Suzanne Biegel, a gender lens investing pioneer at Wharton's Social Impact Initiative, recently discussed the field’s latest trends.

Gender lens investing — using capital to alleviate the economic plight of women and girls — is gaining steam. From being a blip on the screen a mere two decades ago, this field is being embraced by more than 100 private and public funds. And their investment products are getting more targeted: Investors can put money in funds that aim to improve women’s access to health care, for example.

Suzanne Biegel, a gender lens investing pioneer now at the Wharton Social Impact Initiative, recently spoke with Nick Ashburn, the institution’s senior director for impact investing, to discuss the field’s latest trends.

An edited transcript of their conversation follows.

Nick Ashburn: What is gender lens investing?

Suzanne Biegel: Gender lens investing can be defined in a few different ways. One is to think about how you integrate gender analysis into financial analysis to get to a better outcome in any investment. Another way is to think about how we use capital intentionally to achieve positive impacts on women and girls.

You might think about women’s access to capital. You might think about products and services that positively affect women and girls or take advantage of the women’s market. You might think about where women show up across the value chain of a business, in governance, in leadership, in supply chains and distribution channels all the way through to end customers. And you might be thinking about how we use our capital intentionally to shift structural gender inequality.

Ashburn: Help me better understand the demand for this type of investment.

Biegel: When I started doing this kind of investing 17 years ago, it was hard to find other people who were ready to be in this conversation. There were people coming from an international development perspective who were asking, ‘How do we get capital to women entrepreneurs?’

The microfinance industry was thriving. There were people who were thinking about how we get capital to women entrepreneurs, especially in tech, because it was the boom of the tech emergence. There were people who were starting to think about women on boards and in governance, but it was very early. When I really looked to deploy capital 17 years ago with this kind of a lens, there was one fund that with a public equity strategy. There were some women’s opportunity loan funds in local communities, but it was pretty scarce.

Over the past 17 years, we have seen demand come from the investor community, from individuals to institutions, from players in the private markets to people in the public sphere and international development, multilaterals and the development finance institutions. And it’s coming for a few different reasons. One is because people are seeing the rise of women as consumers, whether that’s in B2B or on the consumer side.

The second is that people are sharpening their understanding of where the problems are around gender equality or women’s and girls’ access to education or health care or financial inclusion, and how capital can be part of the overall solution. People are seeing the opportunity that is out there to invest and back high-tech, high-growth women entrepreneurs or fund managers who are developing funds around women’s access to capital or around smart business that has women in leadership.

“When I started doing this kind of investing 17 years ago, it was hard to find other people who were ready to be in this conversation.”

As the additional supply of investible opportunities has grown, that has also influenced demand. As women and men who get it about gender equality and the opportunities to invest with a gender lens are starting to be more vocal, they’re pushing to see more product get created. So, it’s a two-sided market.

Ashburn: Now there’s opportunity to invest in things that we hope will improve the lives of women and girls. In the broader conversation around environmental, social and governance factors, or impact investing with the intentionality lens, a lot of people are saying that if you’re taking into account these different factors — gender being one of them — it’s better business. These will be better-run companies. How does that resonate with you?

Biegel: I’m spending a fair amount of time in Africa and south Asia right now. Whether I’m speaking with male or female business leaders, they’re telling me it just makes sense for us to have women in sales and marketing roles if we are marketing to women. If we are working with primarily women in the value chain, in the supply chain, then we should have women who are thinking about what are the barriers and opportunities for that workforce. If we are designing products and services where women are the primary consumers, it just makes sense to have women in roles of design and development of products and thinking about distribution.

Ashburn: To take that a step further, let’s say Dove body soap is not a women-only product but is often marketed to women. We wouldn’t necessarily expect a room full of men to better understand how to market that product to women.

Biegel: It’s not to say that a room full of men might not. But it is to say that if you are thinking from a user-centered design approach, you would be thinking not only what is it about the product, but what is it about how we speak to our consumer audience, where can they get it, are we respectful in how we’re portraying our target audience? We’d be taking all of that into account, so you’d naturally want to have diversity on the teams that are making those decisions.

Ashburn: You talked about the increase in investment products with a gender lens. What are some of those?

Biegel: On the macro level, we can be looking across all asset classes. The thing that I’m most excited about at the moment is where we can use private equity and private debt. We’re working on a research project here at Wharton that is focused on mapping the field around private equity and venture investing with a gender lens. When I tell them that, people think that I’m going to talk about maybe five or 10 or 15 funds that have that kind of approach. At the moment we’re tracking over 100.

They are domestic and emerging markets, they are very specific around particular sectors and themes, and they’re really thinking about where women are in the picture in terms of leadership. So, it’s a fund to invest in women entrepreneurs in Ohio, or it’s a fund to invest in women who are focused on high-tech, high-growth companies that are in cyber security and AI and deep tech and deep science. There really is a diversity now of structured vehicles that are emerging, and that’s really exciting.

Ashburn: While I understand that the private markets are a great place to have impact, there’s more in public markets in terms of scale of capital on the supply side. If I have more of my assets in that and I want to invest with a gender lens, what might I be considering in that market?

Biegel: On the public side, we have a project that we did with various wealth partners last year that we dubbed Project Rose where we wanted to show the size and the scale of what you could be in from a listed company’s public equities and public debt standpoint. We’re tracking about 20 different fund managers and strategies with an explicit gender lens, a gender lens mandate if you will. What they’re primarily looking at is women in leadership, women on boards, women in the C-suite, women in management.

But there are some that are going further and looking at policies and practices, where are they on pay equity, where are they on providing access to sexual and reproductive health services, for example. No one that we’ve seen so far has gone all the way through to looking at supply chains and products and services and some of the other things that I think will be really important indicators. But even at that level of looking at women in governance and women in leadership, you have the big banks bringing out products. You have some explicit fund managers doing it. And you have this ability to be in small cap, mid-cap.

Ashburn: So, there are investible products out there in the marketplace.

Biegel: There are. In 2014, there were about $400 million under management that we could see. Just bringing it forward to 2016, there’s about $600 million under management across these 20 strategies, and that is for funds that really haven’t articulated a gender lens mandate. There are a number of other strategies where they use gender as a factor of analysis in ESG (Environmental, Social and Corporate Governance) and are even doing shareholder activism around gendered shareholder proposals, but that represents a whole other pool of capital.

Ashburn: Your role with us at the Wharton Social Impact Initiative and the work that we’re doing together is starting to uncover what is out there because it is nuanced, it’s varied. Some people are more forthcoming around using a gender lens in their analysis. What do you think working with an institution like Wharton brings to this space?

“People are seeing the rise of women as consumers, whether that’s in B2B or on the consumer side.”

Biegel: It’s important that we help people see the breadth and depth of the field. I think that Wharton as a finance [-focused academic] institution really can bring the question of what is the evidence around performance, help people make sense of the different strategies that different fund managers are deploying and help to amplify [the message] to the finance community, not just to general public but really within the finance community. This is a field of investment that is emerging, and these are some of the really important research questions that are coming from that. We can help people make sense of what good looks like.

Ashburn: The Wharton Social Impact Initiative has been doing this long-term study on impact investing private equity. Impact investing fits into a gender lens profile, but not everyone is calling themselves gender lens impact investors. Where might we find funds that are interested in gender lens?

Biegel: We’re tracking 120 funds that we have now broken into four or five different categories. The first are funds that have an explicit, quantified gender lens mandate. They may self-identify as an impact fund, or they may not identify as an impact fund. In some cases they’re allergic to being referred to as an impact fund. Their view of impact is that they’re getting access to capital for women entrepreneurs in high-tech, high-growth arenas or in particular categories that are really growing.

Ashburn: These investors are saying in their investment thesis or more publicly, “this is our stated goal,” and often with a number to quantify what their goals are around this, correct?

Biegel: Yes, so 50% of our portfolio will be into companies with women co-founders, or 100% of our companies will be looking at women’s economic empowerment as the end goal, irrespective of who’s in leadership. That’s quantified gender lens mandate. We have another category in this taxonomy that we’re evolving that is a gender lens mandate. People are saying we absolutely are committed to a gender lens in our fund, but we’re not going to quantify what percentage or how many people need to be on the board or in the C-suite or in the audience.

Another category is gender consideration. That’s really about using gender as a factor of analysis in looking at deals. Again, it’s not a commitment that we’re going to invest in women entrepreneurs or in companies that take advantage of the women’s market, but that we’re looking across the whole suite of areas of analysis.

There’s another category that is really interesting for us where you might have a lot of women in fund management, for example, which is still so, so small, where we think that there is a gender lens in there, but they’re not stating it publicly in their marketing materials, in their deal docs. But we have watched what they’re doing and think that there’s more of an opportunity to bring and sharpen their gender lens in a way that they’re not even speaking about.

Ashburn: Let’s take your Wharton Social Impact Initiative hat off and put your practitioner gender lens investor hat on. What would you like to see as an investor to help you make these decisions?

Biegel: This is exactly one of the reasons why I got this work started with various wealth partners and Wharton. As an investor who’s deploying capital, I want to understand the different strategies of these fund managers so I can make sense of the choices that I have. What kind of capital are they using? What is their thesis around using a gender lens? What sectors and themes are they in? What geographies are they focused on? What stage of companies are they looking to help or address? What are their financial goals as well as their social impact goals? How do they look at the market? Where do they see the trends or what are the problems they’re really trying to solve?

“People are sharpening their understanding of where the problems are around gender equality … and how capital can be part of the overall solution.”

I might come to the conclusion that none of these funds is doing exactly what I want and that I might want to start and seed a new fund, as some have done. I might come to the conclusion that I want to launch my own fund or put money into a number of these funds that are really tied to the strategies that I’m looking to accomplish. And I really want to see the growth of capital going towards promising entrepreneurs, male or female, who are solving the kind of problems that I’m looking to solve.

Ashburn: Is there a demand-side challenge in terms of the investible opportunities and the private markets where people are addressing these issues?

Biegel: There’s no shortage of demand for capital. I think that’s in the billions, even just within the United States, much less when you get beyond the U.S. We’re tracking this on a global basis. If you’re very specifically saying I want to invest in technology companies that are disrupting slavery and trafficking, what’s the quality of the deal flow there? Or if I want to invest in global women’s health with a particular target audience in mind, what’s the quality of the deal flow there?

The opportunities for co-investments across these different funds is also starting to emerge, which I think is very interesting. The question for the strategy that you’re taking as a venture fund or private equity fund is, how are you also able to bring other gender impacts to life and forward with your power as an investor?

One way that fund managers are approaching this is to say, “If I spot an opportunity that I think is a really strong business, going after a solid market with a good management team and a good understanding of product market fit and all the things that we would normally look for in private equity and debt opportunities, and I don’t think that they’re as strong as they could be from a gender perspective, I can use my power as a fund manager or as a limited partner in a fund to influence their evolution.” Whether that’s adding more women to the board, whether that’s looking at the management team, whether that’s looking at helping them sharpen how they’re thinking about marketing and sales or distribution, the opportunity in the private markets that we have is to really influence these companies.

Ashburn: What I love about looking at the gender lens investing space as a researcher is when I look at this as a factor of analysis, or the intentionality that I want to invest to improve the lives of women and girls, I see this as an opportunity to dive deep into one theme or sector. At the same time, these principles that maybe we’ll uncover through the research will be applicable to other factors outside of gender. How could you see that playing out?

Biegel: Some people are really interested in the question of looking at race and class and gender and ethnicity. Where does adding a conscious approach to thinking about diversity improve the financial performance or the social performance of a fund or of a particular business? By focusing on gender, we may also uncover good questions and good trends to be thinking about in other forms of diversity.

We’re at a point in our evolution in the field of gender lens investing where we don’t necessarily have strong correlation data, and we definitely don’t have strong causation data, about when you look at gender in particular areas does it automatically have a positive financial or social effect.

“This is a field of investment that is emerging.”

One of the things we’re really hoping to do within this field is uncover some of those correlations, especially where is the opportunity for causation. In comparing with non-gender lens mandate funds or with funds that don’t have this, we would be able to show that having that level of diversity or paying attention to markets and trends helps you to deliver a better performance on both a financial and a social basis.

Ashburn: Suzanne, you are one of the foremost experts in this field both as a practitioner and a researcher. What are you most excited about in the future in this space?

Biegel: I am really excited about uncovering how we’re matching structures of capital to the problems that we’re trying to solve, whether that is in a thematic or sectoral areas or for what kind of business is the right capital appropriate. When does it actually make sense to blend philanthropic capital and debt? When does it make sense to have a peer-to-peer lending structure? When does it make sense to have something that doesn’t have a classic 10-year and “2-and-20” structure that is known in the venture capital industry? And where will we need new tools, new forms, new structures that are going to better suit the needs of the entrepreneurs that we’re aiming to help?

We have an opportunity to get more and more refined about enabling people to match the investment structures and strategies with the problems they really want to solve or the market opportunities they really want to see. I think we’ve gone from broad-based investing with a gender lens or investing in women entrepreneurs to being able to get more precise and say, “I care about improving the quality of women’s and girls’ access to health care,” or “I care about girls’ access to education. What can I be in?” That differentiation is something that’s starting to happen. And I think we have both a need and an opportunity to help people see that. The ability to seize market opportunities and to solve problems is just getting more and more refined.