What Does RBG's Death Mean for the Investing World?
We were devastated by the recent passing of Justice Ruth Bader Ginsburg, a pioneer in uncovering and eradicating much of the gender bias that lurks behind the laws, policies and norms that impact our daily lives. It’s not easy to lose a hero like RBG. But, there is a tremendous role that the investment community can play in carrying forward her mission of social justice and gender equality. In addition, there is a growing set of tools -- and body of research -- to support investment advisors in building institutional portfolios that embrace the financial and the social impact goals of their clients, without sacrificing returns. This point of view is catching on with millennial and female investors, and with women set to control ⅔ of the wealth of our country within the next ten years, CIOs need to be ready to respond.
While a gender lens can be applied across an entire investment portfolio, at Rethink Impact, we approach this work exclusively through venture capital for very specific reasons. As RBG said, “women belong in all places where decisions are being made” and this is especially true with venture capital. Nearly half of public companies founded in the United States since 1980 have been VC-backed. This matters, because public companies become household names and are core to our economy. Their leaders’ actions make headlines and their decisions and policies shape global trends. Yet, the group of people involved in starting, funding, and guiding these companies in their earliest stages is over 87% male and 97% white.This lack of diversity impacts which problems get solved, which products get made, and which points of view contribute to their design,not to mention who benefits financially (or doesn’t) when these companies find success. Who’s in the room at the beginning matters. That’s where gender lens VC comes in, and it’s changing the game in terms of who’s receiving VC funding and who’s writing the checks. What’s most important, however, is that it’s working for investors and is poised for rapid growth.
Venture capital firms that boosted female partner hiring by 10% saw a roughly 1.5% increase in fund returns each year, with 9.7% more profitable exits over the long haul. Female CEOs are, on average, generating more revenue per dollar invested and delivering returns to their investors faster than their all-male counter parts. Women are building billion-dollar businesses at a faster rate than ever and rather than pattern matching against founders like Mark Zuckerberg or Travis Kalanick, VC investors are coming to see leaders like April Koh, whose precision mental health company Spring is now reaching a quarter of a million employees, and Helen Adeosun, who is building Care Academy to upskill one million home-based care workers in the next few years, as the potential unicorns of tomorrow. It’s time for the investment community to catch up with the data around investing in women, or risk leaving both societal impact and financial returns on the table.
Women need a voice in the companies that shape their lives, and gender lens investing is one way to do it. The opportunity, both socially and financially, is huge—but the change is too slow. RBG’s successes lay the groundwork for the investment community to continue her work, through the eyes of a fiduciary. When will we have enough female founders and VC funders in our economy, you ask? We will let RBG have the last word on that one.