Ladies First: Investing in women-owned SMEs
For those who haven’t seen it yet, Goldman Sachs has recently announced the launch of the Women Entrepreneurs Opportunity Facility. The initiative (mentioned in this NB post) is a partnership between the Goldman Sachs Foundation and the International Finance Corporation. It aims to raise up to $600 million in capital for women-owned SMEs. Their goal is to facilitate capital access for 100,000 women-owned SMEs globally – it’s truly a momentous initiative.
The facility complements the ambitious work Goldman Sachs Foundation has already done on behalf of women entrepreneurs though the 10,000 Women Program, a global training academy for women entrepreneurs. Several years ago, I had the good fortune of working with TechnoServe and 10,000 Women’s local partner in Brazil, FDC Business School in Belo Horizonte. We were piloting wrap-around services for the women entrepreneurs, i.e. customized mentoring programs for their specific business needs. I attended the scholars’ graduation and heard the testimonies of these women, many of whom experienced double digit business growth. Just remembering their gratitude to the program and their excitement about economically contributing to their families and communities nearly brings tears to my eyes. So I’m not at all surprised to see that over 80 percent of the participants have expanded revenues and over 70 percent have created new local jobs.
We knew back when 10,000 Women was founded that increasing women’s incomes leads to greater investment in family health and education, thus leading to improved human development indicators. Now, new research by Goldman Sachs’ Global Markets Institute, Giving Credit Where It is Due, illustrates that closing the $285 billion global credit gap for women-owned SMEs could increase per capita income by up to 12 percent in BRIC and Next 11 countries by 2030. A 12 percent increase in per capita income nationwide is pretty epic for development outcomes.
Given that research indicates that women-owned SMEs have better repayment rates, they are a prime target for impact investors and SME financiers, like GroFin. However, not everyone wants to have a women-only fund. And in order to protect financial return, investment decision making cannot let gender overrule the other risk factors in a business. This is one of the potential caveats with gender quotas. So what’s a woman to do to better synergize impact investing and women’s economic empowerment?
Thanks to Suzanne Biegel and ClearlySo, I found some great ideas at Criterion’s Gender Lens Investing page. It turns out the fun(d) doesn’t have to stop at just financing women-owned businesses. We can encourage our investees (and partners) to address diversity in their supply chains. We can expand our focus on sectors with high levels of women’s representation. We can even expand our focus on social businesses that address women as end-users.
There are also potential easy wins in some of the following strategies:
- Engaging the women-owned SME ecosystem, by reaching out to organizations such as WEConnect International, Vital Voices and BPW International
- Instituting social performance incentives for investment staff
- Adapting marketing strategies to be more inclusive of women entrepreneurs. This can include the look and feel of brochures and websites, for which resources like the Lean In Collection from Getty Images may be useful
This is just the tip of the iceberg. I wonder if any readers have other proven strategies for getting more women-owned enterprises into your impact investing portfolio?
Thanks for reading and please feel free to share more and better ideas!
Tara Sabre Collier is an impact investing specialist at GroFin Capital, a pan-African impact investing fund.