Despite the fact that record capital has been flowing into VC and private equity, with US startups raising $329.9 billion in venture investments in 2021, women fund managers - particularly first-time and racially diverse women fund managers - continue to be systemically underfunded.

In the gender-smart community, many of us are working to change this - so that women fund managers can build and create wealth, so that they can get their funds to first close, and so that more capital flows with a gender lens to entrepreneurs.

The sustainable bonds market has exploded in recent years, with the issuance of green, social, sustainable and sustainability-linked bonds doubling in the first half of 2021 alone.

For issuers, these bonds are a way to finance meaningful action on climate and sustainability. For investors, they are a way to invest in climate and environment-related projects, and to incentivize businesses to improve their performance on sustainability.

When it comes to investing, our relationships shape what investment opportunities we’re exposed to, how we are perceived, who influences our thinking, and how we execute. And when it comes to our work in shifting the financial system, our relationships determine our ability to move the people and institutions that need to be moved, how we mobilise collective impact, and our ability to withstand the ups and downs of doing difficult work.

Here are eight kinds of relationships we should all be fostering as gender-smart investors, and some ideas on how to cultivate them.

We know that the impacts of the climate crisis are not being distributed equally. Whether you’re looking at New Orleans or Nigeria, women — and especially women of color — are disproportionately bearing the consequences of climate-related natural disasters, including migration, food insecurity, job insecurity and violence.

So, it makes sense that when investing in climate solutions we should be paying attention to gender, race and ethnicity, both when it comes to who is deploying capital (on investment and fund management teams, at investment committee level, as individuals), and when it comes to who it is being deployed to (ownership of firms and funds, employees, customer base, who is in the supply chain).

In the gender-smart investing field, all of us are working hard to move capital and shift systems and institutions to work in more equitable ways. But we often don’t have time to stop and think really deeply about what the world we’re working to build looks like.

Recently, I sat down with the GenderSmart team to vision what success might look like in each part of the gender lens investing ecosystem, 10-20 years into the future. If we achieved everything we’re setting out to make happen, what would the world look like? What would it look like to have a truly diverse and gender-equitable financial system? And what are leverage points we need to get there?

Read on to spend some time in the future we imagined. And let me know in the comments below what you’re working on to help us get there.

The latest Project Sage data, released in late December, reveals a rise in the number of private funds investing with both gender and climate in mind. This month we share a few of these funds’ approaches and learnings, supplemented with findings from our own working group. These are not investment recommendations, just illustrations of how other investors are approaching this theme.

In December, Wharton Social Impact Initiative and Catalyst at Large published Project Sage 4.0, our fourth study of private equity, venture capital, and private debt funds with a gender lens.

The growth in funds continues to be significant, with a 3.5 fold increase in the number of funds since we began the study in 2017. There are now more than 200 gender lens funds in the report - itself only a partial reflection of the total field, since Project Sage covers only those funds that respond to our survey. 22% of the funds in the latest report are raising $100M or more, with the majority in the $20-50M range, and the funds span every sector, vehicle type, and geography. (Note that Project Sage is not recommending these funds, but only reporting what is happening in the field.)

Here’s a breakdown of two trends we’re seeing in the field.

Earlier this month, ImpactAlpha published a list of 22 impact markers that investors should be paying attention to in 2022, filed under five broad themes: The Reconstruction in 2022, Impact in Emerging Markets, Climate Finance, Catalytic Capital, and Capitalism Reimagined.

ImpactAlpha is always on the leading edge of impact investing, and their team’s ability to synthesise the big themes and trends is powerful. Their coverage has also played a significant role in putting gender lens investing on the map.

In December, Wharton Social Impact Initiative and Catalyst at Large published Project Sage 4.0, our fourth study of private equity, venture capital, and private debt funds with a gender lens.

There are now 206 total funds in Project Sage, a 3.5 fold increase since we began the study in 2017. 22% of these funds are raising $100M or more, with the majority in the $20-50M range. Only 38% of the funds surveyed are fully closed, which means there is a lot of room for investors to deploy capital, across every sector, vehicle type, and geography. (Note that Sage is not recommending these funds but illuminating the field.)

This is the first in a series from GenderSmart, a community of 2,500 investors and investment influencers, intermediaries and others in more than 50 countries, highlighting the work already underway to address the climate emergency with a gender lens, and to encourage the adoption of these approaches at scale and pace in mainstream finance.

The private capital committed by members of the Glasgow Financial Alliance for Net Zero (GFANZ) has the potential to transform climate investments. Yet climate investment decision-makers don’t reflect the diversity we need for a just transition. They are therefore likely to overlook the women outside of their networks driving many solutions.