Findings show private markets investment in gender lens funds grew more than 30%

Gender lens investing in private markets has grown by more than 30% in the past two years, with the minimum market size now assessed at US$7.9 billion in aggregate capital, compared to US$6 billion in 2021.

This is among the findings of a study published on Tuesday, April 30 from the Project Catalyst research initiative from 2X Global, a gender finance organisation and Sagana, a leading gender-lens advisory firm focused on diversity, equity and inclusion in financial services. The initiative, funded by the Visa Foundation, measures the size and scope of gender lens investing (GLI) in private markets.

“As an enabler of economic mobility, Visa Foundation is proud to work alongside our partners 2X Global and Sagana to continue advocating for gender equity through the critical research presented in the Project Catalyst report,” says Najada Kumbuli, Vice President and Head of Investments for Visa Foundation.

The study details findings from a sector-wide survey which was carried out in late 2023 with more than 100 investors and fund managers working in private equity, venture capital, and private debt worldwide.

It shows that both the number of funds and assets under management have grown since the last such report in December 2021 from its predecessor initiative Project SAGE, which was helmed by the late gender lens investing expert and industry pioneer Suzanne Biegel.

273 gender funds were identified by the 125 fund managers surveyed for the report, with data going up to June 2023. This represents a spike from the 206 private GLI funds named in Project SAGE.

The study shows that gender lens investing is taking place across asset classes, sectors and geographies, and being pursued by a broad range of both established and emerging fund managers. There is a vibrant pipeline, as evidenced by the growth in the quantum and sophistication of funds.

In addition to the increased capital, the field is showing signs of expansion in the areas of investment, with gender lens investments flowing into sectors in which women have traditionally been poorly represented, such as real estate, infrastructure, transportation and industry and manufacturing.

“We’ve gained good insight into both where the market for gender lens investing is right now and where it’s moving. The survey and follow-up interviews with investors and fund managers, demonstrate the growth in the number of funds and size of the market, but there is room for far more growth,” said Jessica Espinoza, Chief Executive Officer of 2X Global.

Raya Papp, Founding Partner of Sagana, noted the potential in this increased mainstreaming of gender lens investing, stating:

“The most promising insight emerging from Project Catalyst is the mainstreaming of gender finance and gender lens investing across a broad range of GPs and LPs around the world. We can now say, with a high level of confidence, that investing in women yields outsized financial and social returns. Gender lens investing is at a tipping point, and I look forward to the big strides asset owners and asset managers will continue to make.”

The report identifies clear market opportunities for LPs, with funds spanning a wide range of fund managers and strategies, currently raising capital seeking an additional US$ 6.2 billion of gender lens investments.

Other key findings:

●    Climate is an emerging theme with 61% of all participating funds selecting at least one climate-responsive sector as a part of their investment strategy.

●    Despite well-recognised challenges to data collection, over 80% of participating funds are consistently tracking and reporting gender metrics.

●    The investor landscape is increasingly diverse. 71% of funds have family offices as investors, 59% have institutional investors, and 49% include development finance institutions (DFIs) and foundations in their investor base.​

●    78% of funds report the perception that their gender lens strategy generally helps them attract LPs. However, not all LPs inquire about GLI in their due diligence.

●    GLI funds continue to demonstrate a strong commitment to diversity and inclusion, with over 67% of Investment Partners in these funds identifying as women.