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The hard thing about Gender Lens Investing

Posted on Apr 1, 2021
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As a firm, Patamar started our gender-lens investing journey 4 years ago in 2017, and the first thing I learned was that gender-lens investing is actually very broad. I have to underline the disclaimer that I am not claiming any expertise in this, just sharing my personal journey and our firm, Patamar Capital, as we use gender lens in our investment activity. To us, gender lens investing means incorporating gender lens in all parts of the investing process. If you want to read more on what gender lens investing is all about, this article from Criterion Institute explains what it entails in more detail.

It’s about smart investing, not just politically correct

One aspect of gender lens is investing with the intention to address gender issues or promote gender equity. One thing that is clear for a lot of people is investing in women-owned businesses. It’s been cited a lot that only less than 3% of VC funding went to companies with female founders. And unfortunately during Covid, the percentage went lower from 2.8% to 2.3% in the US.This is a big problem on its own, but it doesn’t just stop there. To address gender issues, it is also important to support businesses that offer products that improve the lives of women and girls. Some of the root causes of these are systemic, but at Patamar, we want to focus on things we can practically implement now and within our control.

What is definitely within our control is the second aspect of gender lens investing: how we operate as investors. Incorporating a gender lens means ensuring our investment processes consider gender issues: from sourcing, due diligence, deal negotiation, to post-deal monitoring. This is the gender lens practice our firm focuses on. For example, in sourcing practice, we try to go broader. If we only attend community events where the attendees are typically men, then we might be missing out on great women-led companies whose founders don’t feel they belong to that community. So we had to consciously look broader to ensure we don’t have a blind spot.

During due diligence, we also look at how gender plays a role in the business. For example, whether the target market is predominantly women, like the case of our portfolio company Sayurbox. Or whether the stakeholders are majority women, like our (former) portfolio company Mapan, who has >300k agents now, and almost 100% of them are women. Another example is our portfolio company mClinica who works with more than 150k pharmacy professionals in Southeast Asia, mostly female. Understanding the gender aspect of a business affects how we evaluate it. In cases where women play a very important role in the market, the founders need to ensure that the marketing message, product design, user experience, and so on fit into the target market. This is something that is critical to the business success, not just a politically correct thing to do.

Interestingly, after the firm decided to seriously adopt gender lens, I started to apply this lens out of habit in my daily life when looking at businesses around me. For example, as a consumer watching the C2C e-commerce war, I assume all the marketplaces want as many customers to transact more on their platforms to gain market share. However, the early image used to be that more men use Tokopedia and women shop at Shopee. So it was interesting to see Tokopedia try to appeal to more female customers by using BTS as their brand ambassador. On the other hand, Shopee used football stars Cristiano Ronaldo and Bambang Pamungkas, and have special male-oriented promo days to attract more men. This just shows that in business, it’s always important to use gender lens to ensure there is no blind spot that can affect business performance.

First step: be conscious of biases

On International Women’s Day, some men may think about how we can help women be more empowered. I used to think that too, until I realise that was just another case where men are biased on gender issues. When I had that thought some years ago, I unconsciously felt that we men are in the position of power: that women need our help. No thanks to my childhood reading Superman in the comics saving Lois Lane and literally lifting her up to fly. I learned to change the way I think towards an equal position. Rather than thinking how I can help, I changed my mindset to not be an obstruction. Because a lot of times women just need us men to get out of the way.

When Patamar embarked on our journey to implement gender lens in our investment work, this was something I had to challenge myself: that I was (and maybe still am) biased when it comes to gender issues. That was my big revelation, the concept of unconscious bias. I can say, “My wife owns a business and I support that fully. And besides, I have 2 daughters, so I am not biased.” But I once met a team of male-female founders, and assumed the male founder was going to be the one leading the pitch. Dead wrong there, the female founder was the brain behind the whole business and was the CEO.

In another meeting I was called out for focusing too much on the risks of a business started by female founders, something that was proven to be prevalent among VCsThis HBR article/study exposed the unconscious bias from VCs asking female founders more questions on risks while questions for male founders tend to focus on future potentials. After many anecdotal evidences, I came to realise that most, if not all, men are biased, unconsciously.

Project Implicit, a non-profit research collaboration, has been studying and publish many peer-reviewed papers on many types of implicit/unconscious biases, from racial bias, body shape bias, religious bias, age bias, and of course gender bias. They developed a simple Implicit Association Test and I encourage you to take the implicit gender-career association one to find out whether we are unconsciously biased.

I came to realise that getting rid of bias is similar to gaining competence. It takes a conscious effort to be competent at something, just like it takes effort to be unbiased at something. I think the Competence Hierarchy that is often used to describe human’s learning process is also applicable to bias

By TyIzaeL — This file was derived from: Competence Hierarchy adapted from Noel Burch by Igor Kokcharov.jpg by Kokcharov, CC BY-SA 4.0

When a child is unconsciously incompetent, she might jump into water without knowing that swimming skills is required. That one bad experience with water will move her to be consciously incompetent. If motivated enough, she would start learning how to swim. Otherwise, she’d stay in the second stage knowing that she doesn’t have the ability to survive in water. Early swimmers who just start to gain the skills are usually going through the motions very consciously, thinking of every stroke and when they need to tilt their head above water to breathe. The real skilled swimmers can do laps after laps without thinking of the little details of hand strokes, kicks, and taking a breath. Unconscious competence

When I thought about it, as a human being, I have gone through the 4 stages for so many skills that I now take for granted: swimming, riding a bike, driving, reading, basic algebra, the list is endless. That gave me the confidence that human beings should be able to move from being unconsciously biased, to be conscious of our biases, and eventually be unconsciously unbiased. As with learning new skills, taking the first step itself was very hard for me: admitting that as a man, I do have some gender biases. Moving from being unconsciously biased to be conscious of my biases.

I like how this article listed what roles men can play in promoting gender equality, and the first one is: acknowledging male privilege. So I encourage the men reading this, let’s say it out loud, “I. Am. Privileged”. As a man, I have started to acknowledge my privilege and also acknowledge that because of this privilege, I am biased on gender issues.

What We’ve Done At Patamar

At Patamar, we consciously took steps to eliminate these biases. We became more intentional about how we were fostering gender equality in our recruitment and career development. The gender balance shifted and we have more women now in the team. But stopping there would just be tokenism. As the first step is acknowledging our bias, we encourage everyone in our team to call out potential biased views and behaviours when they see one, and train ourselves (especially the men) to reflect whether those were driven by our biased views. We love that the theme for International Women’s Day 2021 is #ChooseToChallenge, because we have experienced this firsthand, that by challenging ourselves we become more alert.

I personally have been called out more than a few times, and it definitely made me more conscious of my thoughts and actions. We had a meeting with a company where both founders were present. I made the assumption that the male founder was the CEO, and how wrong I was. The female founder was the CEO and led the whole pitch.

We also took a conscious approach to incorporate gender analysis into all Patamar’s investment work. To take the swimming analogy further, we can only learn by jumping into water and practice. And jumped into the water we did. We set up a seed fund in collaboration with Investing In Women to invest in women-led businesses. This led us to broadening our sourcing activities by reaching out to female-focused communities/events as I mentioned earlier. Partnering with Kinara Indonesia, we ran accelerator programs for female entrepreneurs. Through both the seed fund and the accelerator, we invested in 14 women-led companies. Those efforts provided great learning experiences and practice for the whole team. We learned about challenges faced by women in scaling up their businesses. We got used to discussing gender issues and challenging each others’ biases.

We saw that equity financing is not always the answer for small businesses, which led to the launch of a sister fund focusing on female entrepreneurs called the Beacon Fund, managed by a team led by my business partner Shuyin Tang. We’re still far from done, so we take the conscious effort to continuously evaluate ourselves to embed gender lens in all our work, and strive to get to the unconscious level of competence/unbiasedness.

Personally, it will still take a while for me to learn and reach the state of unconsciously unbiased. Right now I am still discovering my biases and just trying to be more conscious of it. So I guess as a man, the first step we can do for gender equality is that: be conscious of our biases and just get out of the way, don’t become an impediment that stops progress.

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