February 27, 2020

Breaking the VC Glass Ceiling By Investing In Women Social Entrepreneurs

Breaking the VC Glass Ceiling By Investing In Women Social Entrepreneurs

This article was originally published by MeiMei Fox on Forbes.

Recent data shows that companies with at least one female founder received just 18% of the venture capital injected into the startup economy. The percentage of VC dollars dedicated to all-female founded teams was less than 2% in 2018. The fact that a glass ceiling exists when it comes to VC funding is undeniable. FINCA Ventures aims to change that. The impact investing initiative by global microfinance pioneer FINCA International provides capital and pre- and post-investment support to high-impact, early-stage social enterprises seeking to improve economic productivity and resilience in low-income populations. Many of them are co-founded by women.

In the last three years, FINCA Ventures has invested in eight companies in sub-Saharan Africa that seek to democratize affordable access to basic services or meaningfully grow incomes in the agriculture sector, which employs 70 percent of people there. “Our call to action comes from the pressing issues of climate change, technological advances, and globalization unleashing indeterminate economic and labor shifts globally,” says Ami Dalal, who manages FINCA Ventures. “We have an opportunity to work within these changes to create new kinds of business models that promote more equitable economic growth and shared prosperity.”

In her job with FINCA Ventures, Dalal seeks to support entrepreneurs who are creating business model disruption using technology and innovation to raise standards of living, reduce costs, connect markets, or improve the flow of information for farmers, small businesses and households. She evaluates investment opportunities throughout sub-Saharan Africa by spending lots of time with entrepreneurs and their customers—understanding how a product or service works, what challenges early-stage companies face getting that product or service to customers, the unmet wants or needs of customers, how much capital entrepreneurs need to answer a set of questions before the next stage of growth, and how to address each of these dimensions. Once the team makes an investment, they work closely with the company’s founders to robustly define the business plan and priorities, and then support their ability to execute that plan.

As a second-generation Indian American, Dalal says “the immigrant experience tinctured nearly every aspect of my life.” Her parents emigrated to the U.S. to create better opportunities for their children and then worked to create opportunities for others. So, Dalal always felt a strong calling to civic responsibility. Through FINCA Ventures, deploying capital to early-stage ventures mostly led by women, she hopes to create similar opportunities for families and small business owners in underserved markets, albeit in a different kind of way.

After taking an economics class at a local college in high school, Dalal felt motivated to study finance in college. This led her to embark on a career in investment in real estate, infrastructure and, now, early-stage companies in developing markets. “Across what are varied experiences, the through-line for me was investing in businesses that created real assets in cities and communities,” she says. “As I became more experienced, I wanted to have a greater voice in where capital went and to ensure that it went toward people, places and things that needed it the most. In my current role, along with the team that I work with, I can be that voice—to mobilize capital to markets that are harder to work in and to direct attention toward entrepreneurs that elect to work in these markets to solve critical socio-economic challenges.”

The greatest challenge Dalal faces is also her greatest opportunity, as she sees it. Career pathways in the impact investing space are still emerging and the landscape is rapidly growing and changing. This creates a wonderful opportunity to be an agent of change and shape what is still a relatively small sector with new ideas and principles. Her hope is to fuel impact investing until it becomes as large as traditional investing, if not the new norm. Notably, women have taken real leadership here, Dalal is quick to point out. “There are several female fund managers in this space already: Lisa Hall [formerly] and Dimple Sahni at Anthos Asset Management; Lauren Cochran at Blue Haven Initiative; Els Boerhof at Goodwell Investments; Marilou van Golstein Brouwers at Triodos, Elizabeth Seeger at KKR & Co., Ritu Verma at Ankur Capital, Tove Larsson at Norskken Foundation and Kesha Cash at Impact America are just a few of the women in leadership positions in the investing community who are bringing an active impact lens.”

It’s not a coincidence that women are leading this effort, seeing opportunities that others have overlooked, says Dalal. “Diversification brings a competitive edge. It enhances perspective, networks, ideas, and solutions.” Dalal references a highly critical article in The New Yorker by Nathan Heller about what he calls Venture World. The critical distinction, according to Dalal, is that the pioneering companies backed by FINCA Ventures and the aforementioned women look nothing like the enterprises of Venture World.

“Perspective matters,” says Dalal. “To that end, I am excited to see the work being done to support first-time female fund managers. I welcome the active and open commitments financial institutions are making toward more equitable gender representation on Board of Directors and in the companies they invest in. And I commend the emphasis that fund managers are applying to back female founders. These are three things that we are certainly focused on at FINCA. As these commitments manifest, the swells they are unleashing will make waves in the business community at large, creating better business models, better strategies for investment and improved approaches to corporate governance.”

“It is a combination of privilege of opportunity and good fortune when you can pursue a career that has deep personal meaning,” says Dalal. “This also makes me better as an investor because my passion and my competencies are fully aligned.”

Dalal believes that many factors influence how we choose our jobs and careers: family, life context, economic circumstances, and general timing. These factors also impact how clearly we listen to the inner voice calling out our life purpose. Her advice is not to silence that internal voice. “Be intentional yet flexible in charting your career by writing down short-term and long-term goals. Recognize there is a time for big bets vs. incremental changes and that both are okay, but always show bias toward taking action. Try to build specific competencies and broad perspectives so that you can adapt to change. And finally, build your community by giving help and asking for help in return.”