Asia’s wealthy heirs, family offices bet on women in business with ‘gender lens’ investing
- Gender lens investing is part of a growing trend among Asia’s rich families, as young generations inheriting wealth put their money to work
- Its growth comes as workforce participation, discrepancy in salaries and access to capital between women and men worsened amid the pandemic
“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 Tahir, who has founded start-ups and is now a director at her family’s Mayapada Hospital group, said of her three daughters.
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 impacts. 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.
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.
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 outperformance”, 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. 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
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,” Tan said of gender lens investing. “Technology is making a lot of these solutions bankable.”
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Even family offices that do not have explicit mandates for diversity are dipping their toes into the space.
“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 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 such as family offices, which can “often take more risks” as they are less bureaucratic than institutional investors, said 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.
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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.
“Almost by happenstance we discovered these female founders who we have a huge amount of respect for,” said Kuok. “I think we’ll see more and more very high-calibre female-led companies continue to get institutional capital.”