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Moving toward gender balance in private equity and venture capital

International Finance Corporation

2019

Global

Report/Paper

Impact Investing

Gender diversity Gender gap Women-led business Gender balance Women-owned business

Moving toward gender balance in private equity and venture capital

Moving toward gender balance in private equity and venture capital

The ‘Moving toward gender balance in private equity and venture capital’ report explores the link between financial returns and gender diversity; the lack of women in the industry; and steps needed to achieve gender balance. One of the key findings of the report is that private equity and venture capital funds with gender-balanced senior investment teams generated 10 percent to 20 percent higher returns compared with funds that have a majority of male or female leaders.

Highlights

  • The lack of gender diversity is acute in emerging markets’ private equity and venture capital. Eleven percent of senior investment professionals in emerging markets private equity and venture capital are women, which is roughly comparable to the 10 percent observed in developed markets. For portfolio companies, emerging market female entrepreneurs receive only about 7 percent of investment capital.
  • Gender balance is positively correlated with higher performance. Private equity and venture capital funds with gender-balanced senior investment teams generated 10 percent to 20 percent higher returns compared with funds that have a majority of male or female leaders. Portfolio companies with gender balanced leadership teams have outperformed in median valuation increases by as much as 25 percent than non-diverse teams.
  • When women are represented as investors, women-led businesses get more funding. There is a correlation between gender balanced Gender Partners and portfolio company diversity. Only 7% of deals done by male investments partners were in women-led businesses, but for female partners, it was twice as much at 12%.

Contents

  • Executive Summary
    • Top Ten Findings
    • Recommendations
  • Overview and Approach
    • Report Objectives
    • Overview of Private Equity
    • Gender Diversity and Financial Performance
    • Methodology
  • Gender gaps in Private Equity and Venture Capital
    • Women as allocators or capital
    • Women as recipients of capital
  • The Relationship Between Gender Balance and Performance
    • Gender balanced fund performance
    • Benefits of gender balanced General Partners
    • Gender balanced portfolio company performance
    • Benefits of gender balanced portfolio companies
  • Steps General and Limited Partners Can Take to Move Toward Gender Balance
    • General Partners–Managing the Talent Pipeline
    • General Partners–Managing the Investment Funnel
    • Limited Partners–Catalyzing Change in General Partners
  • Conclusion
  • Bibliography
  • Appendix A: Detailed Methodology
  • Appendix B: Overview of existing research on gender diversity and performance

 

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