As part of its Women’s Leadership Initiative, Confluence Philanthropy partnered with Arabella Advisors to co-host an intimate dinner program in New York titled “A New Economy for All.” The dinner brought together 15 women working in diverse roles in financial services and philanthropy eager to engage with each other on the broad topic of creating an equitable economy that allows women, people of color, and other underrepresented groups to build wealth.
Dana Lanza, CEO of Confluence, opened the evening, introducing the Women’s Leadership Dinner as a unique opportunity for women in the investment industry to share their experiences and expertise and to build connections with like-minded peers. Shelley Whelpton, Senior Managing Director at Arabella Advisors, a philanthropy and impact investing consulting firm and Confluence member, introduced the program and Arabella Advisors’ role in educating philanthropists and investors on how to address a specific aspect of creating an inclusive economy. In a recent report, Arabella acknowledges the deep systemic biases that prevent entrepreneurs of color and/or women from accessing capital and, more importantly, provides donors with various recommendations for how they can correct this market failure.
The group was familiar with the scope of the problem and opportunity as described in the report:
- Startup teams with women founders generate more revenue per dollar invested than those with all-male founders – on average, 78 cents vs. 31 cents
- Between 2007 and 2012, non-white business owners were responsible for creating 72.3 percent of new jobs in the United States
- Meanwhile from 2007 to 2015, women-owned businesses created 1.24 million more jobs than male-owned firms, even though there were significantly more of the latter
- Companies with more diverse leadership teams generate more innovation revenue than less diverse companies
- Nevertheless, only 2 percent of venture capital funding goes to women entrepreneurs, and less than 5 percent of entrepreneurs backed by venture capital firms are black or Latinx
Dana Lanza and Shelley Whelpton facilitated a discussion focused on four fundamental questions:
- How can we help support unlocking capital for women entrepreneurs and entrepreneurs of color?
- What are the systemic barriers and changes that need to happen?
- How do we gain more momentum?
- What will it look like when we are successful?
A number of noteworthy themes emerged from the vibrant discussion. The participants identified that the questions may require further digging, and our time together would be better spent tackling critical, provocative sub-questions that would surface the root causes of these challenges. Examples included:
- Is there a gap in women’s STEM competence that could also be driving this underinvestment in women entrepreneurs? Do we need to address this gap by developing younger women’s skills in STEM?
- Participants agreed that investors generally perceive women-owned companies as riskier to invest in, but the data shows that investing in women-owned companies is less risky than investing in men-owned companies. How can we remedy that misperception?
- Are there stakeholders, such as leading Wall Street executives, who have publicly assumed this cause but are not sincerely committed? Could they be contributing to a harmful misperception that access to capital for underrepresented entrepreneurs has garnered enough attention and is now a priority?
The group arrived at a general agreement that gender diversity on company boards is necessary but not sufficient to drive more capital to people of color and/or women entrepreneurs. A participant contributed that one woman alone cannot have an impact and make a board diverse; at least three women and/or women of color on corporate boards can exert influence, as validated by extensive research on tokenism and critical mass theory which states that the size of an underrepresented group matters. Women directors will reach a critical threshold, and exert influence, only when there are at least three women on a board. Another participant followed by sharing the work of the Thirty Percent Coalition, a group of public and private companies, investors, nonprofits, and others committed to achieving the goal of women, including women of color, holding thirty percent or more of corporate board seats across public companies.
Participants also highlighted that the practice of inclusive investing–a set of investment practices that aim to ensure that capital reaches the most promising startups and businesses regardless of race, gender, or circumstances of their owners–first depends upon creating inclusive workplaces in the investment industry where women and/or people of color can thrive.
A number of participants claimed that they can be authentic in their workplaces; others are even comfortable assuming the role of “Chief Agitator,” as coined at the dinner, uplifting women, people of color, and other colleagues who may not receive adequate recognition, for example, and actively aiming to undercut biases. Others noted that Europe, in many ways, is further ahead of the US in cultivating work environments that authentically welcome and foster diversity. From studying racial equity in the US investment industry, Dana Lanza shared research findings that reveal people of color may not bring their whole selves to the workplace and may have a harder time winning business because of bias.
Other participants shared that the discussion on inclusive investing to date had focused exclusively on women, and not adequately acknowledged LGBTQI, trans communities, people who live with disabilities, or other underrepresented groups.
Outside of work, participants offered that they could be agents of change by supporting female entrepreneurs in their networks with an extra hand, such as childcare and other resources. They also shared an interest in mentoring college-aged and young professionals outside of their networks who would like to work in finance but may not have access to opportunities.
In response to the question “What will it look like when we have succeeded in creating an inclusive economy?” attendees offered a range of markers of success, which many participants are collectively and individually working towards:
- When we have inclusive cultures at work that enable us and other underrepresented groups to fully contribute our assets in the workplace
- When we have finally overcome entrenched patterns of bias in the workplace by creating standardized and universal systems for promotion, negotiation, and pay that are immune to human biases
- When we have invested in meaningful storytelling and profiling of underrepresented entrepreneurs, investors, and asset managers who are deploying capital in innovative ways, to drive greater interest and investment in creating an inclusive economy. Through this storytelling, we will have changed the mainstream perception of an entrepreneur to an African-American woman. African-American women are the fastest-growing group of entrepreneurs in the US.
- When we don’t have to have women’s dinners anymore because we have achieved a critical mass at decision-making tables
To learn more about the Confluence Women’s Leadership Initiative, please contact their Vice President of Programs, Nishi Moonka.
To learn more about Arabella’s work in inclusive investing, please contact Shelley Whelpton, Senior Managing Director at Arabella Advisors.
Joan C. Williams, Founder of Bias Interrupters, an organization that has developed evidence-based tools to help individuals and organizations interrupt and correct implicit bias in the workplace
This piece was originally published here by Confluence Philanthropy. It has been republished in its entirety with permission. The author, Radhika Nayar, is an Arabella Advisors Director.