Gender Lens Investing (GLI) has emerged as a vital approach to addressing gender disparities while creating sustainable business outcomes. Studies have shown that in emerging markets, gender-diverse funds had a 20% higher net internal rate of return relative to the median and that investors in companies with robust gender diversity strategies see compounded annual returns that are 3.5% higher on average. Moreover, startups led by women delivered a return of 78 cents for every dollar of funding, significantly outperforming male-founded startups, which generated only 31 cents per dollar.

Globally, GLI has gained significant traction, and gender lens investing in private markets has expanded by over 30% in the past two years, with the total market size now estimated at a minimum of US$7.9 billion, up from US$6 billion in 2021. Yet, despite the rise of GLI as a strategy to address funding inequities, South and Southeast Asia continue to lag behind regions like Sub-Saharan Africa and Latin American and the Caribbean in adopting GLI at scale.

In theory, South and Southeast Asia has many of the ingredients needed for GLI success – a growing entrepreneurial ecosystem, significant unmet demand for capital among women entrepreneurs, and an expanding impact investment landscape. Notably, the e-commerce sector has seen significant growth, driven by women entrepreneurs leveraging online platforms. Between 2015 and 2020, the e-commerce market in Southeast Asia tripled in size, and closing gender gaps in online sales could add $280 billion in value by 2030. FinTech is another emerging sector for women in the region, which attracted almost a third of the investment into Indian women-led start-ups in 2024.

Yet systemic barriers and structural biases within investment frameworks persist, keeping gender lens investment in South Asia from growing at the same pace as other geographies. South and Southeast Asia have immense untapped potential to leverage GLI for economic growth. According to McKinsey, eliminating gender inequity in Southeast Asia could add $370 billion to the region’s GDP by 2025. Women’s economic participation is crucial for unlocking this potential, as they represent a significant proportion of entrepreneurs and workers in key sectors

Asia’s entrepreneurial ecosystem, though thriving, remains male-dominated. Many women entrepreneurs face challenges in accessing formal networks, mentoring, and scalable opportunities. This is further compounded by systemic biases within the investment community that view women-led ventures as riskier or less capable of achieving high returns.

The representation of women in leadership roles within funds is a critical factor in GLI’s success. Research indicates that women fund managers are twice as likely to invest in female-led businesses. However, in South Asia, the number of women in senior roles within private equity and venture capital remains minimal. As of 2022, women made up less than 15% of partners and less than 10% of investment committee members at PE / VC firms in India. Male-dominated networks and decision-making structures within funds often lead to the perpetuation of bias and a lack of prioritization for gender-focused strategies.

Bias, both conscious and unconscious, plays a significant role in the underfunding of women-led businesses. Male-dominated investment teams often underestimate the potential of female entrepreneurs, perpetuating the cycle of underrepresentation.

Even when women entrepreneurs succeed in early-stage funding, they often struggle to raise follow-on capital because of entrenched perceptions about their ability to scale. This results in a cycle where female entrepreneurs are constrained to small-ticket investments, limiting their ability to expand and compete. Moreover, according to invest2innovate, a Pakistani female-led fund, female-founded startups tend to assign lower valuations, resulting in smaller funding rounds.

While female fund managers are more likely to support women-led businesses, their relative scarcity in South Asia limits the scope of such investments. This bias is not limited to South Asia but is amplified by cultural norms that prioritize male leadership and undervalue women’s contributions to economic activities.

• Increase female representation in funds: To address investor bias, increasing the representation of women in leadership roles within investment firms is crucial. Sub-Saharan Africa has seen the emergence of gender-focused funds such as Alitheia IDF, which is not only female-founded and female-led, but also has 54% female board representation. The fund focuses on integrating women-led businesses into its investment strategy.
• Shift risk perception narrative: The perception that women-led businesses are riskier investments must change. Studies have shown that companies with greater gender diversity often outperform financially. Amplifying success stories and data-driven evidence of women-led businesses delivering superior returns can help shift this narrative. There are multiple studies from
• Provide targeted technical assistance (TA): Technical assistance programs should focus on equipping women entrepreneurs with the skills and networks needed to scale their businesses. This includes mentorship, leadership training, and access to market insights. Additionally, increasing the presence of women in leadership roles within large businesses in emerging markets can create a trickle-down effect, encouraging more women to enter the entrepreneurial ecosystem. For instance, Kuramo Capital Management, an investment management firm in Africa, has set up the Moremi Accelerator Program that provides comprehensive support and training to early-stage fund managers, with a strategic focus on gender-smart funds.

Investing in women-led businesses has the power to transform economies and societies. Sub-Saharan Africa’s success in leveraging GLI offers valuable lessons for Asia. By increasing female representation in funds, shifting narratives around risk, and aligning capital with the sectors women entrepreneurs thrive in, Asia can unlock the untapped potential of its women-led businesses.

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