Pocket Sun, Co-Founder & Managing Partner, SoGal Ventures
Pocket Sun, Co-Founder & Managing Partner at SoGal Ventures, was away from Southeast Asia for a while. But upon visiting Singapore recently, she noticed that there was some progress for women in the regional tech startup ecosystem. However, some challenges remain.
“A lot of people feel that it’s a pipeline problem. I think we’ve seen in other parts of the world that it really is not. It might take some time, but it’s really about putting intentional efforts into supporting different demographics,” she explained to e27.
“If you want more deals from women founders, then you need to look specifically [into that segment]. You can’t expect women to trust you automatically and just show up for you.”
She also noticed how, unfortunately, vocal sexism remains rampant in the regional startup ecosystem. She had been at events where someone would make loud, misogynistic comments about women entrepreneurs being less stable than their men counterparts. Certainly, this kind of behaviour drives women founders away from potential investors.
“You lose opportunities to women-led companies when you say sh*t like that. Sometimes it’s not a pipeline problem. It’s your problem,” she stressed.
The startup investor also insisted on the importance for investors to take action, instead of just presenting the image of being a women-friendly company–a practice commonly known as “purple-washing.”
“Besides investing, there have been efforts to set up a separate programme for women. It definitely helps to build your reputation, but nothing comes as strongly as when you actually deploy capital into women entrepreneurs.”
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Nikkei Asia Review wrote in December 2022 that in addition to raising less funding, women founders also raise it at lower valuations. So how can we move forward and build a more inclusive startup ecosystem? What role do investors play in this?
The following is an edited excerpt of the interview with Sun.
How can we mainstream this gender issue, instead of treating it as something we do on the side as a charity?
One obvious answer is that we need more women-led success stories … But I feel like, a lot of the time, their stories are seen as outsiders, as the exception. That most women are not like that.
That concept is so prevalent, [but] having one or two winners with outstanding success doesn’t change the fate of all women entrepreneurs out there.
One time, I was speaking to a group of entrepreneurs and investors. The icebreaker question that they asked was, who is the best woman entrepreneur that you know, that you’re inspired by? The answers are pretty much the same few people. It’s like, I left Singapore for two-and-a-half years now and it’s still the same names that I have known from when I was here. So, I feel like people hang on to a few names because they feel like it’s good enough. They don’t put more effort into proactively discovering more amazing women entrepreneurs.
Can you share more about your investment philosophy and how you are doing it differently?
There are three ways to define it. One, we like [to reach out to] what we call undervalued founders, which includes women and other minority groups such as LGBTQ+ people, immigrants, and veterans. People that are not the ‘mainstream’ entrepreneurs.
We also look at undercapitalised geographies. Even in the US, we don’t invest in Silicon Valley. We invest in these tier-two, -three cities where there’s not enough venture capital yet.
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The third one is underserved problems. We like companies that are not chasing after heights. Right now, we’re not even looking at generative AI companies. In the past eight years, we’ve gone through so many different waves of different tech trends, from drones to machine learning to Web3 … We almost intentionally avoided those really heated trends at the time. Because, a lot of the time, all these buzzwords just create so many opportunistic companies that rarely create value.
Instead, we look for companies that are creating long-term value, that are creating solutions for big problems.
No matter what is hot at the moment, you always see companies that are just quietly growing and gaining traction … that’s because they focused on the right things from the beginning, and it’s not about chasing trends.
We want companies that could truly make a difference in young people’s lives. We want companies that are category creators and category leaders. Not just a me-too company.
What role does an investor play in ensuring gender equality in the startup ecosystem?
Investors play a huge role, whether they know it or not. Because, as an investor, you are controlling more capital than the average people combined. Right? You have the privilege of directing money in a way that is to your liking.
Collectively, we kind of dictate the future of technology and innovation, the most used applications in our daily lives. So each decision we make is like voting for the future. That’s an immense responsibility we are taking on here.
When we started SoGal, we thought about three things. One, who are we going to invest in? Are they the same type of people that everyone else would fund?
Two, who gets to make these investment decisions? Because, previously, people like me, people like my co-founder, we are not the ones that get to make investment decisions when we started the fund. No one even thought we had the qualifications or credibility to do so. But we’ve been able to prove that we could make damn good investment decisions, that our portfolios are badass and returning top-of-industry type of performance.
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The third thing is, who gets to make money with us? Previously, all the funds are funded either by a royal family or the largest families in Thailand, Indonesia, Vietnam and Singapore.
Wealth is being redistributed back to the same people. That is something we wanted to change as well. And I think it’s something that we, as investors, need to be very cautious about. So we’ve thought long and hard about who we would want to make money for. I think the answer is that we want to make money for people who would genuinely care about the startups and the problems our startups are solving.
The recent global situation, does it affect the way investors are investing in women-led companies?
Yes. To us, this validates our thesis because in the past year … we’ve had 20 new financing rounds for our portfolio companies. Many of them were up rounds. Some were flat rounds but there are almost no down rounds. I don’t know if many of my peers could say the same thing.
That shows a lot about price sensitivity and investment discipline. We don’t really like trying to squeeze our heads into the super-hot companies with super-inflated valuations that everyone was trying to get in.
Our entry point was at the right prices. We were able to really support our companies to be very rigid with their cash management, to be realistic with the goals they’re setting, and to make sure that they could be capitalised properly.
The fact that women and diverse entrepreneurs have a really hard time raising money, forces them to be more capital efficient.
They know what it’s like when things are tough because things have always been tough for them. To many of them, this is just another challenge.
We have two unicorns in our portfolio companies and one more that’s going public in the next two to three years in the US. These companies have killer products, are loved by customers, and are successfully branching out to different channels, markets, and product suites.
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So, what is coming up this year for SoGal Ventures?
We are going to raise the rest of our funds, too. We launched a second fund last year which enabled us to lead investments in the pre-seed and seed stages. We have started deploying them already and we are raising the rest of the funds this year. We’re also making five to eight new investments out of the funds this year. We will also continue to build out our team a little more.
We also have a documentary coming out about women entrepreneurs and investors.
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Image Credit: SoGal Ventures
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