SUMMARY
Women make up a mere 2.4% of founding partners with control of capital in private equity and venture capital (PE/VC) firms
One of the primary reasons for this gender disparity in the investment industry can be traced back to traditional gender roles and societal norms
By bringing more women as leadership levels, the industry will create role models and demonstrate that there is longevity and success for women in PE/VC
Despite rising awareness about gender equality on a global scale, a significant gap still exists in the representation of women in the investing industry across markets. The underrepresentation of women in India’s investment landscape is an issue equally pressing and urgent.
Women make up a mere 2.4% of founding partners with control of capital in private equity and venture capital (PE/VC) firms, as compared to traditionally male-dominated sectors such as manufacturing and infrastructure, where women hold 25% and 19% leadership positions, respectively.
Conscious And Unconscious Biases Limit Access
One of the primary reasons for this gender disparity in the investment industry can be traced back to traditional gender roles and societal norms. Historically, women were not actively involved in decisions involving finance and investments, perpetuating the notion that finance and investment fields are better suited for men.
Stereotypes like these play up into unconscious biases that affect the availability of opportunities and access to women. Women’s skills and capabilities in finance and investing are frequently underestimated and undervalued, leading to their exclusion from opportunities in the investment landscape.
These stereotypes also influence the professional choices that women make, with fewer women considering investing as a career option. The few women who take the plunge are frequently faced with biases that affect their growth, progress and success.
In addition, due to these biases, women entrepreneurs may face challenges in accessing capital and securing funding for their ventures. This creates a self-perpetuating cycle of fewer women in the industry and fewer women at the top – which in turn, creates a barrier for women to enter or advance in the investment industry.
The investment industry usually relies on connections. It’s a tight-knit community. Over 75% of investors hire through their networks. In India, where the investment landscape is predominantly male-dominated, women have limited access to the inner circles.
This, along with biases, reduces the participation of women in the private equity and venture capital (PE/VC) sector. It is important to recognize the need to de-bias the investment industry and create an inclusive environment that promotes gender diversity.
Time To Remove The Shackles
Gender diversity is not just a matter of social justice; it is a business imperative. Numerous studies have shown that diverse teams and organisations outperform homogeneous ones in terms of financial performance, innovation, and decision-making.
However, the path to diversity requires changes in practices, policies and the operative culture. We must begin with equal access and opportunity and move on to removing the systemic barriers that exist, step by step.
Gender diversity is a leadership agenda and bringing more women in senior leadership teams, decision-making roles and key operational positions within PE/VC firms will be crucial.
By bringing more women as leadership levels, the industry will create role models and demonstrate that there is longevity and success for women in PE/VC. Having more women will create a natural challenge for existing biases and stereotypes, ultimately fostering an environment that is inclusive for women investors and entrepreneurs.
It is important to work with both genders when it comes to handling the challenge of gender diversity. This is not about excluding men. Rather, it is about broadening and deepening the pipeline for the industry, whether it is for talent or investees, by including women in it.
The Way Forward
The underrepresentation of women in India’s investment landscape is a significant opportunity that deserves and demands immediate attention. The way forward has to be beyond hiring the one token woman and meeting a minimum threshold.
In order to truly manifest the benefits from diversity, it has to be embraced in its true essence – seeking the best talent and creating an environment that supports the best talent to grow and be successful. It is time to stop being defensive.
It is time to take a step back to reflect and then take a progressive leap forward. It is time to de-bias, embrace diversity and watch as a deep talent pool drives the investment industry towards manifold success.
