Jun 5, 2021

How empowering visionary women leaders can sow prosperity

spearcapital
Investment
diversity
runwaysale
Bryan Turner, Partner, SPEAR C...
5 min
Following investment in ecommerce retailer RunwaySale, made up of 77% women, Bryan Turner, Partner at SPEAR Capital argues the business case for diversity

Everyone knows that any plant has three essential needs in order to grow – water, sunlight, and nutrients – but a horticulturist understands that each plant has varying and specific needs in order to grow well. We can apply this same reasoning to business investment, as the ability to identify the right characteristics in a business can be critical to a successful investment venture.

Investment in startups carries a uniquely high risk as these companies are often very young and are faced with a high rate of failure, calling on investors to focus more closely on product differentiation, competitive advantage, and identifying strong industries to invest in. However, private equity seeks to acquire meaningful stakes in growing and well-established companies, and so must also take into account an ‘x’ factor to enable success.

One of the most significant characteristics of a successful business lies in its leadership, all the way from the C-Suite to the lowest managerial levels. By looking for great leadership, investors would be able to identify opportunities that others may have missed and thus gain significant rewards.

In early 2020, cautious sentiment dominated the global private equity market but disruption in the past year has left investors hungry to find new opportunities in 2021. Identifying investment opportunities in great female leadership will not only open up new doors for investors but also reap benefits across several spheres, including helping to close the gap in funding for female founders and enabling an increasingly diverse business environment.

While female-led startups and companies present a number of opportunities for investors, they receive very little funding or capital. In 2020, startups led by women received only 2.3% of venture capital funds and 82% of startups funded by private equity did not even have a female co-founder on their team despite the proportion of female co-founded companies having doubled since 2009.

A view of where the opportunities lie

The business case for diversity is largely well known, however McKinsey’s latest diversity report found that the relationship between diversity on executive teams and the likelihood of financial outperformance has strengthened over time.

Additionally, it’s been proven that, as team diversity increases, so too do returns on funds and companies. A study by the Boston Consulting Group observed that if women participated equally as entrepreneurs, the global GDP could rise by 3% to 6%, injecting up to $5-trillion into the global economy. Other research has also shown that startups with at least one female founder raise 21% more VC funding over time than companies headed by all-male teams.

But, it’s important to note that investing in women-led business alone won’t move the needle forward: we need to be investing in the women leading the business themselves.

So what does great leadership look like?

To invest in great leadership, investors first need to be able to identify great leadership and then be willing to cultivate it.

The first, and arguably the most important, leadership quality investors should take note of is a leader’s passion and commitment to their vision along with the ability to get employees invested in and working towards that vision at the same time. This comes from real belief in their business backed by experience through research and trial-and-error as well as courage. Genuine, meaningful expertise is built through obsession and, when a leader is confident in their vision and it is backed by evidence, this is a good sign of a secure investment.

Another important quality to look for is transparency and communication. This ensures that there is a clear view of where the business is at and where any challenges lie that could be improved upon, providing investors with an objective lens over their investment and enabling a better relationship between the two that can help steer the business in the right direction for both. Candour is vital and there needs to be a real level of openness by leadership towards investors.

Today’s environment has also meant that softer leadership skills and qualities have risen in importance. Good leadership also means that leaders must be empathetic and facilitate an environment that puts people first and where employees feel they can be their authentic selves and belong. A culture of belonging is vital to facilitating employee buy-in of any leader’s vision and therefore the ability to achieve that vision.

Visionary leadership bears fruit

In 2020 we made a significant investment of over US$5-million into Cape Town-based ecommerce retailer, RunwaySale, because we recognised and believed in the quality of leadership of co-founder and COO Elmien Hammerschmidt and her passion for the business she’d built from the ground up. A significant factor in our decision to invest was that her investment into leadership could be seen across the entire business which employs nearly 150 people, 77% of whom are women.

When COVID-19 struck, that leadership and drive helped to steer the company in the right direction, quickly identifying new opportunities for growth, such as an expansion into homeware and other categories during a time when ecommerce activities in South Africa were heavily restricted and national lockdown measures were difficult to navigate.

The company’s leadership team quickly recognised the need to digitally transform over the past year. This led to a substantial amount spent on tech, such as refining the algorithm it uses to become smarter in the way it buys and sells, making the business more resilient and agile. Great leadership has resulted in RunwaySale’s ability to compete with traditional brick and mortar stores where it was previously only competing with a small group of other online fashion outlets.

The well-proven leadership displayed by RunwaySale also meant that, as investors, we could be more comfortable introducing flexibility into our investment portfolio and adapt to a changing playing field along with how and where we invest as all of the company’s achievements would not have been possible without that leadership to guide it through disruption and change.

As investors, we’ve recognised that great leadership is fundamental to making good investments and investing in great female leadership is crucial to driving innovation, closing the gender gap, and ensuring that female-led businesses have access to better funding.

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Jun 11, 2021

G7 Summit guide: What it is and what leaders hope to achieve

G7
Sustainability
G7Summit
EU
3 min
Business Chief delves into what the G7 is and represents and what its 2021 summit hopes to achieve, in terms of sustainability and global trade

Unless you’ve had your head buried in the sand, you’ll have seen the term ‘G7’ plastered all over the Internet this week. We’re going to give you the skinny on exactly what the G7 is and what its purpose on this planet is ─ and whether it’s a good or a bad collaboration. 

 

Who are the G7?

The Group of Seven, or ‘G7’, may sound like a collective of pirate lords from a certain Disney smash-hit, but in reality, it’s a group of the world’s seven largest “advanced” economies ─ the powerhouses of the world, if you like. 

The merry band comprises:

  • Canada
  • France
  • Germany
  • Italy
  • Japan
  • The United Kingdom
  • The United States

Historically, Russia was a member of the then-called ‘G8’ but found itself excluded after their ever-so-slightly illegal takeover of Crimea back in 2014.

 

Since 1977, the European Union has also been involved in some capacity with the G7 Summit. The Union is not recognised as an official member, but gradually, as with all Europe-linked affairs, the Union has integrated itself into the conversation and is now included in all political discussions on the annual summit agenda. 

 

When was the ‘G’ formed?

Back in 1975, when the world was reeling from its very first oil shock and the subsequent financial fallout that came with it, the heads of state and government from six of the leading industrial countries had a face-to-face meeting at the Chateau de Rambouillet to discuss the global economy, its trajectory, and what they could do to address the economic turmoil that reared its ugly head throughout the 70s. 

 

Why does the G7 exist?

At this very first summit ─ the ‘G6’ summit ─, the leaders adopted a 15-point communiqué, the Declaration of Rambouillet, and agreed to continuously meet once a year moving forward to address the problems of the day, with a rotating Presidency. One year later, Canada was welcomed into the fold, and the ‘G6’ became seven and has remained so ever since ─ Russia’s inclusion and exclusion not counted. 

 

The group, as previously mentioned, was born in the looming shadow of a financial crisis, but its purpose is more significant than just economics. When leaders from the group meet, they discuss and exchange ideas on a broad range of issues, including injustice around the world, geopolitical matters, security, and sustainability. 

 

It’s worth noting that, while the G7 may be made up of mighty nations, the bloc is an informal one. So, although it is considered an important annual event, declarations made during the summit are not legally binding. That said, they are still very influential and worth taking note of because it indicates the ambitions and outlines the initiatives of these particularly prominent leading nations. 

 

Where is the 2021 G7 summit?

This year, the summit will be held in the United Kingdom deep in the southwest of England, with Prime Minister Boris Johnson hosting his contemporaries in the quaint Cornish resort of Carbis Bay near St Ives in Cornwall. 
 

What will be discussed this year? 

After almost two years of remote communication, this will be the first in-person G7 summit since the novel Coronavirus first took hold of the globe, and Britain wants “leaders to seize the opportunity to build back better from coronavirus, uniting to make the future fairer, greener, and more prosperous.”

 

The three-day summit, running from Friday to Sunday, will see the seven leaders discussing a whole host of shared challenges, ranging from the pandemic and vaccine development and distribution to the ongoing global fight against climate change through the implementation of sustainable norms and values. 

 

According to the UK government, the attendees will also be taking a look at “ensuring that people everywhere can benefit from open trade, technological change, and scientific discovery.” 

 

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