A recent report by DealStreetAsia found that 73 per cent of venture capital firms based in Southeast Asia don’t have a single female investing partner. One of the youngest women VCs in the region, who made partner this year, thinks it is largely due to the ecosystem’s nascent stage of development.
In an interview, East Ventures partner Melisa Irene discusses why she thinks Southeast Asia’s investment ecosystem is relatively balanced and why representation matters.
How would you rate gender representation at VC firms in Southeast Asia vis-à-vis mature markets such as the US?
I don’t have direct access to the Western ecosystem but what I have heard is this kind of problem is highly prominent in the US, where the domination of the male partners or decision-makers is very high. In here, our VC ecosystem is still pretty much quite young, so it doesn’t have a very high level of discrimination.
If you look at the VC ecosystem, it is quite balanced. If we think about the investment team, for example, there is a good representation of women at the principal level or VP level. At partner level, there indeed is a clear [gender] disparity. But since 2014, there has been a rise in conglomerate-owned VCs and you see some of the female executives, who are part of the [conglomerate] family, take that [partner] role. At least, when the entrepreneurs talk to VCs, it’s not always men but there’s a good representation of women.
There’s also encouragement from the community. People celebrate when they see a promotion [of a female VC] and the partners are quite proud of that. Maybe Southeast Asia has the chance to not repeat the bad reputation that the West or a more mature ecosystem has.
How much of the disparity at the partner level is due to systemic issues and how much due to the fact that SEA is a very nascent VC ecosystem?
We had a discussion with some of the female tech professionals on this. I think Southeast Asia’s gender gap and the US is very different. In the US, it is probably more systematic. Here, it’s not so much that women are pushed out but that women are credited for things that men wouldn’t be.
So, for example, if someone is able to create a good assessment or be aggressive in a certain deal, people will be just surprised by the fact that you are a woman and you are able to drive through that, a comment that would not be sent out if it was done by a man. Or if you met a woman who is doing data science or very heavy engineering work, people will be surprised and think it’s great that you are able to do this. It’s not so much an aggressive discrimination as a very passive one.
On the gender disparity [in VC roles in SEA], I don’t think it’s the system behind it. The exposure is still low and the industry is still pretty new. We’ve seen enough promotions for women from the investments team to VP or Principal, which sets a good pathway. In the coming years, we will see more and more female partners in Southeast Asia.
How difficult is it for a woman to make partner than a man in Southeast Asia, all other factors being equal?
Something that I haven’t experienced myself is how hard would it be for women who have different priorities in life, where they already have family and kids, and how they are able to juggle all those responsibilities.
If you look at the GPs here, most of them have a background of investment banking or consulting, or they have run startups before — roles that have been mostly held by men. I think that’s why most of the partners are male.
But VCs in Southeast Asia are very friendly. In Indonesia, especially, we don’t have a strong finance industry. So, people who are coming in this industry are those who have worked at other corporates, conglomerates or audit firms and people are quite open-minded in welcoming those talents. So, it is just a different starting point as there is only a small percentage of Asian women who are CEOs.
How hard is it compared to men? I am hopeful it is not going to be very discriminatory.
Does having more female VCs provide more support for female entrepreneurs, who could potentially become partners in the future?
I think it boils down to different ways of communicating. If I am to trust the research, it is said that most women communicate better during one-on-one conversations. In comparison, in settings like [investor-startup] speed dating or pitching competitions where you need to do more one-way communication, some research says that it is not the best way for women to communicate.
Second, it helps to have your gender represented on the other side of the table in the sense that you know someone will be able to neutralise if there should be any comment that is not related to business performance.
In your experience, is there a relationship between having a more diverse investment decision-making team and the returns you generate or the portfolio you build?
We haven’t actually done that analysis yet, but we have gotten to around 10 per cent female representation in the portfolio. While it’s still low, it’s actually quite a good achievement.
Second, the fact that decision making is done not by a single person is good. Having gender diversity theoretically helps to protect against any biases that might be unintentional. From the point of view of gender inherently, there is a layer of protection [in case of gender diverse decision-making] and that kind of balance is good.
I think it also goes back to the individual making the decisions, where the alignment of values is important. So in EV, for example, Willson [Cuaca, managing partner] places a very strong emphasis on meritocracy. It is not very difficult to push forward when we appreciate those values.
What can women do in order to climb up the ladder at a VC firm from your experience?
There are external and internal factors like how they are themselves and the firm that they are at. They should be able to perform well, that is very important. People should value the work based on merit and what they deliver not merely because of their gender. In our company, what we try to do is to set the same expectations for male and female executives to provide effective feedback for them. Second, pick the right workplace that celebrates those values.
Then, there are external factors. The ecosystem in Southeast Asia is very friendly, I think, and it needs to check the results [of such efforts] and whether the industry is doing better than before. At the end of the day, it is important for VCs to believe this [gender diversity] is a social good that delivers the same, or even better results than we expect as investors.
When you talk to other women VCs in the industry, are there conversations in terms of the compensation structure, units held within the VC and carry? Or is it still early to have those conversations in Southeast Asia?
People generally don’t talk about compensations openly. About carry, it is pretty nascent [concept] in Indonesia. I talk to colleagues in Singapore, not necessarily all women, and some are open to discussing and disclosing it. Some don’t simply because it is not yet present in the company structure.
Where are we in Southeast Asia? Some firms have introduced such structures [formally] but that is an exception rather than the norm.