The outbreak of the COVID-19 pandemic came with attendant challenges forcing world leaders to employ various interventions in response to coronavirus-induced global economic depression.
What may not be so obvious is that globally, women in the workplaces are also experiencing an economic downturn such that it’s been described as ‘shecession’.
This development requires urgent attention since more than enough evidence points to female entrepreneurship as an ingredient for growth and value in businesses, economies.
As a result of this consciousness, the concept of gender lens investing is gaining traction as more investors and financial institutions are adopting the strategy. According to a World Bank Group study, countries around the world are currently losing a combined $160 trillion as a result of differences in lifetime earnings between women and men.
Interestingly, as far back as 2015, a McKinsey Global Institute report claimed that driving women’s equality in the workplace would add $12 trillion to the annual global GDP. Needless to say, there are consequences of overlooking gender lens investing.
In an event hosted by Innovation Support Network (ISN), a community of innovation, technology, and entrepreneurship hubs supporting entrepreneurs across Nigeria, experts gathered to explore the benefits of deploying capital to address gender inequalities, and how founders, particularly female founders, can prepare themselves for investment.
Panelists at the virtual event included Tokunboh Ishmael, Co-founder, Alitheia Capital, Bunmi Lawson, CEO, EdFin Microfinance Bank, and Board Member at Lagos Angel Network, and Oby Ugboma, Investments Lead at Rising Tide Africa.
In line with the theme of the event- ‘Promoting Entrepreneurship Inclusion Through Gender Lens Investing’- Ishmael describes gender lens investing as broadening the field in terms of how women are impacted not just from being able to access funding as founders and entrepreneurs but also being able to inject diversity at the board level to improve.
With the interest in gender equality in workplaces, there’s a tendency to regard gender lens investing as lowering the bar just to accommodate female entrepreneurs while the males are kicked to the curb. On the contrary, women founders have great ideas; they’re, however, constrained by socio-cultural and economic barriers.
During the course of the event, the speakers gave insights on how gender lens investing can be executed to drive inclusion. What follows summarizes concrete pointers that can help founders become investment-ready.
Toot your horn
Ishmael asserts that women behave differently when it comes to debt and equity funding. Male entrepreneurs, on the other hand, were more visible and confident.“The entrepreneurs we’ve backed were the ones that shouted the loudest, the ones that were visible. At Alitheia, we notice the tendency of women building businesses and just beavering away.”
This does not detract from their value in any way as she views women entrepreneurs as ‘efikos'( a Yoruba word that describes a brilliant person) firing up to deliver. From her experience as an investor, she reveals that most female entrepreneurs are not out there necessarily tooting their horns in search of the next big thing.
According to Ugboma, age is an important factor to consider as women belonging to the older generation are described as modest and diligent workers while the younger generations- the Millenials and Gen Z- are more vocal, assertive, and less reticent.
The speakers unanimously agree that one way female founders can toot their figurative horn is to build their confidence through rigorous preparedness; this could be done by getting critics to evaluate and poke holes in their pitches for improvement.
Build gender diverse teams
In gender lens investing, more attention is given to scalable startups made up of diverse teams. This is because there tends to be a balanced symbiotic relationship between males and females in leadership positions.
“At Alitheia Capital, we like to see gender diverse teams because male entrepreneurs will sell investors on what they want to do and be able to secure financing. Their female counterpart is more measured in their approach. A woman will attempt to explain, convince and even justify why she’s qualified to receive funding.”, says Ishmael.
Promoting gender diversity makes smart business sense. Going by a recent research study covering over 1000 companies from 15 countries, it was found out that companies with gender-diverse boards are 28% more likely to outperform their peers, while gender diversity in executive teams increases the chance of outperformance by 25%.
Another report also disclosed that venture and private equity funds with gender-balanced investment firms have 20% higher ROIs than their peers.
For startups whose products target market is mixed, Lawson stresses the need “to have both genders at management levels to represent the interest of your consumers.”
Be informed and resourceful
One crucial reminder for entrepreneurs seeking funding is to resist the temptation to jump into partnership with just about any investor. What can help less experienced founders is to get the opinions of seasoned entrepreneurs who can serve as mentors during this process.
“Do your numbers. Get proper lawyers versed in venture capital funding, equity raise, and the like. Don’t assume you have an understanding; instead, read through agreement documents and understand the clauses. Know what you’re signing up for.” Lawson says.
She also emphasizes that once documents have been signed, it becomes difficult to renegotiate with investors and partners. It’s better to get it right the first time.
Featured Image: Tokunboh Ishmael, Co-founder, Alitheia Capital, Oby Ugboma, Investments Lead at Rising Tide Africa and Bunmi Lawson, CEO, EdFin Microfinance Bank
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