I was pleased this morning to read about another commitment to expand access to capital for women and minority entrepreneurs. Investors’ Circle was founded 24 years ago with an access-to-capital mission, one that continues to this day – to increase the flow of capital to companies that are addressing our society’s challenges as well as generating financial return. Increasing the engagement of women, both investors and entrepreneurs, is a critical step in this work.

“Social finance movements each address questions of power and recognize that whoever controls capital defines whose interests matter. Changing what matters in investment decisions often requires changing who is making the decisions.”
-Criterion Institute’s Report, The State of the Field of Gender Lens Investing

Since its founding, IC has insisted that a company’s impact on society, not just its financial return, matters. Valuing relationships, impacts, and respect for entrepreneurs – not just bottom lines – has been more welcoming to investors committed to a more holistic approach to investing. I believe this broader definition of what matters is one reason that IC has been ahead of the game in regards to engaging women. Our investor membership has traditionally been at 30% women, ahead of the female angel representation which has historically been below 15%.

Per the quote above, I am convinced this more diverse room has resulted in a more welcoming environment for women entrepreneurs, as 35% of companies that have received funding from IC since 2012 are women-led, above the more typical sub-20% of the broader angel field. At our national Beyond the Pitch event in Boston last week, 50% of the selected pitching entrepreneurs were women, and two-thirds of the companies had women in leadership positions.

Investors attend our Boston Beyond the Pitch Event last week where 50% of the entrepreneurs were women.
Investors attend our Boston Beyond the Pitch Event last week where 50% of the entrepreneurs were women.

Inclusion of broader values has attracted a more gender-diverse community, which in turn continues to normalize a more diverse image of an entrepreneur, while also normalizing due diligence questions that go beyond the bottom line. If we are to be truly successful in our social finance movement, this virtuous cycle must continue to expand the community at the table. Representation by women should reach 50%, and we must see progress in more ethnic and racial diversity as well as a diversity of backgrounds beyond finance if we are to achieve an inclusive and sustainable economy.

Why does expanding what matters matter? It is common sense, as well as standard economic understanding, that more information leads to better decision-making. To continue to insist that one can grow a successful, long-term business with blinders on, oblivious to broader perspectives and environmental and social externalities, is folly. In this age of greater customer expectation and transparency, blinders increase risk and miss opportunity. More perspectives, whether informed by gender, ethnicity, or life experience, bring critical value to the decision-
making. Yes, taking the blinders off is more complicated, but it is ultimately more rewarding and necessary in our quest for a sustainable economy.