How Private Capital—By and For Women—Can Be Good for Business

June 2025

Munkhtuya Rentsenbat, CEO of Khan Bank, Ulanbaatar, Mongolia. Photo © Julia Schmalz/IFC

Munkhtuya Rentsenbat, CEO of Khan Bank, Ulanbaatar, Mongolia. Photo © Julia Schmalz/IFC

At a Glance

Private equity and venture capital are important sources of funding for companies, helping to shape their development at all stages. New IFC research finds that these funds could do more to channel capital to women-owned and run companies. The study also found that if these funds had more women making investment decisions, more funding would flow to women-owned businesses—and that this would not come at the price of lowering their portfolios’ financial performance.

The potential for traditional lenders like banks to amp up financing for women entrepreneurs is well known. Less attention has been paid to the role that private equity and venture capital can play. These sources can give businesses things traditional lenders cannot. For example, they provide companies with support and advice on how to run and grow their business. Funds have more ‘skin in the game’ through equity stakes, which incentivize them to get more deeply involved in supporting company growth. Funding is usually longer tenure too—8 to 12 years—compared to 5 years or so for loans.

What is private equity and venture capital? How are they different?

Both private equity and venture capital funds invest in privately owned firms, but they do so differently. Private equity helps relatively more established companies grow, while venture capital provides funding to promising startups, often in the tech sector.

Emerging market fund managers reported higher levels of female representation in investment teams—30 percent—than the global average of 22 percent. The global figure is comprised mainly of funds that target developed countries, which suggests that emerging market funds are doing better than their developed market-focused counterparts on employing women as investment professionals.

However, there is evidence of a ‘glass ceiling’ effect where female representation drops at more senior levels, an effect equally evident in funds that target developed markets. There are early signs of improvement here with some of the newer funds reporting higher levels of female representation and half of all private equity funds studied reporting at least one female partner. And there are regional bright spots, with 30 percent of the partners in Africa-focused venture capital funds being women, for example.

More Women Investors → More Funding for Women-Led Firms

Analyses also show that a greater representation of women in decision-making roles is associated with a higher likelihood of their funding women owned, led or cofounded businesses.

Moving toward gender balance—defined as between 30 and 70 percent female representation at investment team or partner level—is not associated with a trade-off on the financials. In fact, it may reap some benefits—funds with male-dominated leadership reported a three times higher write-off rate for their portfolio companies than gender-balanced funds. In addition, no correlation was found between supporting more women-owned and led companies and a weakening in portfolios’ financial performance.

The report draws from a new dataset of exclusively emerging market-oriented private equity and venture capital funds. It discusses trends in female representation both among fund investment teams and in the firms these funds support. The study sample covers over 90 percent of small to mid-market growth funds raised outside the three largest markets of China, India, and Brazil. Together, these funds support jobs for 1.35 million people, of whom 500,000 are women.