“I am fully convicted that companies that commit to strong internal gender equality and continuous operational improvements will be superior business performers, both financially and socially.” – Jennifer Buckley, Senior Managing Director, Asia, SEAF
What motivated you to become a gender lens investor?
SEAF has always been committed to women’s economic empowerment. Navigating through the nascent gender lens investing (GLI) ecosystem, however, has not been smooth, particularly when a majority of capital providers perceive a lack of available pipeline.
Nonetheless, after piloting a few funds and initiatives, we have proven that there is indeed a strong base of women entrepreneurs seeking investment as well that gender lens investments can provide a return profile on par with non-GLI companies. With these results, more partners, including Investing in Women, are coming forth to support the work that we do and propel women’s economic empowerment.
What guides your investment decisions? Have you seen any returns?
In 2017, we piloted our first fund dedicated to women’s led businesses across Southeast Asia. The SEAF Women’s Opportunity Fund (“SWOF”) gave us the opportunity to refine our women’s economic empowerment strategy. We hypothesized that we could tackle economic empowerment challenges faced by women in Southeast Asia by investing in the following high growth sectors:
- Women-led firms that do not have equal access to equity capital
- Firms where women employment opportunities are more prevalent
- Companies whose products/services meet the needs and wants of women and girls
- Exemplary firms that are already demonstrating a commitment to gender equality and are influencing social norms
Critical to SEAF’s GLI strategy is our Gender Equality Scorecard GES© – a screening tool that assesses our portfolio companies based on their level of demonstrated gender equality. GES© also helps to identify opportunities to build value within these companies by shaping gender equality in their leadership and workforce policies. Their score, therefore, can be tracked and improved over the investment hold period through technical assistance, thus ensuring the sustainability of SEAF’s value creation work even after our exit.
How does SEAF encourage more mainstream businesses and investors to join the gender lens ecosystem?
The prevailing investment strategy in Asia continues to echo the “two pockets” concept, where there are monies to invest and monies with which to do good. In this strategy, each pocket of money is separate, and they never meet. Globally, commercially oriented investment funds have been slow, even reluctant, to dive into gender lens investing. Likewise, investors tend to be very conservative and slow to warm to new types of investment, given their limited track record. A large group of them want to see (1) other investors make the first commitment before participating in the second closing of these funds, and/or (2) definitive progress on the value creation work in existing portfolios to demonstrate the return potential of these transactions.
A huge myth that SEAF would like to bust is the misconception that GLI or even impact investing in general implies a compromise in financial returns.
To overcome these hurdles, we need to continue raising awareness to encourage family offices, venture philanthropists and foundations to stimulate investment into gender impact funds. Through the positive results of our investment strategy – having successfully raised and managed 40 impact investing funds which included investments that supported women’s economic empowerment -, we hope to mitigate any perceived investor risk and through our new dedicated GLI-focused funds send a strong signal to other fund managers and capital providers that there is a strong potential in this new investment area.
As most investors in Asia seek risk-adjusted, market-rate returns, the majority of them are skeptical of developing a pipeline of investment-ready enterprises in the region. This is particularly challenging for GLI as investors find it difficult to source investable enterprises that are owned or led by women amid an already sparse pipeline. These investors often find themselves in this ‘disadvantage’ as they interpret GLI to merely investing in women-owned or women-led enterprises, revealing their limited awareness of other GLI strategies. Greater awareness training, therefore, needs to be offered to the investment ecosystem to broaden investment strategy and identify more opportunities that can create significant impact for women.
In addition, investors assume that women entrepreneurs do not want to take external equity for fear of losing control of their companies. While SEAF has seen elements of this, a critical element of pipeline development is establishing trust within this partnership, whereby entrepreneurs accept the investor as a collaborator in the business.
Finally, exit is the only measure of success that matters for commercially oriented investment firms. Until there are successful exits, it is a challenge to show these investors that the private investment model works. The exit mechanism, therefore, must be considered at pre-investment diligence.
Any tips for new or interested entrants to gender lens investing?
Investing in women-led or owned businesses is not enough to achieve women’s economic empowerment and gender equality as women have different roles and domains. A first step that investors can take is adapting the GES© to strengthen existing initiatives that support women economic empowerment and/or address any discriminatory practices.
In addition, to ensure the sustainability of your GLI strategy, it is important that the investments do not only provide access to capital but also access to necessary business support for strategic and operational execution.
Here is a series of case studies which offers a practical view on how women’s economic empowerment programs are implemented, measured and improved, while at the same time, providing appropriate financial returns.
How can AVPN support the work that you do?
We hope to leverage AVPN to raise awareness of GLI and encourage foundations, high net worth individuals and investment advisors/ to adopt a GLI strategy within their portfolio by demonstrating how social impact can play a role in creating value in businesses.