(Re)defining Risk in Gender-Lens Investing
Traditional investor sentiments suggest that Gender Lens Investing (GLI), especially in African markets, is perceived as carrying a higher level of risk compared to traditional investments. This perception contributes directly to the systemic barriers that women face when raising funds, and is evidenced, for example, by the fact that only 2.3% of all venture capital (VC) funding raised in Africa in 2023 went to solely women-led ventures. Conversely, 85% of VC funding raised went to all-male founded teams, with only 15% of funding being raised by solely women-led ventures or founder teams with at least one woman. This demonstrates a clear system-level issue, where women are disproportionately underserved by the investment community.
Despite the growing adoption of GLI mandates by institutional investors and the increasing number of women-led funds operating in the African investment ecosystem, particularly in the small and growing business sector asset class,2 the statistics around capital flows towards women-led enterprises indicate a grave and gendered financing gap within the finance and investment ecosystem. This gap is not merely a consequence of individual investment choices but a reflection of the entrenched systems that continue to undervalue and underfund women-led initiatives.
Objectives and scope of the report
The study focuses on investigating the prevailing risk perceptions of investors concerning GLI in Africa. By analyzing dominant risk perceptions and their determinants, the research seeks to offer a comprehensive view of the challenges and opportunities associated with GLI initiatives in Africa.
Furthermore, the study seeks to uncover the commercial and social impact benefits of GLI in Africa and highlight the unique opportunities that GLI presents for unlocking economic growth in the region. By delving into the benefits associated with GLI and identifying the potential for economic advancement, the research aims to provide insights into the broader implications of gender-focused investment approaches in driving positive change and sustainable growth in African markets.
The study intends to investigate promising ideas, solutions, and examples of how the Fund and other funds-of-funds can not only influence investors’ risk perceptions to garner greater support for GLI on the continent but also realize the opportunities of GLI. By highlighting innovative approaches and successful strategies for shifting investor mindsets, the research aims to contribute to the advancement of gender-inclusive investment practices and facilitate a more supportive environment for GLI in the African investment landscape.