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impact investing

5 Social Entrepreneurs and VCs share why Gender-lens investing is important for the ecosystem

5 Social Entrepreneurs and VCs share why Gender-lens investing is important for the ecosystem

The term ‘gender lens investing’ coined in early 2009, is now being used heavily in the VC world. Throughout the years, women-owned businesses have suffered due to lack of capital, funds, support, and resources. According to an Ashoka global survey, 9% of their fellows reported experiencing gender-specific challenges while attracting funding and investment for their businesses.

In 2005, when Valeurs Feminines fund, created by the French money-management firm Conseil Plus Gestion, started investing in women-owned and women-led European businesses, it led to many other venture capitalists joining the league. Now, some of the famous gender lens portfolios include Morgan StanleyMerrill LynchGoldman SachsRoot CapitalVeris Wealth PartnersIlluminate VenturesTrillium Asset ManagementGray Matters CapitalGolden Seeds, and the Calvert Foundation.

Gender lens investment yields many benefits to the ecosystem and also contributes to our sustainable future. As times are changing and if we look back, the return on investment or equity of women-owned or backed businesses has never been low. Over a five-year period (2011-2016), U.S. companies that began the period with at least three women on the board experienced median gains in return on equity (ROE) of 10 percentage points and earnings per share (EPS) of 37%.

What other benefits does gender lens investing bring to the table? I had the opportunity to talk to five social entrepreneurs and VCs to share their opinion on it. Let’s hear it from them.

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Reema Shah - Investor and Managing Director, Golden Seeds

“Gender investing is absolutely necessary for the ecosystem since women entrepreneurs have been tremendously underfunded around the world, whether it is in Silicon Valley or in an emerging market. Yet, research has shown that companies consisting of at least one female senior executive are more likely to have favorable outcomes than those with an all-male senior executive team. It is also important from a societal impact perspective to invest in women entrepreneurs, as they are significant contributors to innovation and economic growth.”

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“Any serious shift towards more sustainable societies must include gender equality. At Green Box, we really believe it is high time to fully invest in ‘her’. Integrating a gender lens in social and corporate businesses can empower women especially young girls in developing countries. We need to remember that they are key to critical, sustainable development challenges: talent acquisition, workplace culture, and the need for holistic innovation.”

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Renata George - Managing Director, Zenmen VC fund; Founder, www.women.vc and www.VC.academy

“As a tech VC investor, I can say that many of my fellow colleagues have been missing out on the opportunity of getting better returns from women-led businesses. On the one hand, we cannot blame the men for not having any clue about what women need. However, that brings us to the other issue - the lack of female venture investors who are more than capable of recognizing high-potential tech solutions targeting females that can provide good returns.

Having women investors don’t necessarily automatically lead to a proportional increase in funding for female entrepreneurs because the ratio of them among all entrepreneurs is still low. So unless the investment theses mandate funding female entrepreneurs, the organic share of startups with at least one female founder in a portfolio won’t exceed 15-20%, however, VC firms with female investors do have better chances of attracting female entrepreneurs to their portfolios. It is a fragile structure that needs to be carefully built by all the participating parties with a great share of attention shown to it over time.”

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“Less than 10% of venture capital goes to women founders. This system-wide failure presents a huge opportunity for capital deployment. Women founders, while being underestimated, are working on innovative solutions and building scalable products. Polyvore, Glossier, Canva, and Houzz are great examples of companies that were started by women to solve a need in the market that no one else was tackling. If we don't invest in women and LGBTQ founders, while building emerging ecosystems, we're essentially defueling the rocketship of change as it's trying to take off.”

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Asma Salman Omer - Co-founder, Marham

“For the last 3 years, Marham grew exponentially as a healthcare startup in Pakistan and one of the core reasons behind it is women. The power and passion of women on our team has moved mountains. Do you know who has benefited the most? Those women who couldn't find the right treatment for themselves. And who played the role in our massive organic growth and word of mouth? Those women who were helped and wanted to help others. What I know for sure is, women can grow and catalyze everything - from revenue numbers to the impact we created - I must say if we want to grow, gender lens investing is a decision every investor should make to thrive in the ecosystem.”

ABOUT THE AUTHOR

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Hira Saeed joined Miller Center in July 2018 through a partnership with the US Embassy in Islamabad and Atlas Corps. Hira works as a GSBI Women’s Economic Empowerment Fellow to implement  new  research,  initiatives,  and  projects  to  help advance women’s economic empowerment through GSBI programs globally and with a specific focus in the Middle East.

The Justifiable Ask: Realities of Raising Impact Capital

The Justifiable Ask: Realities of Raising Impact Capital

Entrepreneurs often say that capital, or lack of it, is the biggest obstacle to business growth and cause of enterprise failure. In reality, there is much more to it.

The new cohort of 18 social enterprises (SEs), from 11 countries around the globe, is arriving to Silicon Valley next week for the 16th annual Global Social Benefit Institute (GSBI®) In-Residence accelerator program. The goal for the SEs is to refine their capitalization and scaling strategy, connect with investors, and present them with exciting opportunities.  

Photo from 2017 GSBI Investor Showcase

Photo from 2017 GSBI Investor Showcase

The SEs in this year’s cohort are working on a variety of solutions–from last-mile distribution of essential goods in Sierra Leone, to preventing newborn deaths in India, to improving earnings potential and livelihoods of smallholder farmers in Zambia.

Since February, these entrepreneurs have been working with experts and mentors to hone in their business models, growth plans, and capital needs, in order to scale their businesses and impact. As many entrepreneurs observe, much of their efforts come down to raising capital – identifying the different types of capital available to their business, the best way to deploy it within the company to position it for success, and the kind of expectations they can set for investors in getting a return on their capital (an impact and/or financial return).

In turn, an enterprise that has a clear and attractive business model, impact, and a Justifiable Ask is more likely to obtain the needed capital quickly and have investors knocking on their door. It is most often not about connections, but rather about attractiveness of the business to an investor, a reasonable capital ask given the enterprise needs and what it can deliver in return, and a thoughtful approach to the right partners.  

The Global Social Benefit Institute (GSBI®) In-Residence Accelerator program has a comprehensive approach to investment preparedness that aims to help entrepreneurs put their best foot forward in attracting the right type of capital for their businesses.

When we talk about a Justifiable Ask, we think about the interrelation between these key items:

Photo from 2017 GSBI Investor Showcase

Photo from 2017 GSBI Investor Showcase

  • Growth strategy and strategic initiatives,
  • What resources are needed to achieve these,
  • How much capital do those resources translate to and over what time horizon that capital would be deployed,
  • The return the company may be able to provide an investor given their financial performance to date, the potential of the business (forecast) and the inherent risks,
  • The type of capital that is available and appropriate given the aforementioned factors.

By helping develop, then reviewing financial models, we help identify gaps and challenges that an investor may see–often pushing back on how realistic assumptions are, what key drivers of growth, profitability and cash flow may be, and help entrepreneurs paint a clearer picture of their growth opportunity, effect of capital infusion and return potential for that capital to investors.

During the ten-day In-Residence at Santa Clara University, the entrepreneurs are grilled on various topics related to their business with specific feedback on operations, impact metrics, internal finances, and growth strategy, among other topics. Although that feedback is sometimes difficult to receive as the panelists may shoot down exciting ideas, question reasoning or a new strategy, this exercise helps the entrepreneurs develop much stronger cases for their conversations with potential investors and partners. The SEs, with support of their mentors, then have to build the adjustments resulting from the feedback into their forecast and translate it to their capital need.

The result of the process, is an inspiring group of enterprises with diverse business models, working across the world towards solving important social and environmental challenges in their communities and globally.  Their capital needs are as versatile–from debt and equity to convertible notes and blended capital needs, including grants, debt and equity, to innovative structures such as a Security Token Offering (STO) and revenue sharing mechanisms.

You can see these entrepreneurs present their vision to scale and create a lasting impact on the world on Wednesday, August 15 at the 2018 GSBI Investor Showcase or via live stream, hosted by Miller Center for Social Entrepreneurship. If you are an investor and would like to schedule a private meeting after the Investor Showcase or connect online with any of the SEs, don’t hesitate to contact us!


 

Anastasiya’s expertise is in providing catalytic capital and advice on financial strategy to businesses ranging from early stage start-ups to multinational corporations. While Anastasiya serves as Miller Center’s GSBI Funding Facilitation Lead, she also actively manages a consulting practice supporting scaling social enterprises in raising capital, and investors in evaluating and structuring deals.

Prior to starting her consulting practice, she was the Director of Investor Relations & Financial Innovation at Agora Partnerships–facilitating over $50M in capital flow to social enterprises in Latin America and designing new funding programs. She is also a former Portfolio Manager of RSF Social Finance, a US-based impact investor with $100M AUM. Anastasiya began her career in Corporate & Investment Banking at Wells Fargo in San Francisco and New York City, providing capital markets advisory and other financial services to a portfolio of Fortune 500 corporates.

Anastasiya holds a Master’s in International Finance and Economic Development from the Barcelona Graduate School of Economics, and a B.S. in Finance from Santa Clara University. She is originally from Ukraine and enjoys visiting friends around the world, dancing, yoga, and rock-climbing.

Mobilizing for Migrants, Refugees, and Slaves

Mobilizing for Migrants, Refugees, and Slaves

Click on image to access the encyclical

Click on image to access the encyclical

The third Vatican impact investing conference will convene in Rome next month. It seeks to mobilize capital to address pressing, interconnected, global problems: migrants and refugees, climate change, youth underemployment, and health. In his encyclical Laudato Si’, Pope Francis notes the “tragic rise in the number of migrants seeking to flee from the growing poverty caused by environmental degradation” (25) and notes “interdependence obliges us to think of one world with a common plan.” (164).  I am honored to be the invited moderator of a panel on Migrants, Refugees, and SMEs.

In January, when Miller Center decided to launch the SEM accelerator program for social enterprises serving or led by refugees, migrants, or human trafficking survivors, we wondered how many and what kinds of these ventures existed.

We were surprised when many of the over 100 applicants told us the SEM cohort is the first they’d encountered focused on helping them scale their impact, as Program Manager Marie Haller notes. Their business models include impact sourcing, entrepreneurial support, and skills training. Technologies including blockchain and AI are part of the solutions they offer to refugees and modern-day slaves.

We had hoped that launching the SEM program might reveal entrepreneurial solutions to serve the most marginalized among our common human family. The quality and quantity of applicant social enterprises and their profound passion in our pioneering program amazed and heartened us. Convening this group of social entrepreneurs has built momentum among a variety of stakeholders interested in finding new solutions for these global crises.  

Vodafone Americas Foundation, The Chao Foundation/Transparent Fish Fund, and Skoll Foundation have stepped forward to provide Miller Center financial support as we accompany the SEM social enterprises; we are grateful.

ImpactAlpha recently ran a story entitled Entrepreneurs and investors mobilize to tackle challenges of refugees, migrants, and modern day slaves, identifying a growing “market” of the forcibly displaced and enslaved and consequent growing pools of capital. We are thrilled that this story names four of the twenty-one social enterprises in our Social Entrepreneurship at the Margins (SEM)cohort and humbled by the Reuters headline, California executives mentor businesses helping migrants and slaves.

When journalists and foundations use phrases like “stock the pipeline” of investment-ready social enterprises, and “an emerging ecosystem”, it suggests a bigger movement is afoot to define an impact sector focused on the needs of the displaced and enslaved.  

We need it now more than ever. Tomorrow, June 20, is World Refugee Day. We hope you’ll join us on this journey to discern a common plan that affords refugees dignified livelihoods and eradicates modern-day slavery.  


Photo credits: banner image by geralt on Pixabay.com; screenshot of Pope Francis from laudatosi.com; UNHCR, image from UN Refugee Agency post embedded from Facebook by Markel Redondo)