Funding a diverse future: Q&A with Hayley Chan
Venture Capital is funding the future. The decisions made by VCs filter through to the whole community.
Hayley Chan, Director at SoftBank Investment Advisers (SBIA) spoke with Alexandra Gheorghe, FinTech Platform Manager at Barclays and Editor in Chief of the Rise FinTech Insights report, about the need for diversity in the venture capital industry and how the SoftBank Vision Fund is striving to give diverse founders a 'seat at the table'.
Alexandra Gheorghe: Thank you so much for participating in this interview, Hayley. I want to start off with learning more about your background and why you decided to become an investor.
Hayley Chan: Ever since I was young, I was drawn to science and technology. I studied Mechanical Engineering in college, and wanted to discover the 'next big thing' that would have a positive impact on society. But over time I realised that many of the most interesting technologies from university labs lack the business model to realise their desired impact. I became an investor to learn more about what makes great businesses and to help innovative technology unlock their potential.
I started my investing career during the last financial crisis, which was a very interesting time to learn how to invest. Over the years I have invested across different industries and geographies, with a common thread in backing disruptive technologies that have reshaped and transformed how people live.
AG: Tell us about some of the FinTech work you’re doing at the Vision Fund.
HC: In my role, my main focus is on FinTech. This focus comes from a belief that financial services is a core and basic need by businesses and people alike. FinTech companies are making an impact in fulfilling these core needs, particularly for the underserved markets that are traditionally overlooked or in geographies where financial infrastructure is less robust.
Dovetailing back to why I became an investor, it is as much about innovation around the product as it is around the business model – I look for FinTech companies that have a differentiated value proposition for their customers, have sustainable competitive advantages, and have demonstrated unit economics. I’m also very interested in who’s leading the business, what their vision is and their execution track record.
I look for FinTech companies that have a differentiated value proposition for their customers, have sustainable competitive advantages, and have demonstrated unit economics
Director at SoftBank Investment Advisers
AG: Venture Capital, and the Financial Services industry as a whole, has typically been male-dominated. What is diversity of thought and why is it important within VC?
HC: In every transaction, there is a buyer and a seller. As market participants, they have different points of view and come to different conclusions on a particular asset. Similarly, I believe my investments result from having a differentiated perspective around market dynamics or something that’s misunderstood about the company.
Part of the process of formulating a differentiated insight is by leaning on diversity of thought to bring different experiences to the table. These different points of view are core to successful investments and are even more important when considering the broader impact of these investment decisions.
AG: As a female investor, what have been some of the biggest challenges you have faced throughout your career?
HC: My career can be demanding at times, requiring long hours or traveling on short notice. Balancing my career and other aspects of my life can be challenging especially after becoming a mom of two young children – I have a six-year-old daughter and a three-year-old son. For me, one of the reasons I was able to continue pushing my career forward while having a family was establishing a proper support system.
That support system can look different for different people at different times, but for me that meant pivoting my career to the West Coast because that is where our family is. After having children, I asked my in-laws to live with us which provided my husband and me with the flexibility and peace of mind to pursue dual careers. For us, this approach has worked very well. For others, it might not. It’s important to determine what works best for you and your family.
AG: How does SoftBank promote diversity and inclusion across its investment teams?
HC: We are fostering diversity and inclusion in several ways. First, we established a Diversity & Inclusion Committee with senior leaders. We meet on a regular basis to discuss topics such as our work environment, flexible work arrangements and benefits to support our employees such as maternity and paternity leave, as well as elder care. We also started several affinity network groups that bring together groups of employees to celebrate and embrace our differences, leading to a more inclusive workplace.
On the hiring front, we have implemented policies to ensure we are interviewing diverse candidates and have diverse interviewers involved in the selection process. We recognise there is more work to be done. As an industry, we need to continue making tangible change.
Part of the process of formulating a differentiated insight is by leaning on diversity of thought to bring different experiences to the table. These different points of view are core to successful investments and are even more important when considering the broader impact of these investment decisions
Director at SoftBank Investment Advisers
AG: SoftBank Group recently announced the Opportunity Fund1, a new $100 million venture fund for outstanding Black, Latinx and Native American founders. Can you share more about the fund?
HC: The Opportunity Fund is looking for companies at the seed, venture and growth stage that are using technology to disrupt different industries by creating new products or business models. They are looking for founders that have traditionally been underrepresented and hope that this fund will help reduce the barrier that they face and provide opportunities to highlight their great work.
AG: Venture Capital is a relationship-based industry. How can investors become better allies and ensure that their founder networks are more inclusive?
HC: Last year we established the Emerge accelerator in partnership with WeWork Labs to help underrepresented founders access the networks and tools they need to grow their startups. In June, we had our first cohort of 14 founders complete the programme culminating in a Startup Showcase event in front of SBIA, WeWork Labs and industry investment professionals.
During the event, we announced SBIA is backing these founders with capital. This programme is a way for us to build a network of underrepresented founders. It was great to see the success of the first cohort of companies and now we are looking forward to continuing the programme with future cohorts.
We have implemented policies to ensure we are interviewing diverse candidates and have diverse interviewers involved in the selection process. We recognise there is more work to be done. As an industry, we need to continue making tangible change
Director at SoftBank Investment Advisers
AG: What resources, besides capital, can venture capitalists provide diverse teams in their portfolios to support growth?
HC: SBIA plays an active role in driving ecosystem connectivity. In partnership with the investment teams, our Operating Group aims to deliver a unique advantage to our portfolio companies while serving as advisers to their leaders—offering hands-on help, sector expertise and guidance on global expansion. We also bring together our portfolio companies so that they can learn from each other. As an example, last year we hosted Connect and Lead which brought together women leaders from our portfolio companies, providing an opportunity for them to network and explore business collaborations. We plan to host a virtual equivalent this year.
AG: Lack of diversity within tech originates from a lack of resources for underrepresented communities, thereby widening the wealth gap. Can you highlight any FinTech companies in your portfolio that are supporting wealth accumulation and financial inclusion for these underrepresented groups?
HC: I led an investment in a UK-based supply-chain finance company called Greensill which leverages a buyer’s credit to provide more affordable cost of financing for its suppliers, accelerating the movement of capital into the real economy, where it is needed most. Since our investment, Greensill has launched an innovative new product that addresses the arguably most important suppliers to a company: their employees.
Employees provide services every day, but only get paid bi-weekly or monthly. In effect, as employees we are all offering our employers up to 30 days’ free credit on the wages we have already earned. This in turn can mean that hard working people of all incomes have to rely on high interest overdrafts, credit cards or pay day loans to make it from pay cheque to pay cheque, or manage life’s unforeseen expenses.
Greensill announced their new product Earnd which helps employees to access and take control of the money they have already earned, at any point in the monthly pay cycle. This will always be free to employees, and to public sector employers – many hospital trusts in the UK’s National Health Service have already signed up, meaning nursing staff can access their pay for regular hours and overtime shifts at any point. Private sector employers will pay a small fee to use the service but companies who have been early adopters have found this can be cost neutral in terms of better employee motivation, productivity and retention.
The standard of paying bi-weekly or monthly came from the limitations of a traditional payroll system – it wasn’t always this way. Up until the 1950s, most employees were paid either daily or weekly in cash. The monthly payday is the product of the limitations of 1950s payroll technology. With modern technology, we can disrupt that system and provide value to both employees and their employers. To me, this is a great example of how innovative FinTech solutions level the playing field by making access to pay more efficient.
1The Opportunity Fund is managed by SoftBank Group (our parent company) whereas Vision Fund 1 and Vision Fund 2 are managed by SBIA
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