• Katica Roy

Why Should Investors Care About Intersectionality?

Updated: Jul 19


Welcome to my weekly Q&A feature. (Scroll down to find the Q&A.)


If this is your first time here, welcome. I spend a fair amount of time speaking at events and conferences. At the end of my presentations, I leave space for audience members to ask questions—tough questions, brave questions, you name it. The level of candor and curiosity always inspires me, and I want to share that sentiment with you. Each week I pick one question that I believe others would find most instructive and publish my response to it here.


The purpose of this weekly tradition is transparency and inclusion.

  • Transparency: a behind-the-scenes look at my day-to-day.

  • Inclusion: bringing others along on the journey.


Be Brave™


Getting Investors To Care About Intersectionality


Question:


How do we shift mindsets in the investment sector to normalize that intersectionality matters?


Curious about something? ​Ask your question here for a chance to have it answered in an upcoming edition of Brave Souls®.


Answer:


What’s in it for me?


We have a range of modalities and tools for cultivating empathy. This simple question is one of them.


What’s In It For Me?


Imagine you’re an investment professional. You’re sitting in your Wall Street or Sand Hill Road office, and the person on the other side of your desk keeps repeating the word intersectionality.

  • What about this word piques your curiosity?

  • What about this word makes you lean in a little more?

  • What about this word makes you pause the internal chatter and pay attention?


Whatever “it” is—that’s how we shift mindsets and get investors to care about intersectionality. We have to consider, from an investor perspective, what’s in it for me?


Intersectionality acknowledges that identities are not additive, but rather that the intersection of our identities creates substantively unique experiences. Intersectionality gives us the means to capture these experiences.

Let’s follow this empathy experiment and consider why we (the investors) might want to devote our energy to normalizing intersectionality.


The Truth About Intersectionality


Intersectionality isn’t some woke word reserved for social justice warriors. It’s an analytical framework. It sharpens our view of the world. It turns blurry pixels into crisp pictures. It helps us see people. It helps us understand their experiences.


When Kimberlé Crenshaw first coined the term intersectionality in 1989, she used it as a critique of the single axis framework popular in antidiscrimination law at the time (and even today still).


Whereas the single axis framework treats categories such as race and gender as mutually exclusive experiences, intersectionality acknowledges that race and gender combine in the logic of 1+1 = 3.


Being a woman (+1) and being Black (+1) creates a new set of sui generis experiences (= 3).


When Our Identities Overlap, Our Experience Of The World Changes


If you’ve ever heard of the Black women’s pay gap, then you’re familiar with intersectionality. Black women earn 64 cents on the White man’s dollar. Compare that figure to the aggregate (i.e. non-intersectional) gender pay gap of 83 cents on the dollar.


Life looks much different when you’re earning $43,209 per year as a Black woman vs. $67,629 as a White man vs. $50,982 as an “average” woman.


Here’s another example of intersectionality. Pipeline found through its implementations that men receive promotions at a 21% greater rate than women in aggregate. When we apply the intersectional lens, however, the promotion gap doubles for Black women.


How Does Intersectionality Benefit Investors?


When we don’t apply the intersectional lens, we operate with incomplete knowledge—some might call it ignorance. And ignorance is certainly not a posture a cunning investor would want to assume. Here are four specific ways intersectionality benefits investors:


1. Understand product-market fit


There are 7.9 billion humans on the planet with different needs, preferences, and desires. Homogenous investing teams are limited by their own experiences, a constriction that extends to their investment decisions. With less exposure to the problems potential startups could solve, these investors have a hard time understanding product-market fit.


More than 90% of all VC decision-makers are men. Meanwhile, the emerging femtech market hit $45 billion in 2021, and analysts expect it to reach $75 billion by 2025.


Talk about massive untapped potential. An intersectional lens can help investors recognize and understand the value of markets hiding in plain sight.


2. Align with changing preferences


Intersectionality also helps investors align with changing preferences of the population at large. By 2030, analysts predict that women will hold two-thirds of our nation’s wealth, and nine in ten women view wealth as a means to promote positive change. More investors (and consumers) than ever before want their dollars to catalyze action toward intersectional gender equity.


3. Prepare for human capital regulations


Companies can expect more pressure from regulators such as the SEC to report on diversity, equity, and inclusion metrics. Allison Herren Lee (then Acting Chair of the SEC) reported in early 2021:


“Human capital, human rights, climate change — these issues are fundamental to our markets, and investors want to and can help drive sustainable solutions on these issues...We understand these issues are key to investors — and therefore key to our core mission.”


She continues:


“In the near term, [an ESG disclosure framework] should also include considering where we can advance initiatives on a standalone basis now, such as offering guidance on human capital disclosure to encourage the reporting of specific metrics like workforce diversity.”


Investors that understand intersectionality and apply this lens to make decisions will be one step ahead of regulators—especially important for those seeking a public market exit.


4. Generate better returns


Intersectional gender equity among venture capital partners, individual founders, and founder teams improves financial performance for everyone. VCs who commit to intersectional gender equity could expand returns to their LPs by $4.4 trillion.


TL:DR: Intersectionality acknowledges that identities are not additive, but rather that the intersection of our identities creates substantively unique experiences. Intersectionality gives us the means to capture these experiences. Savvy investors can use intersectional insights to make better, more equitable decisions.


Curious about something? ​Ask your question here for a chance to have it answered in an upcoming edition of this newsletter.


© 2022 Katica Roy™, Inc.