What Women VCs Are Up To During Covid-19
SheVC (a SoGal Foundation initiative) is a community for womxn VCs, LPs and angel investors across Asia, with the mission to support women investors and increase diversity in investing.
Last week, we hosted a virtual SheVC Happy Hour, and sat down virtually to catch up with a group of female VCs in Asia. Our topics are around new insights, challenges and opportunities during the pandemic. Who knew virtual sessions could be just as engaging? We took notes along the way and are sharing some interesting ideas with you.
1. What is one newly found or reinforced insight during the Covid period?
Gail Wong: This is a reinforced insight, it really is along the lines of inequality. I always believed that the role of capital has to be beyond making money. That is why I am in gender lens investing and we want to raise money for women and people whose talents and skills are under-supported and give access to them.
“The virus has laid bare the ways that we are not behaving as a humanity and thinking about how as capital providers we can work with our portfolios in human ways and grow together rather than growth at all cost.”
Pocket Sun: The Black Lives Matter movement has brought attention to people over profit, people over product, and human-first ethos. I am really glad that these principles are surfacing and catching traction. I recommend Patriot Act by Hasan Minhaj on Netflix — a talk show with episodes on key social, cultural and political issues — which provides a good peek into topics such as censorship in China, overworked labour, and the dying news industry.
Jennifer Cheng: I find that if we don’t at least promote a sense of equality and justice for everybody, it’s not just a US problem but a global one.
“The only way to end systemic inequality is to invest in minorities, the underrepresented, women.”
I feel that impact investing is more powerful than just giving one-off donations. It is a gift that keeps giving.
2. What new opportunities or trends will be here to stay?
Christine Wang: With regards to the travel industry, we have been tracking travel bans, consumer sentiments of business travelers across the globe, and looking at when everything is going to come back online. I have two big takeaways:
- Future of (Virtual) Work: With meetings going on virtually and the increased zoom fatigue, I am curious to see how video conferencing or having global webinars and events will pan out in the mid- and long- term, and if there’s any opportunity to innovate and disrupt further. The lockdown also teaches us that not every type of meeting can be replaced with a virtual one, especially for deal making and really getting to know people — there is still a barrier on a virtual level. Face-to-face meetings will become more important and I personally believe that travel will not go away, but if at all, it will be integrated with digital tools. This is the case from a business and corporate aspect.
- Distributed start-up organisations: Working remotely has made me wonder whether there is a bigger trend coming out of this whole virtual working mode. Under lockdown and travel bans, we got used to working together in dispersed locations.
- This mentality will give rise to a whole new opportunity around forming teams and building organisations that will focus less on whether people are in one location and more on where the best talent sits. Will we see more powerful start-ups arising with ie the CTO and his team sitting in Israel, the CEO in Berlin and the CMO in Silicon Valley? Will we even see corporates moving away from rigid roles towards more start-up nimbleness and more fluid, competence-based working modes?
- “New Travel”: On business traveling: The consequence of virtual work on business travelling is currently still shaping up and it could go one way or another (people understand the value of face-to-face meeting more, or they will travel less for business because a lot can be done via virtual meetings) — most likely it will be a combination.
- On leisure traveling: We see that a lot of people have cabin fever and really want to travel again — across the globe. It is good to see that travel habits have not changed dramatically given the pandemic and that travel spirits remain high and optimistic. We think that the leisure segment will grow in importance for the travel industry.
- At Lufthansa Innovation Hub, we are currently conducting a broad range of different sentiment analyses, surveys and early demand tracking on both business travelers and leisure travelers as we believe that for both segments, there will be changed travel needs, behaviours and exciting opportunities for collaboration, venture build and investments arising from the “New Travel” era.
Pocket Sun: Travel is actually the only space in our portfolio that has really been affected during Covid. Everything else either stayed on track or grew even faster. The travel startup we invested in, Noken, has been heads down focusing on building a superior product this year.
3. What has been the most unexpected outcome in your portfolio in this period? It could be either good or bad.
Lauren: One of our portfolio companies, FoodRazor, digitises invoices for restaurants. Before the whole situation, they were going down to restaurants to do direct sales. It was really inefficient and they were trying to find a way to speed up the process. When Covid hit, they drove themselves to A/B test with cold emails and build on inbound marketing techniques. They even managed to go global over the past few months by reaching out to Australia, New Zealand and even the UK and the US. That was a very pleasant surprise and a good outcome.
“It is heartening to see how in crisis situations like this, good founders are able to use the situation to their advantage, make the best out of it and be really creative.”
Kelly An: I have been using three collaboration tools — Figma, Mural, and Miro. They are design-based interactive prototype apps that help to facilitate a lot of design thinking workshops and build a better way for collaboration in terms of brainstorming, etc. During this time, we have used these tools quite often and I also noticed my other office at PayPal has been active in trying other remote working tools.
Fernn Lim: We use Mural and Miro extensively too and see a surge in its usage in the future. People are definitely looking for new ways to collaborate.
Shannon Kalayanamitr: Overall our portfolio companies have done relatively well — it’s lucky that we are in venture tech. We are outliers in the investor market. We have 260 companies ranging from China to Southeast Asia and we have had to go through exercises on the best to the worst Covid scenarios (considering Covid might run till next year). The cash runway issue has been a big one especially for the smaller and the seed and Series A startups. But the vast majority, especially our Series B ones have enough runway.
“What’s been great is that we’ve been able to go through and see creative ways in how some startups are hibernating or scaling down - all of a sudden they realized they don’t need a certain expense anymore. “
We have some travel companies and like Pocket, we were hit there as well. One of them was really sizeable. We had three in our growth fund and majority of them turned out to do really well. One of them is Travelio, they are the management system for people who own many airbnbs; they turn your airbnbs into a hotel-like system. The founder pivoted their business model from short-term stays to long-term stays and she is doing really well now. A lot of them are being creative in what they do. We have some amazing drone companies that have picked up, we have one company Eureka AI that is helping the Indonesian government scan for Covid cases. Majority portfolio are a lot of great ones, and very few seed ones that unfortunately will not make it.
Another growing trend I am seeing is homeschooling and education tech. That is the biggest trend I have seen right now. There is a big trend of parents taking their kids out of school. Personally, I don’t believe in the school system right now. Previously people thought that only conservatives did homeschooling in their communities, but now I feel that things are definitely going to change. I still haven’t found a tool that aggregates the entire curriculum but now we are learning how to piece these things together and that’s going to be the same for working from home.
Nadia Fonny: That’s a really good point. Everyone is used to going to school. With homeschooling, everyone can actually adapt with the skills they have and bypass the whole education system. I feel like the sad thing about kids is that they grow well and fast but they are limited by the class/grade they are supposed to be in. In Indonesia, if you want to transfer schools, you have to reach a certain age to actually be accepted to another school. It would be great if you’re not bound with schools or sections of class that are dictated to you but can improve based on skills instead— it’s all about meritocracy and access.
Pocket Sun: Many of our portfolio companies have set new records during this period as well.
- We invested in an ed-tech company Fiveable, which helps US high schoolers to prep for AP tests). They saw a 1500% growth in revenue from last year this time.
- Baby toy company Lovevery had the highest single day sales during the pandemic.
- Digital health company Everlywell was the first one in the US to develop a Covid at-home test collection kit, AND the first to get FDA approval on the kit for emergency use. They have been beating monthly sales plans every month.
- Mental health has really grown as well as a necessity. Some health-related startups have started to provide mental health services besides their original core business. We invested in a startup called Real who’s redesigning mental healthcare. They were going to open a physical mental healthcare studio in New York which obviously did not happen because of Covid. Instead, they pivoted entirely, built digital offerings in 10 days, and started offering free services which turned out to provide incredible learnings. Now that digital is part of their DNA, they’ve come up with a much smarter, more scalable and profitable business model, which was a big pleasant surprise.
Jennifer Cheng: In terms of the beauty industry, I noticed that the things that are doing really well are skincare and eye makeup, because you can only see eyes above the masks. People are not as concerned about lipsticks or foundation right now. The other thing I have noticed a lot is about physical retail and beauty companies. I am a Venture Partner at Indogen Capital and one of their beauty retail portfolio companies, Lunadorii, is doing really well selling hand sanitisers and face masks.
Pocket Sun: What I realised for beauty is that channel really matters. A big portion of beauty sales in the US are actually from drugstores. We invested in a fun beauty startup for Gen-Z called Winky Lux, is in the affordable luxury category. Winky Lux was at Sephora, Ulta, Nordstrom and other big retailers but those were all closed due to Covid and caused many beauty brands to suffer. However, Winky Lux got into all the Target stores (essential business) right before Covid hit, and Target was able to stay open the entire time. With this fun and cheery presence, Winky Lux evoked happiness at a time when people needed it. They are doing really well and profitable, but most other beauty companies are getting hit pretty hard.
4. How did you or team adapt to challenges faced during this period? Any successful tactics to share?
- Culture — Gail Wong: One of my portfolio companies, a fast-growing legal tech SAAS platform, has doubled their team in COVID and we are seeing both experienced and young people starting work in this abnormal workplace environment. We thought about how to bring people in, create a culture from day one and get them onboard without feeling lost, while all sitting in our own rooms and staring into a screen. We have done group workouts, group dinners and other ways to reinforce the human connection because that’s the missing piece. It’s about really building the human intangible piece that is so easily swept away especially in this day and age. It is about addressing loneliness and being proactive about creating connection.
- Communication — Fernn Lim: Maybe because of this lockdown, I actually interestingly saw more people saying thank you’s.
“You would imagine when you’re in the office that everyone is busy, but now that everyone is away and feels like they need a human connection, everyone is taking the time to appreciate and get to know each other. This is something that was unexpected for me and I thought it was refreshing.”
- Ultimately, we are in the People business. It’s important that we appreciate our team and ensure that we keep in contact and over-communicate during this period.
- Cause — Pocket Sun: We have a really small team. With things going on and changing, people’s mental health is at various levels, and it fluctuates. Sometimes you can see from their faces that they are exhausted, burnt out or anxious. One thing that really helped team morale was working on impact projects together. We partnered with SoGal portfolio companies to fundraise for PPE (personal protective equipment), for healthcare workers and death-care workers at funeral homes. We also recently launched a Black Founder Startup Grant, and our team loved working on it.
“Our team is more energised by impact projects. They give us a sense of togetherness versus if we just go on without addressing what’s happening in the world.“
- Care — Cindy Teoh: My team and I have conference calls at the start of the week and at the end of the week, and there’s more effort going into helping peers and checking in with people from outside of the usual social circles.
5. How has investing changed for you in terms of check size, investment pace and portfolio triaging at the moment?
Jennifer Cheng: On portfolio triaging — I previously mostly invested in real estate. In general, rental income especially commercial rents are going to come way down. I don’t think property would be that great of an asset class to get into in the future. We are dealing with this challenge right now about wanting to find more income-generating investments. I have been looking after our direct venture investments as well as allocations so I am on the lookout for funds that have impact. Right now, I am trying to put a handle on my time and deal less with brokers or things that don’t matter. I am only interested in really good deals and co-investment opportunities and trying to avoid time wasters, diversify more, and find other asset classes to go into.
Cindy Teoh: I’m still reviewing deals for investments, but there are some limitations on how much due diligence you can conduct without the ability to travel and take in-person meetings, so I’m spending more time working with portfolio companies to help them prepare for doing business in the new environment. As I also invest in my personal capacity in public equities, I see the connection and relationships between the public and private markets. Staying invested in VC is definitely part of a good portfolio strategy as there are a lot of good companies that are going to enter the public markets in time to come.
SoGal is the largest global platform for womxn and minority entrepreneurs and investors. SoGal Ventures = a female millennial-led early stage VC fund investing in next-gen companies. SoGal Foundation =a nonprofit with 55 city chapters on 5 continents & programs for startup success, mental health, and angel investing.
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