Serving the financial needs of women-owned businesses in emerging markets: Perspectives from the DGGF Portfolio
DGGF aims to foster innovative financing products and invest in specific target groups, i.e. entrepreneurs in fragile states, young entrepreneurs and female entrepreneurs that face high barriers to attracting capital. DGGF set out to identify where and how it is currently reaching female entrepreneurs, and to gain a better understanding of what capital providers (i.e. both institutional investors who also operate funds of funds and local fund managers) can do to better serve female entrepreneurs’ financial needs. The research focused on what could be learned by concentrating on the SMEs financed by the funds in which DGGF has invested. The analysis of the DGGF Portfolio revealed that 20% of the underlying SMEs are majority or minority owned by women. 28% of the invested capital reached this segment through a variety of instruments. Despite the supportive attitude of fund managers, very few apply gender considerations or mandates when assessing opportunities or deploying capital. In order to be able to invest in women-owned businesses, fund managers need to proactively seek out female entrepreneurs and know how they go about their work, as women may not actively seek external financing.
Institutional investors are actively pursuing gender strategies and most are applying multiple gender lenses (not just +51% ownership). Many investors are collaborating with other players, something they consider necessary to arrive at consensus on defnitions, create an efective evidence base and to scale the sector. At the same time, institutional investors are not consistently providing fund managers with feedback on results or experiences, making it difcult for fund managers to assess what is and is not working and where women are getting lost in the investment process. Closer collaboration and continuous feedback would also help sector players to develop and share best practices that could beneft all the stakeholders in this sector.