A growing body of global research presents a strong financial and equity case for increasing the inclusion of women in owning and managing businesses. The potential economic impact alone is enormous. Expanding women’s economic participation and advancing gender equity could add $13 trillion to global GDP by 2030, according to the McKinsey Global Institute. Yet women continue to face barriers in accessing capital and remain significantly underrepresented in leadership positions.
Against this backdrop, investors increasingly are exploring gender-lens investing—an impact investment strategy that “combines pursuing financial returns with pursuing gender equality and social well-being,” according to Women’s World Banking.
The approach is delivering measurable results. According to the Global Impact Investing Network’s 2024 report, 90 percent of investors applying a gender lens met or exceeded their financial expectations, while 97 percent achieved their impact goals.
“The business case for gender equity has become increasingly clear…,” concludes the World Economic Forum. “Research shows that higher levels of women’s inclusion in an organization—especially in leadership positions—correlates with better financial performance and risk management, less employee turnover, and more innovation, among other indicators.” In short, advancing gender inclusion is central to long-term value creation.
For instance, private equity and venture capital funds with gender-balanced senior investment teams generated returns 10-20 percent higher than those of funds with a majority of male or female leaders. And firms founded by women frequently outperform in terms of returns. Research indicates that women-founded companies deliver more than twice the revenue per dollar raised.
Enterprises with greater women’s participation also tend to generate steadier revenues and are less likely to default. An analysis of more than $1 billion in loans from Root Capital revealed that businesses with higher levels of women’s participation generated more substantial returns on investment. Women-led businesses had a 4.12 percentage point lower average default rate.
Gender-lens investing also benefits market expansion. Gender-inclusive leadership often drives innovation that can open entirely new lines of business and customer bases. Inclusive supplier programs, for example, have been shown to deliver more than double the return on procurement investments, while lowering operational costs.
Inclusion also changes the way investment decisions are made. Research published in Harvard Business Review found that when an investment firm’s partners have a higher proportion of daughters, the likelihood that a female investor will be hired goes up significantly. And when those hires happened, performance followed: firms saw, on average, a 1.5 percent increase in annual fund returns and 9.7 percent more profitable exits when the proportion of female partners increased by 10 percent—impressive given that only 28.8 percent of VC investments have a profitable exit.
Research from McKinsey & Company shows that companies with more gender-inclusive leadership teams are better positioned to reconsider entrenched ways of thinking, drive innovation through broader perspectives, and improve financial performance. For investors, this means businesses can adapt more quickly, serve customers more effectively, and better navigate disruption.
There is also a multiplier effect at work. Advancing gender inclusion alongside other priorities, such as climate action, amplifies impact across the board, touching everything from food security to public health. Empowering those who have faced multiple forms of marginalization can create new markets, increase household incomes, and strengthen community stability, all of which contribute to a healthier investment environment.
This gender-lens opportunity is not limited to institutional investors. Almost all philanthropists have access to capital beyond their grantmaking, including endowments, donor-advised funds, and other private investment vehicles. Directing even a fraction of this toward gender-lens strategies can move significant capital into the hands of diverse managers and enterprises.
Finding the Opportunity: A Three-Step Action Plan
Adopting a gender-lens investment strategy requires translating opportunity into action. Here’s how:
- Measure What Matters
Start by making gender inclusion visible. Track both impact returns (on gender equity) and strategic returns (on market positioning and innovation potential) across your portfolio. This means measuring:
- Impact outcomes: The number of women reached or served by portfolio companies’ products or services
- Decision-making inclusion: Whether investee companies promote equal opportunity for women in their workplace
Some funds have embedded this rigor from the outset. Nia Impact Capital, a women-led impact asset management firm, invests in public companies at the intersection of environmental sustainability and social justice, while promoting gender inclusion in portfolio leadership. An early investment in Etsy, where 80 percent of the sellers are women, reflects the firm’s commitment to gender-informed investing.
Similarly, Women’s World Banking Capital Partners II invests in emerging-market financial services that address the needs of low-income women clients, while tracking and improving inclusion within portfolio companies.
- Set Ambitious Targets
Without ambition, data can fail to unlock potential. Alitheia IDF Fund, a $100 million gender-lens private equity fund investing across sub-Saharan Africa, prioritizes growth-stage small and mid-sized enterprises (SMEs) with gender-inclusive management teams. Since 2019, it has invested over $75 million across 13 transformative companies, raised female board representation across its portfolio companies to 54 percent, and reports 1,584 full-time employees with over 850,000 indirect jobs created (approximately 45 percent held by women)—illustrating how intentionality can yield tangible commercial and impact outcomes.
The Equality Fund is another leading example. According to the Fund, through its investment in a 100 percent gender lens aligned portfolio, it achieved an annualized three-year return of 7.7 percent in the fiscal year ending March 2025 (vs. benchmark returns of 7.8 percent for 60 percent MSCI ACWI CAD/40 percent Bloomberg Global Agg Hedged and 5.6 percent for 60 percent MSCI ACWI Local/60 percent Bloomberg Global Agg Hedged). The fund has also published a freely available Gender-Lens Investing Criteria toolkit to help other investors apply gender-smart screens and impact metrics.
In the United States, Urban Innovation Fund— a top 1 percent performing VC firm that is women-owned—backs companies tackling livability, sustainability, and economic vitality. Seventy-seven percent of the companies it supports have a woman or person of color on the founding team, meeting clear goals with measurable outcomes.
- Commit Capital with Intent
Research from Morgan Stanley shows that more diverse investment teams expand the scope of opportunities and often uncover overlooked sources of value. For allocators, this means that broadening who decides not only advances equity but also unlocks new avenues for innovation and returns.
Some are leading the way:
- Goldman Sachs’ One Million Black Women initiative, which launched in 2021, pledged $10 billion in direct investment capital and $100 million in philanthropic capital over a decade to address the dual gender/racial biases faced by Black women. As of the firm’s most recent reporting, it has deployed roughly $4.1 billion in investment capital and $44 million in philanthropic funding.
- Female Founders Fund backs U.S.-based women entrepreneurs across climate tech, healthcare, beauty, vertical software, generative AI, and emerging tech, including an early investment in Billie, the “female-first” shave and body brand acquired for $310 million.
- responsAbility Investments, based in Switzerland, integrates a gender lens into its climate-focused funds, assessing quality employment for women as a key performance indicator.
- In Turkey, Garanti BBVA has pioneered a “gender equality loan,” where financing terms improve based on a borrower’s measurable progress on gender outcomes.
Applying a gender lens is not about diverting from performance; it’s about sharpening it. And the investors leading the way are proving that gender-smart strategies deliver competitive returns while unlocking new markets and fueling systemic change. For allocators willing to take that broader view, the question is no longer why invest this way, but why wouldn’t you?