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Gender lens investing (GLI) is interpreted and carried out in many alternative methods, from investing in women-owned and -led enterprises to investing in enterprises particularly concentrating on girls, and extra. Shuyin Tang is a Associate at Patamar Capital, a enterprise capital agency centered on Collection A and Collection B investments in South and Southeast Asia in addition to a member of Ladies’s World Banking’s Southeast Asia Advisory Council. Primarily based in Vietnam, Shuyin leads funding alternatives throughout the area and heads Patamar’s work on Investing in Ladies. Investing in Ladies is an initiative of the Australian Authorities to catalyse inclusive financial development by girls’s financial empowerment in Southeast Asia. In view of the upcoming Making Finance Work for Ladies Summit hosted by Ladies’s World Banking, we spoke to her to get a greater perception into Patamar Capital’s work and views on GLI. Throughout the Summit, Shuyin will function one of many judges of Ladies’s World Banking’s FinTech Innovation Problem, designed particularly to reward and foster a FinTech start-up working towards girls’s monetary inclusion.
There are such a lot of methods to consider ‘gender lens investing. How do you method it at Patamar?
Patamar focuses on 4 lenses – three of that are generally utilized and a fourth which is a bit more distinctive to us. The generally utilized lenses are: 1) women-led companies; 2) services and products which profit girls; and three) gender fairness within the office. We determined to transcend these three and likewise take a look at the standing of ladies in that specific society and cultural context, in addition to the sector during which the enterprise is working. This implies we apply a gender evaluation to all the businesses we consider for funding, not simply ones which can be led by girls or centered on girls. We search out gender disaggregated information as we analyse the corporate’s enterprise mannequin and the market during which they function. We then use this data to determine potential alternatives and dangers. For instance, we might look at whether or not there are any gender patterns in buyer loyalty or retention, or take a look at how gender performs a task within the development drivers of a selected market.
There’s some debate inside the GLI neighborhood about course of vs. outcome-oriented approaches to GLI. We’ve centered extra on the method – that’s, how will we embed a gender evaluation into our funding course of and operations as an funding agency – because it’s solely by altering the method that we will systematically count on to get completely different outcomes. We’ve discovered that investing in women-led enterprises is widespread because it’s comparatively straightforward to trace easy outcomes (e.g. “what number of girls did we put money into?”), however it’s not essentially a assure of reaching one’s enterprise or affect objectives. It’s way more highly effective to interrogate how a administration staff understands the wants of its feminine prospects and makes use of that information to generate buyer loyalty, for instance. Quite than saying “let’s make certain 30% of the businesses we put money into are led by girls,” it makes extra sense to dive deeper into the agency’s deal-sourcing methods and due diligence processes, which frequently comprise gender biases.
You have got gathered some nice expertise and first-hand publicity to GLI – whether or not by creating and making use of Patamar’s GLI method, engaged on Investing in Ladies or attending gender-focused conferences and talks. What are the primary challenges you see within the house?
Making use of GLI actually comes with some challenges, as any change administration course of does. Although our staff is absolutely dedicated to the concept of GLI, integrating gender-oriented questions into our due diligence course of has taken time and remains to be ongoing. Quite than have a ‘gender guidelines’ (which might lend itself to ticking packing containers reasonably than a deeper consideration of the problems), we created a set of dialog starters which our deal groups can draw on selectively as they do due diligence. Ideally, gender-oriented questions needs to be absolutely built-in into the general due diligence course of and never be an afterthought. One other fixed problem we’ve confronted is putting the proper steadiness between protecting GLI accessible and sensible and likewise protecting it rigorous.
Stepping again to contemplate the challenges the general sector faces, we see that the overwhelming majority of GLI merchandise are in enterprise capital or personal fairness, which everyone knows just isn’t probably the most acceptable capital supply for almost all of companies. This typically signifies that firms who don’t have “explosive” development typically battle to search out funds. Whereas some could also be dismissive of those firms as “life-style” or “micro-businesses,” our expertise from years of partaking with entrepreneurs in Southeast Asia has revealed that many of those companies are in actual fact worthwhile, cash-flow constructive, and rising at wholesome charges.
Due to challenges elevating funding from exterior traders (because of a large variety of components, together with gender bias, entry to collateral, and so forth), girls typically gravitate to companies with wholesome unit economics the place earnings will be channelled again into natural development. They’re generally sceptical about taking up fairness financing as they need to proceed operating their companies and therefore should not centered on an exit. But regardless of this, there are only a few personal debt or enterprise debt funds in Southeast Asia, and even fewer experimenting with various financing devices, equivalent to revenue-based financing or royalty schemes. Out of those, there are even fewer (if any) with an express gender lens. This appears to me like an enormous missed alternative.
Case research on the enterprise feasibility and desirability of GLI are mushrooming, and increasingly more individuals inside the investing house are realising its potential. Whereas this certainly is a step ahead, are there any drawbacks or precautions one ought to pay attention to?
Certainly, a lot of the work and vitality inside the GLI house is targeted on proving out the observe file for GLI or investing in women-led firms, which, don’t get me improper, is a crucial factor to work on. Nonetheless, if you wish to take a look at information supporting the case for GLI, there’s loads of good materials exhibiting that range (each gender range and different kinds of range) will improve financials return, or on the very least received’t hurt returns. And we’ve had this information for a while now. What worries me is that regardless of all the info, we haven’t moved the needle a lot when it comes to the actual quantity of funding {dollars} directed in direction of GLI. The funding world appears to be ready for extra information on the enterprise case, however I believe the info already speaks for itself. What we now want is motion.
Additionally, many are focusing nearly fully on the truth that GLI makes monetary sense, and as ‘rational financial actors’ that’s what we needs to be doing. However what concerning the easy human decency of contributing to a extra inclusive society? Increasingly the main focus lies on GLI being the sensible factor to do and fewer on it being the proper factor to do. As talked about above, these appeals to trace file and monetary returns haven’t been that efficient, so maybe we have to take a look at telling the story another way, a extra emotional approach.
One last query. How does and the way ought to the long run appear like for GLI?
What I hope to see 5, ten years forward is extra fashions going past the mere counting of feminine entrepreneurs receiving funding to actually considering deeply about methods to create a extra equal and inclusive society. This implies transferring previous the paradigm of organising one other VC fund to focus on feminine founders, however as a substitute experimenting with new approaches and fashions. In fact, this requires the entire ecosystem–from LPs to fund managers, from banks to enterprises–to assume extra creatively. There are constructive tailwinds, equivalent to extra socially-minded millennials and girls controlling an growing proportion of the world’s wealth. I hope we will channel these developments towards extra considerate funding practices that take a look at extra than simply near-term monetary returns.
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