‘Investing in Women’ Webcast Recap
Women investors are leading the charge in increasing access to capital, resources, and networks for women entrepreneurs. This gender-lens investing model was the subject of the latest Global Innovation through Science and Technology (GIST) TechConnect live webcast. Viewers from around the globe tuned in to learn that women-led startups are just as capable of success as their male-led counterparts – and that when women entrepreneurs are supported, economies grow.
In the last 10 years, women in the global workforce have increased by 250 million, and that trend is only rising. Compared to half a century ago, more women have access to higher education and capital, giving them greater opportunities to leverage their innovative ideas into businesses. For women’s success to continue accelerating in this space, women need more female mentorship, the same access to capital as men, and a change in perception that entrepreneurship is not only a masculine activity.
The live panel of experts discussed how women entrepreneurs are breaking barriers, benefiting not only their families, but their home countries. They answered questions from social media and gave a broad overview of what gender-lens investing is and how to achieve it in emerging markets within regions that are known to have strict cultural expectations. The panel included experienced angel investor Gwen Edwards from Angel Resource Institute, and Womena’s founder Elissa Freiha, who operates a platform empowering and educating women in the Middle East and North Africa. Audience participation was facilitated by VentureWell’s Christina Tamer, and the discussion was moderated by Hilina Kebede, partner at Score 3 Angels.
Check out the video here, or read below about the main topics discussed during the chat.
To start us off, what does gender-lens investing mean to you?
Kebede: It is the intentional integration of gender analysis in our investment thesis, which can mean different things to different investors. To some it may be increasing access to capital for women and to others it’s looking at the entire value chain of the company and assessing their board of directors or senior management and seeing if women are valued equally as men.
Freiha: We set out just to empower women to be on the other side of the table. That was our initial way of approaching gender-lens investment. Now we seek to find companies where there’s at least one female founder and then feed them into our accelerator, incubator, and angel investment pipeline. We tackle both sides of the coin – the entrepreneurial side by increasing women entrepreneurs and investing in them. On the investment side, we’re working to increase the number of check-writers who are women, especially because investors tend to invest in those that are similar to them. Thankfully we’re finding more and they’re really great opportunities.
“The whole point of our effort is to prove that women are great bets, that women can be terrific leaders and provide excellent returns to investors.” – Gwen Edwards
What trends in gender-lens investing are you seeing in emerging markets?
Freiha: Working in the Middle East and North Africa region, we do not have the luxury to have access to one single large market. We have to co-invest across borders (investors and entrepreneurs alike) and expand across borders in order to have a significant financial return in what we’re doing. Because we don’t have that luxury, hunting for deals is still very difficult. Because of that, our priority is to get the best deal as investors. And the subconscious biases do come into play but the priority is still to make an investment. We’re noticing that the percentage of funded female entrepreneurs are still in the minority, yet they’re actually higher numbers than in the U.S., when it comes to some early stages. And I think that’s something emerging markets should be very proud of.
“Percentagewise, more women get funded [in emerging markets] because we don’t have the luxury to be sexist!” – Elissa Freiha
What are noticeable differences between startups led by men and women?
Edwards: On one level, there are a number of similarities, but overall the differences center around capital and how they perceive it. Women tend to be more cautious with money and careful in how they use it. It’s been shown that women can have better returns than men when they run companies or sit on corporate boards! But on the entrepreneurial level, we see that they’re cautious and sometimes don’t ask for as much money as they need – so it’s a mixed bag. We try to coach women to be a little more aggressive in their asking, and at the same time, we love the fact that there’s a real sensitivity that capital is precious and how you use it is really important.
The second large difference we see is how long women stay in these businesses compared to men. Women tend to want to build a business that really has impact, even if it’s not a social impact company. But they want a business for the long term, 10 to 15 years. They’re thinking longer term and there’s a tendency for men to want to build a company and then have an exit in 3 to 5 years maximum, and then do it again. So men are sort of “serial entrepreneurs”.
How do you see the investment landscape shifting as more women become successful?
Freiha: From an emerging-market standpoint, the investment market has boomed in the last five years. The number of startups with at least one female founder that has actually received investment has doubled from 2013 to 2017. So we’re seeing not only an exponential growth in investment activity but really exciting activity towards women-led startups.
Edwards: We’re seeing in the landscape that there are problems that women want to solve that might not be as interesting to me. Take for example, nVision. A woman built it for over five years to focus on women’s health and specifically ovarian cancer. She would talk to male investors who thought this would be limited to only a small niche market. Jump ahead to the huge success it’s had, selling for $275 million to a medical giant. The more stories like this are showcased, the more people will consider that there may be opportunities that have been overlooked.
Is access to capital influenced by cultural factors?
Edwards: Your ethnicity, lifestyle, and all the values of your culture absolutely influences access to capital. The best advice on that front is trying to find investors or mentors (even if it’s just one) that is most like you, so you don’t feel alone. Try to go from that person to who else they know and create connections that way.
Freiha: Diversity is important – but when you’re looking for funding you really want to find a core group of people most like you to help, to get that initial spark going, and then build and grow. There are large differences in culture when comparing America and the Middle East, but underlying element is the challenge of discussing money. In our culture [in the Middle East and North Africa], it’s very shameful to ask for money. We do shy away from it as a culture because you can be seen as cheap if you want to negotiate an entrepreneur’s valuation down, and therefore you’re bringing shame on your family by doing that, or you can be seen as greedy by asking for too much for your business or products. That also kind of deters individuals from getting involved in it in the first place. Many would rather have their business sell at a point that doesn’t make them feel terrible or judged. But this entire venture capital space has come in and shocked our region, and now we’re talking about investing $50,000 into an early stage business and dealing with people still starving in other parts of the region. It’s a very sensitive subject that affects the investment landscape as a whole, and women are very sensitive to that – as well as bringing honor to their families at home.
“The cultural nuances of money is very different across landscapes” – Hilina Kebede
Lastly, how can we support women when it comes to risk management in their businesses?
Freiha: This area is incredibly broad, but the way that we look at coaching our entrepreneurs for risk management is to put them in a room with a lot of other entrepreneurs. We throw examples at them that have historically happened in the past, and those that are regionally specific. The risks are quite diverse, and these scenarios to help them realize aspects like selecting the proper customer base and product manufacture feasibility.
What’s amazing to me is that many of them mitigate all the risks and come up with some amazing solutions to circumvent that. It blows my mind that there are some women able to build code in Lebanon where there’s eight power cuts a day, or in Egypt where there’s a revolution happening outside – and you still have two jobs that you take to feed your family. There’s some really fantastic resilience we’re seeing when it comes to managing the risks in our region.
“It’s about having a trusted network and a mentor for women entrepreneurs” – Gwen Edwards
In 2012, there were an estimated 126 million women starting new businesses and another 98 million running established businesses throughout the world. With an ever-increasing interest in the value of women-led companies, gender-lens investing sets the stage for causing ripple effects across the globe!