Closing The Gender Gap: New Growth Funds Could Help The New Economy Look Less Like The Old One For Women-Led Companies

Glass ceilings exist in old economy companies but the new economy was supposed to be different, opening up a new world of opportunities for women. Progress has been limited to date but Women Equity for Growth, the first European investment program specialized in the financial and operational support of women-led companies, is aiming to level the playing field.

The Paris-based group is launching three investment vehicles aimed at women-led companies in Europe in partnership with the fund management division of the European investment bank Bryan Garnier & Co.  The group is also creating a think tank that will develop hard numbers on women-led companies in Europe and a networking organization that will recruit highly skilled women to mentor others and help direct financially successful women, such as lawyers or doctors, to invest in women-led businesses. In addition, specialized committees of business experts with sound industry experience are being assembled to support the women-led portfolio companies. The experts will in some cases take a seat on the companies’ boards and serve as hands-on advisors.

“We want to help women network together, to help women invest in women-led companies and to ensure that women-led companies receive the money and attention they deserve,” says Dunya Bouhacene, president of Paris-based Women Equity for Growth.


Two of the funds are aiming at European growth companies from any sector that are either led by women or have a significant number of women in top management.  One of the Europe funds will focus on innovative companies that invest 15% or more of their revenue in research and development. Some 60% of this fund, called a Fonds Communs de Placement dans l’Innovation (FCPI) or FCPI Women Equity Fund for Innovation, will be invested in private innovative companies, with revenues of at least €2 million. A maximum of 20% of the fund can be used to fund listed companies with a market capitalization of less than €150 million. French investors in the fund benefit from a  tax law which allows a tax reduction of 25% on the money they invest in any European company that meets the “innovative” criteria.

The other fund, an institutional fund, will focus on later stage companies which have proof of traction and revenues typically between €10 million and €15 million. Women Equity For Growth is in the process of raising the funds. The Paris-based group has already started to review eligible growth companies and expects to make its first investments by year’s end. The third fund, called a Fonds d’Investissement de Proximité (FIP), which focuses uniquely on women-led companies in different regions of France, also benefits from a significant tax advantage for investors.  All three funds will be co-managed by Bryan Garnier.

Bouhacene says Women Equity For Growth will consider helping European women-led start-ups with less than €2 million in revenues on an ad-hoc basis by using its network to connect such companies to investors interested in earlier stage companies.

 Europe’s businesswomen can clearly use the help. Women currently represent 55% of university graduates but almost 90% of board members at Europe’s largest listed companies are men, according to Women Equity. And, women are still a minority on the start-up scene.

They also raise significantly less venture capital than their male counterparts. Indeed, according to a panel at a recent workshop on building women-led enterprises at Britain’s House of Lords, organized by Women in Leadership In the Information Society, men tend to ask VCs for twice what they need in the hopes of getting half of that, while women often ask for what they need and end up with half of what their businesses require. That said, women do more with less venture capital, according to  research.

A 2007 survey of 600 European venture-backed companies by British research outfit Library House found that those run by female chief executives delivered higher revenues using less capital than those headed by men.  The Library House study showed that the average venture-backed company run by a woman had annual revenues that were 12% higher than those run by men, using on average one-third less committed capital, says Bouhacene. That is why she says she is convinced that investors in the new Women Equity for Growth funds will end up making better than average returns.

But it is not just investors but European economies that will benefit from a closing of the gender gap. Indeed, the reduction of economic inequalities between males and females is considered the principal level of economic growth in Western economies, says Bouhacene. Consequently, a reduction in economic gender inequalities would increase the gross domestic product (GDP) in America by 9% and the GDP in the European zone by 13%, according to April 2009 research from the World Forum Global 2009 Gender Gap Index and IMF’s World Economic Outlook Database.

Women Equity for Growth points to how specific public support and private initiatives in the U.S. and U.K. have aided gender balance in business leadership, with good results. Research predicts that in 2012, half of the U.S. wealth shall be in the hands of women and by 2020 half of the new British millionaires are expected to be women, with a  majority owing their wealth to their entrepreneurial success.

The Paris-based group argues that new vehicles to help businesswomen should be extended to Europe in order to seize an untapped reserve for growth.  France, for example, is ranked first among 130 countries in terms of education for women but 62nd  when it comes to female participation in the economy. The few French women who do lead companies are achieving good results. Some 14 companies from the CAC 40 (top 40 companies listed on the French stock market exchange) have a proportion of female managers superior to 35%. These companies showed, over a five year period, 61% more growth than companies with less than 35% female managers and nearly double the profitability, according to a 2009 study by Michel Ferray, a researcher at France’s CERAM Business School in Sophia Antipolis, which recently merged with ESC Lille and renamed itself SKEMA Business School.

Bouhacene, the daughter of an Algerian man and a Prussian woman, lived in Algeria, United Arab Emirates and England, before moving to France as a teenager. She studied philosophy and managed cultural projects , prior to earning an MBA and  working for a strategy consultant firm led by former Roland Berger partners which specialized in European buy-outs and mid-caps growth strategies.  She says her latest job, as president of the new Women Growth for Equity, allows her to follow a passion for both helping women and making sound investments. Her message to women investors in the new funds is that they will do well by doing other women some good.  “Women Equity for Growth is creating one of the necessary stones needed to pave the road to equal opportunity,” says Bouhacene. “It is a goal we should all have in mind as meritocracy is democracy’s backbone.”