentioned during the panel, Pitchbook reports that out of $85 billion invested by venture capital firms globally in 2017, only 2% went to all-women founding teams, while 79% went to all-male founding teams. ( http://fortune.com/2018/01/31/
female-founders-venture- capital-2017/). Male entrepreneurs are in no danger of losing access to investment.
Some may be tempted to explain this staggering difference by claiming that women run less investment-worthy businesses. However, recent work by the Global Accelerator Learning Initiative (GALI) showed that founding teams in Africa who have female members are more likely to report both revenue and employees than all-male founding teams. (https://www.galidata.org/
publications/acceleration-in- sub-saharan-africa/) In other words, founding teams that include women are actually more likely to have achieved traction and are in fact attractive opportunities for investors.
At Open Capital Advisors, we support all types of entrepreneurs, and we recognize that women face additional challenges raising capital for their businesses. As a firm that is 50% women-owned and more than 50% women at all levels of the organization, we are dedicated to closing these gaps by working directly with women entrepreneurs on investment readiness and scale, and helping the investors we work with identify and invest in high potential women-led enterprises.
Happy International Women’s Day from everyone at IDRC and OCA!
Post written by Irene Hu.