Gender bias, income inequality, lack of support - the underlying struggles of female funders & founders
Join us as we chat with prominent female investors Dr Melissa Foo, Xelia Tong & Elain Lockman in our second BawaTanya session happening Monday, 31 May 2021 @ 8.30 pm on Clubhouse
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Feminism has been a recurring wave that keeps crashing onto the shores of our society over the past few centuries. Since the late 19th century, there have been four significant waves:
First-wave feminism had a fairly simple goal: have society recognise that women are humans, not property. This included the right to vote and reproductive rights of a woman. The down side was that it was focused purely on white women, which as we all know by now is a grave exclusion that continues to haunt us today.
Second-wave feminism saw the emergence of three main types of feminism: mainstream/liberal, radical and cultural. Mainstream focused on institutional reforms. Radical feminism wanted to reshape society entirely. Cultural feminism taught us that there’s a “female essence” distinctive from our male counterparts.
Third-wave feminism saw many more women enjoy rights and power that rightfully should have been accorded to them since the beginning. However, there was increased attention on racial disparities within the female gender.
Fourth-wave feminism saw the likes of #MeToo and social media activism which has propelled the movement well into the technological age. It builds on the third wave’s emphasis on inclusivity and forces us to examine empowerment, equality and freedom.
Here are some sobering statistics surrounding female funders and founders
Today, female founders within the startup ecosystem have not been spared from the challenges of gender bias and the harsh reality of being undermined, undervalued and underfunded. According to DealStreetAsia’s latest Women in Startups: The SE Asia Edition report, women founders and co-founders accounted for a mere 16.4% (USD1.4 billion) of the overall disclosed fundraisings (USD8.6 billion) in the region in 2020. Excluding ride-hailing payments decacorn Grab’s closure of two deals worth a combined USD1.06 billion in 2020 which accounts for 75% of deal value involving a woman co-founder, the figures are actually much more disconcerting.
Women constitute 51% of the world’s population, opening almost 40% of all businesses. Yet, Southeast Asian startups founded solely by women garnered only 0.9% of the capital raised in 2020.
According to a recent article in Nikkei Asia, despite mounting data which suggests greater returns are generated by female founders, women in business continue to be overlooked by traditional venture capital. In a study conducted by Boston Consulting Group, for every dollar of funding, women-led startups generated a return of 78 cents while male-founded startups generated less than half of that, at just 31 cents.
The situation looks equally as daunting for female funders. In a recent report by DealStreetAsia, 73% of venture capital firms based in Southeast Asia don’t have a single female investing partner. According to Melissa Irene, the first female partner of Jakarta-based venture capital firm East Ventures, this can be attributed to the ecosystem’s nascent stage of development.
Sadly, there still exists institutional wariness around female funders. According to the Untapped Potential of Women-led Funds, a report released in October 2020 by New York-based Global Women in VC, "if we continue at the current pace, it will take female fund managers 200 years to achieve equal status to male counterparts."
Female-led businesses fare just as well (if not, better) as male-led businesses
Let’s take a look at how some of our Malaysian female-led businesses have fared.
Homa2U - an online marketplace for construction and renovation materials - managed to yield a twofold revenue growth from RM 2.2 million to RM 4.4 million over a span of 12 months despite the Covid-19 pandemic which led to two movement control orders by the government. This year, its target is to double its revenue between RM 8-10 million from its B2B and B2C customer segments.
Online store Babydash which sells baby necessities experienced a 37% growth y-o-y from 2019 with a strong customer retention rate of 70%. Its aim in 2021 is to penetrate the Indonesian market and create its own brand of organic baby food, which will be a huge game changer to the baby food industry.
The dynamic duo behind the online ecosystem for advertising AdEasy - Melissa Sim and Therine Goh - successfully secured its place in the 500 Startups Global Immersion Program in Silicon Valley and have begun raising a Bridge Round with plans to expand into two new markets within the Southeast Asian region and grow its user base to 1,700 users by the end of this year. This happened despite the fact that the Covid-19 pandemic impacted 98% of its revenue pipeline.
Confinement service PantangPlus and babysitting service Kiddocare whose solutions require in-person interactions were especially challenged by the Covid-19 pandemic. Yet, both businesses remained resilient achieving revenue figures above RM700,000 by December 2020 with plans to further grow its user base this year.
It’s clear that female-led companies are on an upward trajectory towards building wildly successful and sustainable businesses but yet receive far less support than male-led companies.
So why is there so little venture capital going towards female founders?
In our first Sprout 2020 instalment featuring guest speaker Amy Zheng, Co-Founder and CEO of healthy snack brand Amazin’ Graze, she shares her challenges as a female founder along her entrepreneurial journey. “Being based in Southeast Asia, women founders have no playbook to adhere to. I’m proudly the first generation of “made-local” from Asia but there are very few models to be inspired by who comes from the same background. I’ve also encountered people and even team members who don’t take me seriously as a woman running a lifestyle-oriented business. Believe it or not, I’ve had people commenting that what I do is more of a hobby.”
“This is no big secret but it’s also hard for female founders to get capital, both in terms of fundraising and getting loans. There’s this implicit prejudice against women which impacts our risk profile against that of men,” continues Amy.
Pennie Lim, founder of construction and renovation materials online marketplace Homa2U, states: “Thankfully, I’ve been quite blessed to be able to gain access to funders and investors but what’s killing the momentum right now is the state of the construction industry with regards to the Covid-19 pandemic. There definitely needs to be more support for the female founder community instead of being pitted against each other. Contrary to popular belief, I find real value in leveraging other female founders for personal and professional growth.”
One common barrier is a woman’s responsibility towards family. “The biggest challenge for me personally is balancing family vs career. It’s not always easy to choose between the two,” said Pennie. The other more unseen and not talked about nearly enough is a woman’s biological clock. “The clock doesn’t wait for our career. As great as it is being a female entrepreneur that gets to empower other females, female founders are forced to think about how long family planning can be delayed and discuss the decision with their partners,” added Amy.
The rise of female funders
A big part of the problem is that the VC world is a huge boy’s club. This is why in more recent years, the industry has started to see the sprouting of VC firms led by women that seek to address gender or racial biases such as Backstage Capital - founded by Arlan Hamilton - which champions underrepresented founders including women, people of colour and LGBT founders.
Co-founders Tanya Rolfe and Gail Wong of Her Capital - Singapore-based investment team focused solely on female-led startups - states: “Investors are missing out since female-founded companies outperform male-founded ones in a number of ways including generating greater returns for investors, exiting faster and being - on average - more profitable.”
In an article written by Tanya and published in Nikkei Asia, she mentions “Pointing capital towards change such as gender equality will require institutions to not only embrace new metrics publicly but consider new ways of working. Those committed to driving meaningful change will need to start from within: with self-examination of existing practices and a willingness to adjust for the challenges ahead. Financial data strongly supports female founders and the plain truth is that investing in women is good business.
Despite the stark reality, there is hope for female funders in our region. “The Southeast Asian investment ecosystem is “quite friendly” toward women where people rejoice in the promotion of female professionals in the industry. The support for female investors goes beyond simply checking the gender-diversity box and reflects a real demand for more empathetic investors in the tech industry. Empathy is something that comes more naturally from females. However, the number of female decision-makers definitely needs to improve and I’m optimistic that our local and regional ecosystem will support that,” said Melissa of East Ventures.
The underlying issues that prevent female founders from being funded and female funders from being heard
There is a clear prejudice against females operating in this space that constantly happens despite the proof that female founders and funders are invaluable towards the ecosystem. Coupled with income inequality, the pathway for females to either found their own business or fund investments is marred by the disparity of income against males. There needs to be fairer assessment models and income transparency mechanisms in place in order to more accurately present a woman’s financial worth and growth potential.
To address the sometimes poor judgements made by an overwhelming community of male funders, the key is to increase venture capital funding to female-led companies through female-founded venture capital funds with a strategy for investing in women. Simply adding more women into existing venture capital funds is not nearly enough as the strategies that’s been set are often already defined and led by men. We welcome more women to the investment table to inject more empathetic decision making - hopefully in other women.
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ICYMI, you can watch Amy’s talk below.
Join us for our upcoming BawaTanya Session #2: Women Who Invest & Investing in Women on Clubhouse
Here are some recent findings:
Women are 51% of the world's population. They open almost 40% of all businesses and receive less than 3% of all venture capital funding, which has remained unchanged for the past 7 years.
In 2019, 2.8% of funding went to women-led startups; in 2020, that fell to 2.3%, Crunchbase figures show.
KrASIA reviewed the rosters of 34 VC firms that are active in Southeast Asia. Only 12 firms have one or more female partners on their investment teams. Among them, three firms stood out: Golden Equator Ventures (Singapore) and RHL Ventures (Malaysia) each have three women as partners, while Gobi Partners (Malaysia) has two appointments for women.
The traditional fund management and investment playing field still runs based on strategies defined and led by men, so simply adding more women into existing VC funds doesn't necessarily mean their thoughts and strategies are being laid on the table. Case in point - 73% of VC firms in Southeast Asia don't have a single female investment partner.
On the other side of the VC table, research has proven that female-founded businesses generate greater returns than male-founded businesses. Yet female founders have a hard time securing venture capital with only 2.3% of all VC funding going towards women according to Crunchbase.
In our second instalment of BawaTanya titled Women Who Invest and Investing in Women, join prominent women investors Dr Melissa Foo Suyin (Agensi Inovasi Malaysia and Vice President of MBAN), Xelia Tong (Managing Partner of ScaleUp Malaysia) and Elain Lockman (CEO of Ata Plus) as we discuss the real reason why women aren’t able to break into the investment scene, why women investors are better decision makers and the support that's direly needed for the women investors and founders community.
Details below:
Day/Date: Monday, 31 May 2021
Time: 8.30 pm
Clubhouse Event Link: BawaTanya #2: Women Who Invest and Investing in Women
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