Even in 2022, the problem of the funding gap between male and female founders remains widespread in the global tech startup ecosystem. Many solutions have been proposed to solve this problem, but putting women first by making them a target for impact investing has been popular. Investors aim to make a positive impact in society by investing in female founders as part of their impact investment strategy.
But is this really the best solution to the problem? What impact does it have on female founders, the industry and society in general? Is it possible that focusing on women for impact investing is doing more harm than good?
On November 11, at the She Loves Tech Global Conference 2022 in Singapore, the organization hosted a debate on women as a focus of impact investing and whether it is the right way to go. Chaired by Arvin Abraham, Partner at McDermott, Will & Emery, the debate included leading names in the global startup ecosystem: Kamila Katya Sharipova (Sturgeon Capital), Michael Lints (Golden Gate Ventures), Mohan Lakhamraju (Great Learning) and Shiyan Koh (Hustle Fund).
Lakhamraju opened the debate by arguing that in the context of a mature market, putting women at the heart of impact investing is counterproductive to the goal of promoting gender equality in the startup ecosystem. He advocated meritocracy, calling the proposal “an insult to the skills of female founders”.
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In response to his argument, Sharipova put forward data on how capital going to women hasn’t moved in recent years and that companies aren’t “operating in a vacuum” – meaning business owners need to be aware of how their business affects society. This required a form of affirmative action represented by women as the center of impact investing.
“If you have a positive bias about investing in diverse teams, or teams that understand diversity… it teaches women that investing in talented women is the wisest decision [one can make]’ explains Koh as part of the opposing team.
Concerns about the long-term implications of women-centric impact investing continued to surface throughout the debate. In his speech, Lints pointed out that impact investing for women is nothing more than a “minimum contribution” and a “check the box” step in creating a level playing field and promoting diversity.
“We also need to remember that impact investments are often the first to disappear in times of crisis,” he stressed.
As a viewer of the debate, if I had to pick a winner, I would give it to Sharipova and Koh’s team. However, the point difference between the two competing teams is relatively small.
In determining the winner, I look to the team that can explain their points and defend their main arguments.
While Lakhamraju opened the debate with a bold point about the values of meritocracy, this point was touched upon lightly by Sharipova in the opening of her speech, when she pointed out that meritocracy is not achievable in every market. In communities where there is an apparent gap between the capabilities of men and women, policymakers (and those in power) should take steps to ensure that everyone can get to the starting point at the same time.
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The affirmative team returned to the top with Lint’s argument on long-term impact and sustainability. While these may have been the points that saved the team’s spot, I noted that Sharipova’s earlier point about the need for positive action stood – Lakhamraju and Lints’ ideas could not be realized without acknowledging the different situations on the ground.
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Impact Investment Focuses on Women: Does it do more harm than good? first appeared on e27.