06/05/2015 | Ironwood Insight
My Take-Away from the Women in Investing Roundtable
On May 28th I participated in the Women in Investing Roundtable, hosted by the White House Business Council and the U.S. Small Business Administration. In attendance was an impressive collection of women in senior positions within the investment industry, policy leaders and senior administration officials.
It was an honor to be part of this gathering of over 50 accomplished leaders, all in one place to talk about the issues, challenges and opportunities pertaining to women in or thinking about investment careers. In my role as a member of the Executive Board of the Small Business Investor Alliance, a private equity trade association, I’ve seen firsthand the positive impact that public and private sector programs have already had on women in small business, so it’s exciting to see this issue tackled head-on by industry leaders from some of the most respected firms and agencies in the country. We want to raise awareness about the dearth of women in investment careers and the benefits of investing public and private money in funds led by management teams that include women.
“There are a number of programs sponsored by the federal government to help fund managers, business owners and entrepreneurs and we want to make sure women take advantage of these. There is no reason for women not to benefit from this unique opportunity,” remarked Kelly Williams, President, GCM Grosvenor Private Markets. Kelly is a driving force behind this effort. Her firm is one of the world’s largest alternative investment firms with over $45 billion in assets under management and her team members demonstrate the benefits that diversity provides to an organization. She is a founding board chair of the Private Equity Women Investor Network (PEWIN), a group of 250 senior women in private equity and an inspirational leader in her efforts to encourage investors to support more women- and minority-led firms.
The U.S. Small Business Administration (SBA), led by SBA Administrator Maria Contreras-Sweet, Associate Administrator, Office of Investment and Innovation, Javier Saade, and Senior Advisor Nate. T. Yohannes, hosted the event. The SBA, already a significant resource for small business, has done an effective job establishing programs that support women and minorities. Along with its efforts in raising awareness and creating new opportunities for entrepreneurs, the SBA tracks and disseminates statistics on the success of women and minorities in business. They have some impressive numbers to share: in the past 12 months the SBA has increased its loans to women by 24 percent; African-Americans by 33 percent; Hispanics, 20 percent; Asian-Americans, 10 percent; Native Americans, 14 percent; and veterans, 7 percent. Other recent evidence of these efforts includes the licensing of Avante Mezzanine Partners mezzanine fund as a Small Business Investment Company. Jeri Harman, CEO of Avante, traveled from Los Angeles to attend the roundtable. At the event, Administrator Contreras-Sweet underscored her belief that this type of data-tracking effort, already in place at the state and federal level, should extend to private industry as well. The business axiom, “what gets measured gets done,” certainly rings true in this instance.
One of the action items discussed by attendees was influencing the process by which institutional investors assess potential investment managers. Do they ask if there are women in leadership roles in the companies in which they invest? Do they seek managers that support diversity initiatives? The point made repeatedly at the White House roundtable discussion was this – if we all ask the questions enough times, the answers might start to change.
At Ironwood Capital, we track our portfolio prospects to determine if they are owned or managed by women and minorities, support low- and moderate-income communities, and invest in businesses that pursue environmentally responsible outcomes and we regularly update our investors regarding this information. We don’t assess the investment attractiveness of these businesses any differently than other businesses. All investments are underwritten and priced consistent with every other Ironwood investment. In a 2014 report from the Case Foundation, this practice is referred to as “market rate, with impact.” The report cites Ironwood Capital as an example of an investor that looks at these types of “investments like any other, with the expectation of market rate return, but then filter(s) for social impact as well.”
According to the SBA, nearly 3 out of 10 American companies are owned or run by a woman. Women-owned businesses employ more than 7.8 million workers. But the bottom line on women in the investment industry is that there are not enough of them – not enough coming into the industry, not enough in the mid-tier of leadership and certainly not enough at the top.
My take-away from this inspiring event is to redouble my efforts as a managing partner of an established private equity firm to raise awareness about how businesses small and large can continue to drive the positive innovation we see today. Perhaps you already have successfully undertaken diversity efforts in your own companies and it’s working well for you. If so, great! If not, please think about what you can do within your organization to create better data and transparency with respect to diversity and social impact. As we have all seen following the 2008 financial crisis, data, focus, questions and transparency can drive fundamental change in the investment industry.
