Voices from the Finance and Investment Network: Patamar Capital
Shuyin Tang is a Partner at Patamar Capital, a privately held investment firm, and CEO and Co-Founder of the Beacon Fund, a $50 million evergreen fund dedicated to investing in moderate-growth, women-owned and women-focused enterprises in Southeast Asia, particularly Vietnam, Indonesia, and the Philippines. Patamar Capital structured and launched this fund with support from USAID and INVEST. In this interview, Tang discusses the Fund’s ability to create substantial and sustainable impact with its non-traditional structure, launching in the middle of the COVID-19 outbreak, and the challenges and opportunities associated with gender-lens investing.
By Carolanne Chanik, INVEST Communications Advisor
Patamar Capital, a privately held investment firm, has been active in Southeast Asia for just about a decade now, and its team members have an expert feel for the region’s financial and investment landscape. “The region is often overlooked by traditional venture capital,” explains Shuyin Tang, a partner at Patamar Capital. South and Southeast Asia are home to a third of the world’s population, yet their markets receive only seven percent of venture capital investments. With high population growth and densely packed and young cities, the region holds significant economic potential. “At Patamar Capital, we support agile founders throughout their growth journey as they build impactful and economically successful businesses,” says Tang.
Patamar Capital was built as a platform to launch impact funds with distinct investment theses; one such vehicle is the Beacon Fund. “Beacon Fund provides financing to women-led and women-focused moderate-growth businesses that are typically underserved by other capital providers,” explains Tang. “Financing options in our markets are concentrated in predominantly one format: venture capital and private equity.” In 2019, venture capital and private equity accounted for approximately $8 billion of investment in Southeast Asia, mainly targeting the same types of opportunities — explosive growth companies.
Beacon provides an alternative model for moderate-growth enterprises. “From Patamar Capital’s experience with the other funds it has managed, we’ve discovered that these mid-sized businesses are often sidelined by traditional venture capital and private equity firms, when in fact they can be profitable, cash-flow-positive businesses that grow at a healthy rate,” says Tang. Each investment provided by the Beacon Fund ranges from $500,000 to $2 million, predominantly in the forms of debt and mezzanine financing (e.g. revenue-based financing, venture debt). “Beacon Fund serves businesses that have needs beyond microfinancing, but do not have access to larger commercial loans from traditional lenders like banks,” she says.
Through the Beacon Fund, Patamar Capital made a long-term commitment to improve the financial ecosystem for mid-sized, moderate-growth businesses. Beacon is structured as an evergreen fund — an open-ended fund structure with no termination date, meaning there is no predetermined timeline for investors to exit. The Fund has the potential to impact hundreds of target businesses in the coming years with its structure and debt focus, which allows interest earned from debt to be re-invested into many more target SMEs. “The success of the Fund will send a strong and positive signal to markets about the viability of alternative fund structures for emerging market economies,” says Tang. USAID’s support enabled Beacon Fund to build a $1 million first-loss layer into its fund structure, reducing risk for investors. To date, Beacon Fund has raised over $20 million in investment capital.
While the Beacon Fund has a sunny outlook for supporting women-led and -focused businesses, launching the Fund has not come without its challenges. “Fundraising obviously looks very different in a world where we can’t travel; it really relies on face-to-face and in-person interactions,” explains Tang in reference to travel restriction imposed by COVID-19. “We launched at the height of the pandemic in 2020.” Facilitating investor relations, conducting due diligence on portfolio companies, and team building required a shift to a remote context. “One of the advantages that we had is that we’re actually based in-market in Ho Chi Minh City. So, we were still able to actively evaluate deals and conduct due diligence on the ground. We’re lucky we’re not trying to figure things out from Singapore or even further afield.”
In terms of advice for other Funds looking to raise capital, Tang offers, “It’s definitely a long game and I think persistence and dedication is what’s needed, whether you’re fundraising or the person deploying capital.” Gender-lens investing (GLI), according to Tang, may require a bit more evidence-building, time, and dedication before the practice is considered commonplace. “I can say that I’m certainly very inspired by the different GLI fund managers out there because I find their strategies unique and compelling. But it’s bit of a stretch to say that it’s very mainstream and that every investor is doing it, but I am hopeful.”
While GLI might not yet be a mainstream practice, aggregating data on this type of investment strategy has the potential to bring additional investors on board. “I think as investment vehicles like Beacon Fund start to not only count the number of women involved in any particular company or investment but really think about how and why gender actually adds value to a business, we’ll see the support for GLI increase,” says Tang. “We’re collecting our own findings from due diligence conducted on our portfolio companies, and I’m really struck by the power and the value add that gender-lens investing can have. That was a light bulb moment for me.”