Cognitive biases largely responsible for lack of VC diversity, says Gobi’s Shannon Kalayanamitr

Shannon Kalayanamitr is a Thailand-based partner at venture capital firm Gobi Partners.

As a former entrepreneur and now venture capitalist, Shannon Kalayanamitr has been on both sides of the negotiation table. A partner at Shanghai and Kuala Lumpur-based venture capital firm Gobi Partners, she is one of the 39 female decision-makers at Southeast Asia-based VC firms.

In a candid interview, Kalayanamitr talks about the Southeast Asia VC ecosystem and its performance in terms of gender diversity, cognitive biases that plague the industry, the She Economy, and her advice for budding female entrepreneurs and investors.

Edited excerpts of an interview with Kalayanamitr:

How would you rate Southeast Asia’s VC ecosystem in terms of gender diversity? Are there conscious efforts being made to improve on this front, or do you see most players paying lip service?

3/5 because there is always more we can do. I believe that there are more women in VC now, but not enough at the decision-making level which is what counts – partner level, or women in IC committees, representing the company’s interests being on the portfolio companies’ boards, and those that the firms send out as representatives to speak/ make decisions on behalf of the firm.

Which are the areas pertaining to gender diversity where this region’s VCs have progressed? In what areas do they lag behind?  

[There are] more women in investment for sure. There are women community groups that help support, upskill and mentor. There are groups that actively target women investors to do more, and associations and groups that help raise the awareness and pledging for more investment into women-led companies, and the importance of diversity in management teams and boards.

Much talk about this has been done – but the needle has not moved too much yet in terms of 1) women in decision making positions 2) actual monies deployed to women-led companies 3) the diversity in women boards has not increased but diversity in management has a bit.

Much of the issue for deployment of funds or hiring or having confidence in that women cannot hold the top positions is largely due to cognitive biases – that women “are not aggressive enough” or “how can she manage the job with a family at home,” etc.

Do you want to expand on the cognitive biases?

There are not enough women in VC in decision-making positions, which is where it counts. Even in Southeast Asia, 73 per cent of venture capital firms in the region don’t have a female investing partner. Women are often doing the administrative work in these positions, but are we really held the same respect, paid the same wage, and given the same responsibilities on where it counts? For example, in Thailand, we have the highest number of women C-suite figures in the world, but even women in positions of power are excluded from decision-making.

There have been strides lately in levelling the playing field, but sometimes I’ve seen that the woman doesn’t want to fight for it herself. I’ve seen a lot of my peers in investment banking make it to the VP level, but do not advance forward to the Partner level due to multiple reasons. In Asia, said peers have dropped out because they have other priorities that play a factor, such as family and relationships. Which is not a bad choice, but it is the reality. It’s just different priorities and a different approach to how women personally define success.

When an entrepreneur looks for an investment, whether you are a female or a male, the investor is already judging the person based on their first impression and surface-level characteristics. If you find yourself judging, you have to take a step back and really assess what aspects of your cognitive biases potentially weighed into your decision. This not only applies to men to women and vice versa, but women tend to actually be tougher on women ourselves. So this cognitive bias goes both ways.

How does that translate when it comes to making investment decisions regarding a startup that’s founded/led by women? Aileen Lee of Cowboy Ventures talks about VCs applying a different filter to female entrepreneurs (“does she have domain expertise?”) versus men (“he’s a good guy”). Do you think that happens in Southeast Asia much? 

It definitely happens in Southeast Asia. For example, back in 2014 when I was fundraising for my women’s e-commerce startup while pregnant, both female and male investors were sceptical of me starting a company while having twins.

But Gobi Partners has been in this field for a while, and Kay-Mok Ku, Gobi Partners’ Managing Partner, decided to invest in my company because Gobi recognized that the She Economy is huge. Women control 75 per cent of the purchasing decisions worldwide – shopping for furniture, travel/tours, groceries, health insurance, education, and many more. Usually, women are the ones starting these businesses because we know the inner workings of the consumer’s behaviour. The sheer total addressable market size is just big.

Also, with the She Economy thesis, Gobi recognizes that the attributes for being a woman entrepreneur and founder is so rough and tough — there are many odds working against them. Because of this, they see that the women entrepreneurs that do survive and thrive are the real keepers and winners, as they demonstrate resilience and will do whatever it takes to get to where they want to be. These women entrepreneurs have shown to drive performance, not only in Gobi’s portfolio but globally as well. Recent empirical evidence shows that startups founded or co-founded by women perform better over time, generating 10 per cent higher cumulative revenue over a 5-year period.

One of our portfolio female founders, Christina Suriadjaja of Travelio, has shown strong leadership and resilience during COVID-19. Despite the tourism industry in Indonesia taking the hardest hit from COVID-19’s impact, Travelio was able to maintain an occupancy rate that was 2x more than the national average. Of course, this was due to their diverse product offerings, but also because they pivoted their focus from short-term stay to long-term stay model, which thrived during COVID-19 where people still need a comfortable place to stay and work from home. Christina was able to have the foresight and make tough decisions while maintaining her business’ integrity and core values.

With the She Economy, there is also the underlying social capacity aspect, where there is huge potential for gains in a market that has been historically undervalued and overlooked. It’s a large problem to solve, and there is huge potential for economic returns in this space.

How much of the gap at the investing partner level is due to systemic issues, biases or simply lack of female talent with the sort of industry experience preferred by (typically male) GPs? How much harder is it for a woman to make partner at a VC than a man in Asia?

In terms of talent and skill set, we are equal.

Women are just as smart as men. However, an added advantage that women have based on our characteristics is that we understand the long term plan, and what it takes for resilience and sustainability. Our nurturing characteristic, coupled with our aggressive and hungry nature, makes for an overall well-rounded entrepreneur. So in terms of skill set, we are not lacking at all.

The problem lies in the lack of opportunities and confidence.

And then there’s the systemic issues and cognitive biases, especially in certain industries such as finance, startup, and tech, which consist of predominantly men. For example, when I was in banking, I was judged for certain characteristics — my conduct was seen as aggressive, my fashion sense was seen as incompetence in finance, and my outgoing personality was judged. Men are not subjected to these judgments as much as women are.

These biases date back to Darwin’s time, where his writings preached that women were inferior to men, claiming that “the average of mental power in man must be above that of women” (Darwin 1871, 564). He also believed that “the traditional stereotype of the breadwinning father and the stay-at-home mother [was] really part of our biological makeup,” and this stereotype has been deeply ingrained in our society until today (Saini 2017a, 28). On top of that, the Asian patriarchal society makes Asian women feel like they shouldn’t fight for their right.

So it really comes down to the fact that the odds are stacked against us, but some of us may not be pushing ourselves enough to break the glass ceiling. Again, women are just as smart, capable and talented, we just need to be given the confidence, tools, and opportunities to succeed.

Even when women get an investing partner role, it is said that they don’t get compensated at the same level as their male counterparts. Is that something you have seen in the industry too?

Yes, I’ve definitely seen this.

There’s been research done where a male and female go into an interview with the same skill set, but the presentation of these skill sets is what creates the gap, which ties back into the cognitive biases and how the perceived presentation of the candidate plays into the interviewer’s final decision. To add on to that, when women ask for a raise, these requests for advancement are not as successful as men, collectively.

One way to solve this is to benchmark to the market what her peers are getting based purely on skill sets and qualifications, all else aside, and go from there.

What will make VCs fight intentional as well as unintentional, subconscious biases?

The awareness and education. We need to establish an internal checklist for cognitive biases, and see if you have fallen prey to any of them while making decisions.

What advice would you give to aspiring female VCs and entrepreneurs to tackle the diversity gap?

  • Know what your peers are doing, in terms of skill set and what you need to know. Know the package comparable.
  • Always do a SWOT analysis on yourself periodically.
  • Find somebody you look up to. An idol, a goal. When I was in investment banking, there was an SVP who was charismatic and smart, and I tried to follow her path. It’s a way for you to see where you’re going and it demystifies the skill sets needed to get there. It creates an attainable goal for your future self, where you can plant your flag and work towards it.
  • Don’t be afraid to ask for something. And even if you don’t get it, always ask why. And turn them to concise and concrete steps that you can take to improve yourself. Any time that you want to achieve a goal, you have to break it down into bite-sized baby steps in getting to a goal. If you don’t even know what that goal is, and what you did wrong, then you wouldn’t know what to fix and how to get there.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.