March 19, 2018

Interview with Leonora Buckland on, ‘Gender Lens Investing: An opportunity for European Social Enterprise Ecosystem’

Leonora Buckland and Mar Corobes both researchers at ESADE Business School published the report, titled “, ‘Gender Lens Investing: An opportunity for European Social Enterprise Ecosystem’. We interviewed Leonora about her findings.

Gender Lens Investing Newsletter

What exactly is gender lens investing and how is it relevant today?

Gender lens investing is a movement whose key concept is that capital can simultaneously generate financial returns and advance gender equality. It brings together different strands, connecting gender and finance. There are three main lenses:

1.Access to capital for female entrepreneurs: for example, the IFC has partnered with Goldman Sachs to create a $600 million facility for investing in women-led enterprises.

2.Gender equality in the workplace, focused on issues such as the gender pay gap or women’s leadership. Public equity products are starting to take these gender lens criteria into account. For example one of the first movers, Pax Ellevate’s Global Women’s Index, focuses on criteria such as the number of: women on the board of directors or in executive management; women CEOs or CFOs; and, whether the company is a signatory to the UN Women’s Empowerment principles.

3.The development of products and services directed at improving the lives of women and girls. An initiative in this category includes the the Spring Accelerator (a partnership between DFID, Nike Foundation and USAID) which supports businesses whose products and services could transform the lives of adolescent girls.

At the moment, it is a broad tent. One of the most radical ideas is that every investment decision has a gender impact. That is how big this is! It seeks a ‘systems change to have gender matter in decision-making in financial markets.’

Within your study, you have found some of the most significant barriers that female social entrepreneurs face. What are they and what solutions did you gain through the gender lens investing study?

Looking specifically at Europe, the key barriers that female social entrepreneurs believe they face in order of importance are: lack of access to finance, politics and legislation-related obstacles, time, visibility and lack of skills and preparation.[1]

In Spain, an earlier ESADE study also highlighted an issue with the lack of networks of female social entrepreneurs. The solutions that are emerging in Europe are female investor networks; female entrepreneurship communities; incubators which have a specific gender lens or financial products that are focused on gender. In developing solutions, Europe can learn from the gender lens investing movement in America. The field is more developed with, for example, 47 gender lens venture capital funds,[2] and even some crowd-funding platforms specifically for female entrepreneurs.

But a societal and cultural transformation is also required, which is a much longer-term proposition, in terms of changing the unconscious bias women face when seeking finance.

There is a need to transform social norms, which subtly identify entrepreneurship with a male paradigm, or at an even more ambitious level, shifting the disproportionate weight of child-raising and housework away from women (since this makes it more challenging to grow a business at the same time).

What initiatives do you believe need to be in place to give female social entrepreneurs stronger impact?

There is no silver bullet solution here. We have to recognise the magnitude of the challenge – gender inequality has persisted for a long time. But there are a series of steps and initiatives which cumulatively can catalyse larger change, at least in the social enterprise world.

 I think the first step is that the social enterprise ecosystem needs to become aware of the fact that there is a problem and that we come together with female social entrepreneurs to create a better environment. Some fantastic champions, such as Suzanne Biegel (Founder, Catalyst at Large) and Hedda Pahlson-Moller (Founder, Omsint/Tiime) have already been doing a great job at getting gender lens investing on the map in Europe. There needs to be more of this awareness-raising, and then intentionality on the part of stakeholders to change the dynamic. A simple but powerful start could be investors measuring how many female social entrepreneurs they support and any gender impacts of their investments. In Europe, we are behind in terms of the level of awareness areound gender.

I would also really like to see more initiatives spread around Europe, such as Ogunte in the UK which has been doing an amazing job supporting over 6,000 female social entrepreneurs or F-Lane, run by the Vodafone Institute in Germany, which accelerates digital impact ventures focusing on female empowerment. There is so much to do and so many exciting possibilities developing in the rest of the world. It is a case of experimentation and evaluation, seeing what works in terms of moving the needle and then spreading good ideas.

What issues did you find in regards to finance of female social entrepreneurs when compared to male entrepreneurs?

Through our quantitative survey of 100 social entrepreneurs (59 female and 41 male), we found that women social entrepreneurs in Spain had much higher failure rates accessing finance (only 26% of them reached their financing objectives versus 46% of male entrepreneurs). In addition, men started their projects with more investment and they looked for it externally to a greater degree. For example, there is a large gap in terms of how male versus female social entrepreneurs use bank finance: 62% of men looked for bank finance as compared to 29% of women.  

Did you gain any insight within the case study that ESADE did not contemplate before by conducting qualitative research and analysing those findings

We were surprised by the lack of awareness within the European investor community about gender lens investing. Whilst it is definitely on the radar in the USA and even in emerging economies, in Europe there seems to be a more complacent attitude towards gender, and an assumption that there is a level playing field for female and male social entrepreneurs.

Another insight was that although the social enterprise field is a positive place for women (for example with a higher ratio of female employees and leaders than the for-profit arena), there is a major issue in terms of access to finance for female social entrepreneurs that reflects and replicates the gender gap in normal entrepreneurship.

Finally, we heard consistently from female social entrepreneurs in Spain that the funds and accelerators seemed to be focused on the high-tech, high-growth segment, which left many women struggling as their enterprises were not necessarily focused on rapid scalability. This was a wake-up call for us as to how far social impact investment could leave female social entrepreneurs behind, Indeed, there could be a perfect storm coming which combines the a gender gap in technology with the gender gap in start-up finance to stack the odds further against female entrepreneurs.

Are there any methods of gender lens investing within the United States that has not been put in practice in Europe and should be?

In the USA there are many more gender lens products so I think we need to grow the product offering here in Europe as a priority. We also need to see some more experimentation in Europe using a gender lens to generate new, more equitable ways to get finance into the hands of female (social) entrepreneurs. For example, we could replicate the idea of a US-based incubator and accelerator such as Village Capital, which has developed a successful peer mentoring and peer selection approach. This is a great example of how more finance can end up in the hands of female founders if we change the standard financing methods.  

[1] WeStart, Mapping Women’s Social Entrepreneurship in Europe, Synthesis Report, 2015

[2] Suzanne Biegel, Sandra M. Hunt, Sherry Kuhlman, ‘Project Sage, Tracking Venture Capital With a Gender Lens’ October 2017

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