What Private Market Fund Managers Just Told Us, and Why We Should Listen
On a recent listening tour, we heard perspectives on gender finance in the current crisis from 38 private equity, venture capital, and private debt funds with a gender lens, across 15 countries. While everyone’s experiences, capacity and appetite were slightly different, many are facing challenging times (as are many non gender lens funds right now). There is no doubt that some of these funds will not survive without investors who are committed to moving forward despite the current fundraising climate.
“If we go down during this unprecedented time, the great progress made to advance representation in venture capital the last few years will be lost. And it matters because of the multiplier effect that women investors have proven out”
It is easy to feel disheartened by the current situation in global markets, however many of the fund managers we spoke to are investing in gender-smart solutions we need today and in a post-COVID-19 world - including access to critical services, financial inclusion, and healthcare products. Several of these funds were approaching closes when the crisis hit; some are pivoting to take care of their existing portfolio companies with emergency bridge loans, or creating new vehicles in direct response to the crisis. (We have been tracking the gender lens in COVID relief financing and will cover this in a separate post.)
Here’s what we heard.
Challenges
Due diligence in lockdown. Funds want to keep the work going, but remote due diligence by LPs remains largely untested for the purpose. “I’m just not sure how much trust can be gained virtually”, said Andia Chakava at Graca Michel Trust. We hope that the investor community can build new muscle, relationships, and tools to enable diligence and diligence sharing at a distance
Diligencing pipeline and building capacity with investees is a challenge the longer the pandemic goes on, particularly in developing markets where internet access is unreliable and technology infrastructure is more expensive
Some promising potential portfolio companies and existing portfolio companies are in distress right now - how to best support the diversity of their needs, while also needing to prioritise on continued fundraising
Immediate Needs
Supporting existing portfolio companies through bridge loans, grants, or business support (and how to afford that)
Connections with other funds in their region or sector for co-investment, market insight, and shared learnings - increased collaboration is one silver lining in the crisis
Support for first time fund managers. GenderSmart is launching a working group to tackle this longstanding issue which is a critical global barrier to more women fund managers
Engagement with investors and intermediaries to ensure gender finance remains on the agenda. Often during challenging times we go back to old ways of doing things for a sense of safety, but this is not good for business, society or funds. “When everyone is in panic mode, the gender lens can go out the window,” said Cathy Goddard at FyreFem Fund Managers
Emerging Solutions and Opportunities
Business advisory for SMEs - one fund manager who has significant business turnaround experience is trying to ensure that a gender lens is taken into account when coaching companies for survival and resilience
New vehicles for COVID response and resilience - fund managers across a variety of geographies are working to better understand the diversity of needs amongst their portfolio companies and develop appropriate, fast, new vehicles for COVID relief, and are looking for funding and investing partners to join them
“The pandemic has created an inflection point, and with substantive change comes substantive opportunity, said Shally Shanker, founder and Managing Partner of AiiM Partners. “As we restart the economy we can reboot sectors of the economy in a lower risk, future positive manner without the normal tradeoffs and sacrifices that come from going concerns anchored in past industries.”
Capital Connect will now be held on 4 December, 2020 in Central London - the largest gathering of private capital vehicles with a gender lens in one place, ever. If you’re an investor in gender lens funds and want to find out more now, or to consider attending in December, email capitalconnect@gendersmartinvesting.com
The GenderSmart listening tour took place between 25 and 27 March, 2020.