Diversity goes hand in hand with business success.
Research shows that companies that commit to diversity, equity, and inclusion achieve results.For example, a Market analysis Last year’s data showed that companies with diversity and inclusion saw 2.5 times more revenue per employee and 35% higher productivity.
Female executives from the investment and venture capital industry spoke Monday at Fortune’s Most Powerful Women Summit in Laguna Niguel, Calif., hosted by Fortune’s Founder and CEO of Operator Collective MPW Summit Co-Chair Mallun Yen – on how to achieve change in their fields.
Panelists include Hayley Boesky, executive vice chairman of global corporate and investment banking at BofA Securities; Paige Hendrix Buckner, chief executive of All Raise; Seyonne Kang, partner at Stepstone Group; SC Moatti, founding managing partner at Mighty Capital; and TPG partner and Chief Operating Officer Anilu Vazquez-Ubarri.
What follows is a portion of the conversation, which has been edited and condensed for clarity and brevity.
Ma Lunyan: What will really move the needle? It’s not just about developing a small, emerging group of managers. How do you get to the point where more capital is deployed?
Peggy Hendrix Buckner: I have a lot of opinions about this. So one of them is helping big companies and major institutions that have a lot of money to write checks have diverse female partners. You need women from diverse backgrounds negotiating and the ability to wield the financial power of big funds. Many of the women we interviewed left major funds because they were unable to defend or pursue papers that they were truly interested in, because they had no power within the firm, or because the culture did not create an environment in which they wanted to stay.
So how can we help companies create a healthy working environment to retain talents? What I’m saying is, help women who are about to be promoted to stay in their role and then grow in that role – but also help women who are already in their role, help them during this time Stay in your post, especially when things are drying up. A little bit more challenging. Again, we won’t make progress unless people with power and social capital invest in significant opportunities.
Seon Kang: One of the challenges with this asset class is that it has such a long lifespan. It takes a long time to see if someone is really a good investor. The assumption that if you have a checkbook and back the company that you will be a good investor is completely flawed. There are a lot of non-diversified people who are terrible investors, but it takes seven years to figure it out. That’s the nature of this asset class. And, on one hand, I take comfort in the fact that it’s going in the right direction, but I think that’s one of the challenges.
I understand trying to get away from feeling like you’re the only power structure, but at the same time, we’re not going to achieve real change unless we write big checks, eight or nine figure checks, and we have more diverse people at the table .
SC Moati: I talk to a lot of women who work at these established companies, and what happens is, they start, they work their way up, they’re amazing investors, and then they figure out that maybe they can affect change internally, and they try for a few years. Then they just do deals, or if that’s not enough for them, they leave and start their own company. Therefore, changes need to be made from within.
And, does investing in diverse managers actually generate more capital flowing to diverse-led companies? In our case, I can tell you absolutely; 44% of our portfolio companies have diverse backgrounds and amazing performance.
But how do we make diversity a strategic competitive advantage? What’s happening right now in artificial intelligence is actually a critical moment for diversity. Most of our world, most of our economy, will have AI haves and have-nots, and if you don’t view AI as your competitive advantage, your ability to innovate will decline rapidly. But your ability to compete with AI will depend on your ability to bring diversity of thought to AI. So I think it’s really time for those who advocate for diversity to say that diversity is not actually a choice but a necessity for us to remain competitive. I think that’s going to impact the investment community – it’s going to impact the companies that we invest in because we’re going to say, we have to build diverse teams, otherwise, they’re not going to be competitive.
Peggy Hendrix Buckner: We need women to stay at the tables of big companies. And many people have already started to set up funds. We need to help them get through this, too. So we talked to some people, major institutions, about how to grow the limited partner pie, particularly with women who have wealth, and help them get into the game and get into this asset class so that they can become limited partners . So many women are already mentored in philanthropic work, but if we can mentor them to become limited partners, the cool thing for some of these fund managers is there might be a better match out there.
SC Moati: I see this change happening as high net worth individuals and women are given more wealth. But I’m seeing changes at the institutional level, especially in terms of government funding. A lot of the conversations they’re having are, we can invest capital in emerging managers, but we’d rather incentivize existing limited partners, institutional capital, and allow our capital to create more diversity.
Haley Boesky: You have to think of it as an apprenticeship. We don’t just write down the money from these $2 billion in commitments and say, “Here’s your check, come back later and tell us how you’re doing.” We provide support, we provide resources. I’m actually very involved in another project; I have this partnership with Bank of America and the Tory Burch Foundation where we give $100 million to female entrepreneurs. What we learned through this process is that a byproduct is networking, building peer-to-peer networks, which is crucial for these women. They need guidance.
Anilou Vazquez-Ubari: time is money. We open our fundraising doors and provide guidance to people. As part of doing all of this, we have about 400 people in various stages. What needs to be said is, when they are at this institution, the larger institution, use your time wisely: don’t just make deals, understand how fundraising happens, ask to attend fundraising meetings, don’t talk first and then Have a conversation and go with someone who is really good at fundraising. Not every white male is good at fundraising, but they attend meetings.
Learn how to build a company. But no one taught us how to build these companies. Most companies fail, not actually because they are bad investors. Is it ultimately a personnel dynamic? So to me, that’s one of the biggest takeaways from my job, is that we need to mentor different people in different ways.
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