Stumbling onto Gender
By: Ronghui Kan
Tags: Impact Investing, Southeast Asia, Sme Finance, Gender Lens Investing, Equality

A guy’s unexpected, happy journey into Gender-Lens Investing

HEC Paris MBAs exploring La Ville Lumière

My predictions about my own life always seem to be wrong. If I had made a bet with friends about which career I would end up in after my MBA in Paris, gender lens investing would probably not even have made it into my top ten choices. Paris is famous for wine, luxury and fashion, and most people would have guessed I might enter that world. Even if I had known more about gender lens investing, I probably would not have even entertained the possibility as one of my MBA “accomplishments” was to get a C grade for the class on gender and diversity (my only C grade!), something I still maintain had nothing to do with excessive partying. On a more reflective note however, my journey into gender lens investing was one of my own gradual education into what is one of the great inequalities in today’s world.

Aren’t we all equal already?

In Singapore where I grew up, I would say that the most egregious forms of gender discrimination were not easy to spot. While I had heard stories of gender discrimination, my lived experience where both genders went to school and worked together relegated these stories of discrimination and inequality to the realm of historical curiosity. In fact, the running joke what that given that only Singaporean men are expected to undergo two years of mandatory National Service, it was men who were being discriminated against! The standard forms of gross gender discrimination that had occupied the minds of previous generations of people had seemed to me to be by and large, snuffed out. To my naïve mind, the battle for gender equality had been largely won.

The gradual realisation that this battle was far from over came when I had the opportunity to join Patamar Capital for a few months in Vietnam in the summer of 2018 for an MBA internship. It was a dizzy and exhilarating, yet thoroughly educational experience. It was here that I first saw the heady rush of innovation as I got the privilege to work with entrepreneurs who were doing amazing things to bring new services to underserved populations and market frontiers, deftly managing their businesses to capture any new opportunity.

On the other hand, it was also the place where I first saw the importance of looking beneath the surface to uncover gender-related equity issues. Some companies that seemed to have it all — good growth prospects and happy workers etc. — revealed deeper issues when dealing with their female workers. In one particularly interesting story, we found a company using appearance as an explicit recruitment factor for female candidates with the supposed justification that this was linked to higher likeability. Needless to say Patamar was not able to invest in the company, but at the same time during the internal discussion process we became keenly aware that there are many established firms especially in the service industry also do similar things (e.g. airlines when hiring air crew), but no attention is called to this issue. I wondered to myself how this was the case and what I could do about it.

Some companies that seemed to have it all — good growth prospects and happy workers etc. — revealed deeper issues when dealing with their female workers.

Investing in an equal playing field

And so one day more than a year later I found myself chatting about female entrepreneurship with Shuyin, partner at Patamar Capital. She shared that Patamar had spotted a gap in the market for women-led small and medium businesses and had an idea to help close the gap. They had noticed a pattern that there were many female entrepreneurs looking for funding, but whom Patamar had to pass on just because they were not looking to grow at the super growth rates expected by venture capital firms. What made the decision to turn these entrepreneurs away harder was that many of these businesses had wonderful ideas, were cash flow positive and investible — but there was just no right vehicle to finance them. Talking to these entrepreneurs also revealed that the formal system of banks, with its formal requirements and conservative underwriting methods, was not able to extend them credit. In other words, an answer seemed to not exist, so she said that she was thinking of making one up from scratch. It was exploration phase.

What made the decision to turn these entrepreneurs away harder was that many of these businesses had wonderful ideas, were cash flow positive and investible — but there was just no right vehicle to finance them.

Building on the key insight that many female entrepreneurs in Southeast Asia had to rely on getting positive cash flow through their businesses as a way to deal with their lack of access to finance, it became clear that debt financing was a real possibility. But traditional underwriting methods were of limited applicability here as these companies were usually young and did not have much track record, nor did they have the necessary levels of collateral required by the formal banking system. Beacon’s familiarity with analysing startups through Patamar was hence immensely useful to understand these young companies who often had plans for good, but not hyper-growth. In other words, Patamar’s ability to thoroughly understand early-stage companies could potentially be the key missing ingredient to designing a debt product that could meet the needs of these female entrepreneurs.

This struck me as a thoroughly good idea. First, I had participated firsthand in trying to channel funding towards non-hyper-growth small and medium enterprises (both from the government and from the inside of one such company) and saw their lack of many alternatives during the process. Second, I believe that most groundbreaking innovation takes place in the “crossover” region between established boundaries and I realised that Beacon was actually in one, being debt investors familiar with investing equity into early-stage companies. Finally, my decision to join was precipitated by the pandemic, as I could see that Beacon’s focus on female entrepreneurs had become even more relevant, with women being disproportionately affected. As such, I packed my bags, left Paris and returned to Singapore to start work at Beacon in early 2021.

I believe that most groundbreaking innovation takes place in the “crossover” region between established boundaries and I realised that Beacon was actually in one, being debt investors familiar with investing equity into early-stage companies.

An open invitation

At Beacon, I will focus mainly on investor relations, but also on a variety of functions from strategy to product development. In this role, I hope to be able to bring my previous experience of development, finance and relationship management to work for Beacon, building a great fund that investors will be happy to participate in. And I can only say that it has been a great ride so far, with the innovative DNA of the company, the unrelenting focus on the client and the priority placed on employee well-being proving to be a potent mix of factors keeping me engaged.

If my story resonates with you and you would like to learn more about gender lens investing in Southeast Asia or have ideas for us, feel free to reach out for a coffee anytime! I am based in Singapore and am more than happy for an excuse to explore the various caffeine houses across the island.