Equity lens toolkit for venture capital investors: Mitigating gender bias within investment processes
The toolkit provides practical tools to help VCs and investors identify and mitigate gender bias in their investment processes. It equips them with strategies to uncover overlooked opportunities and promote inclusive practices, particularly for women founders in the Asia-Pacific region, ultimately fostering a more diverse and equitable investment landscape.
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OVERVIEW
Methodology
The Equity Lens Toolkit (ELT) was developed through primary and secondary research, including interviews with investors and founders in the Asia-Pacific region, particularly Vietnam and Sri Lanka. The toolkit also incorporated insights from the Feminist Finance Forum 2024 and reviewed existing literature, ensuring a comprehensive approach to addressing gender bias in investment processes.
Toolkit objective
The ELT provides actionable pathways for understanding and mitigating gender bias within VC investment processes. It equips VCs to:
- Recognise gender bias within their organisations.
- Identify and address biases in investment processes.
- Learn from case studies and success stories in the Asia-Pacific region.
Deal origination and sourcing
Biases in deal origination and sourcing can exclude women-led businesses, particularly when relying on male-dominated networks. The toolkit recommends VCs diversify their sourcing channels, including partnerships with women-focused organisations and developing gender-inclusive messaging. Tools provided for this purpose include the EquiSourcing Checklist, which helps investors identify and address biases in sourcing, and the Entrepreneur Sourcing Journey Tool, which offers insights into the experiences of women founders during the sourcing process.
Screening and due diligence
Gender bias during screening and due diligence often results in women founders receiving less favourable evaluations. Women are frequently asked risk-related questions, while men are asked growth-oriented ones, reinforcing bias. The toolkit advises standardising evaluation criteria and using structured processes to ensure fairness. The Smarter Systems Investor Implementation Guide helps investors reduce discrepancies in evaluation processes, while the EquiCriteria Tool assists in identifying and correcting gender biases in evaluation criteria. Additionally, the EquiAnalyse Question Bank and the Due Diligence and Evaluation Processes Checklist provide structured guidance for evaluating startups consistently.
Post investment engagement
To promote ongoing diversity and inclusion, the toolkit encourages VCs to engage actively with their portfolio companies. Tools like the EquiBalance Tool support this engagement by helping investors address biases within companies and track progress over time. Monitoring gender-disaggregated data is also recommended to identify and mitigate unconscious biases that may affect funding decisions.
Recommendations
The ELT suggests integrating gender lens investing (GLI) into VC strategies, focusing on businesses led by women, promoting gender diversity in teams, and supporting women-led businesses in value chains. Regularly reviewing investment criteria for biases and aligning them with gender equity goals is also recommended.
