By Melissa Luz T. Lopez
Senior Reporter
PROGRESS has been made in getting more women in the work force — but now, the focus is shifting towards getting females on top.
To this day, the corporate world remains largely a man’s game, with boardrooms ran by suit-and-tie wearers and few ladies in blazers.
The International Finance Corp. (IFC) has a fresh take to prod investment firms and venture capitalists to take gender parity more seriously. Their latest study shows that a more diverse panel of asset managers may be the key to bigger profits.
Henriette Kolb, head of IFC’s gender secretariat, said an ideal mix of at least 30% of one gender in an investment team can lead to substantially bigger yields for the company.
“The mix is what you really need… We’re seeing that correlates to better fund performance,” Ms. Kolb said in an interview with BusinessWorld during her visit to Manila this March.
“What it brings is that you understand your customers better. Usually, women are taking 60-80% of most of the financial decisions in the Philippines… You have to be mirroring your consumer base.”
IFC’s recent report titled “Moving Toward Gender Balance in Private Equity and Venture Capital” found that gender-balanced teams of investment decision makers generate about 1.7 percentage points higher returns compared to male or female-dominated funds.
“The median gender balanced fund outperformed median unbalanced peers by as much as 20% in annual returns,” the report read. “Our research suggests this is primarily driven by enhanced investment decision making and expanded deal sourcing through broader entrepreneurial networks.”
Few fund managers in emerging markets have seized this opportunity, with only 15% of senior investment teams deemed gender-balanced while 70% remained all-male.
In turn, this has given limited opportunities for women-owned start-ups. The study found that only 7% of private venture capital firms are invested in female-led businesses, with the latter receiving financing that is worth only 65% of what male-owned companies are getting.
Making the shift could mean huge gains for small businesses in the Philippines, which make up 99% of all private firms in the country.
Ms. Kolb said having more women as venture capitalists would help address barriers to capital for SMEs, especially when two-thirds of local businesses are led by Filipinas.
“There’s a lot to build on when it comes to the Philippines,” she added.
For one, having more Pinays choosing which start-ups to fund broadens the investment pipeline to cover women-led firms, as the network expands versus those from an all-male circle.
“What we anticipate is that most yields are being sourced in the equities side through networks. If you have 70% all-male investors, your network also tends to be male-dominated,” Ms. Kolb added. “In order to really make sure that you get that ideal flow, you can expand the networks you are sourcing from just by including more women.”
The IFC, which is the World Bank’s arm for financing private companies, is trying to walk its own talk. The firm is targeting to strike a perfect 50-50 balance in its boards by 2030. Now, they are at 35%.
The global lender has also extended about $2 billion in credit to women-owned firms.
More diverse decision makers also open up “different ideas for innovation,” as well as a bigger pool of talent.
“You have a bigger pipeline of deals to source from, and therefore you have a larger chance of making into a unicorn situation… That enriches your portfolio investment,” Ms. Kolb added. “Diverse teams invest in more diverse portfolio companies, and portfolio companies that are diverse are higher-valued.”
