July 13, 2021

Asia’s wealthy heirs are backing women in business

By ellen

JAKARTA (BLOOMBERG) – When Ms Grace Tahir’s daughter turned 14, they sat down to talk careers.

As a family linked to two Indonesian billionaire patriarchs, a life of leisure has always been an option for the women in the family – but the teenager said she wanted to work, like her mother. That sparked a renewed determination in Ms Tahir to help advance women, pushing her to pour more funding into investments with a female focus.

“I would hate to see in 10 or 20 years’ time, when they get into the workforce, them facing the same situation I see myself in right now where a lot of things are very male-dominated,” 44-year-old Ms Tahir, who has founded start-ups and is now a director at her family’s Mayapada Hospital group, said of her three daughters.

Ms Tahir’s interest in so-called gender lens investing is part of a growing trend among Asia’s rich families, as young generations inheriting wealth put their money to work in more novel ways that may also have positive impact.

It helps that the research is beginning to back them up, with a number of studies now suggesting that a focus on gender-equal companies can help portfolio managers outperform.

The growth of this practice is particularly crucial at the current juncture as workforce participation, the discrepancy in salaries and access to capital between women and men worsened due to Covid-19.

Funding to female founders dropped 31 per cent last year compared to 16 per cent for all-male teams, according to PitchBook, a data provider.

‘Gold’ in women

Most gender lens investors look for three key indicators in a company – the number of female co-founders, the number of women occupying senior management roles and whether the business is creating products that materially serve or affect women.

Gender lens investment vehicles aimed at east and South-east Asia managed US$1.3 billion (S$1.76 billion) in 2019, according to a report released last year co-written by consultancy firm Catalyst at Large.

Though still a tiny amount relative to the broader investment industry, the report found the strategy is rapidly gaining momentum, with much of that likely coming from Asia’s secretive family offices.

Globally, some US$7.7 billion was allocated to gender lens investment vehicles in 2019, and the figure likely approached US$20 billion in 2020 as more people see the strategy as a “source of out-performance,” said Suzanne Biegel, founder of Catalyst at Large.

Companies with diverse executive teams deliver better sales growth while research indicates investment teams with gender-balanced leadership tend to outperform.

One female-focused fund that is performing well is SoGal Ventures, co-founded by Pocket Sun, a 30-year-old based in Beijing. Ms Sun said 35 of her 38 portfolio companies have female co-founders. Her fund, which manages US$15 million in assets, has generated an internal rate of return of 80 per cent since it was founded in 2017.

“There is gold in investing in women,” she said.

Bankable solutions

One of the funds that Ms Tahir has backed is Teja Ventures, founded by Virginia Tan, a former lawyer now living in Singapore. While working in Beijing, Ms Tan built communities for women entrepreneurs to network with peers as the start-up scene there exploded.

She co-founded She Loves Tech in 2015, a connector that runs a popular competition for female-focused start-ups and founders, and later started Teja partly to address the shortfall in capital among some of the participants.

“What I’d seen in the developmental space was there was a lot of need, but no capital and nothing to make it bankable – it was always seen as a charitable thing,” Ms Tan said of gender lens investing. “Technology is making a lot of these solutions bankable.”

Teja’s first US$10 million fund focused on Asian deals at the seed stage with portfolio companies including Indonesian plant-based restaurant chain Burgreens, which has a female co-founder; and Sheroes, an Indian social network for women.

Ms Tan said 80 per cent of Teja’s companies raised new funding last year, and that the portfolio has doubled in value. It’s now preparing to start raising a second US$50 million fund later this year.

Even family offices that don’t have explicit mandates for diversity are dipping their toes into the space.

Tsao Family Office investment manager Diana Watson, whose firm manages the wealth first generated by the late Singaporean tycoon Frank Tsao, now requests the gender statistics of the board, C-suite and deal teams at firms seeking the family’s money.

“If it came to two very similar opportunities, it might be that the gender diversity lost it for one or enabled it to be picked,” said Ms Watson.

Wealth transfer

To be sure, gender lens investing remains a very small fraction of the broader investment landscape, and carries some unique risks that could hamper take-up by larger institutions.

For one, the often simplistic level of diversity data supplied by businesses can make detailed analysis tricky. And many venture capital firms still show bias toward viewing – and therefore funding – pitches from all-male teams, which often leaves pitches from women overlooked.

Those concerns, however, are likely less of an issue for backers like family offices, which can “often take more risks” as they are less bureaucratic than institutional investors, said Ms Biegel. Furthermore, many of these affluent backers were entrepreneurs themselves, “so they see opportunities to back capable and smart entrepreneurs.”

And with Asia undergoing a massive wealth transfer to the second and third generations of families, more heirs are willing to use more novel – even riskier – strategies.

Bringing a more open-minded approach to a region still grappling with diversity at work, some have fallen into the gender lens space more through chance than design, and look set to deepen their involvement given the rewards.

Kuok Meng Xiong, the grandson of Malaysian billionaire Robert Kuok, does not set out to look at opportunities through a gender lens.

However, the 40-year-old head of Singapore-based family office K3 Ventures has ended up backing female-led companies that include an American developer of prebiotics normally found in human breast milk and a Vietnamese trucking start-up.

“Almost by happenstance we discovered these female founders who we have a huge amount of respect for,” said Mr Kuok. “I think we’ll see more and more very high-caliber female-led companies continue to get institutional capital.”