Profile: Delphinium Capital's Vivian Yan

A career in private equity wasn’t Hong Kong-born Vivian Yan’s first choice on graduating from Smith College in the US. Equipped with a degree in computer science and economics, she followed the well-trodden path into corporate banking, but the work proved unfulfilling. After four years, she opted for a change of scene, enrolling at London Business School.

As part of a two-year MBA program, Yan secured an internship with Harmony Asset Management under Augustine Chow, the firm’s chairman. She helped launch a hedge fund business and worked on direct investments, and on completing her course in 2010, Yan was offered a full-time job. Given a choice between hedge funds and private equity, she picked the latter.

“He [Chow] actually warned me, ‘If you work on the direct investment side of the business, most of your time will be spent dealing with men – because in private equity most of the industry participants are men. There is a certain level of discrimination. We do view women are less important,’” Yan recalls. “But I didn’t really feel that at the beginning and thought I could handle it.”

In Asian culture, and especially in Hong Kong, it is better for a woman to keep her head down and not draw too much attention

As the only female investment manager in the Harmony team – the firm’s co-investment partners don’t have any women either – Yan believes the playing down a woman’s role in the office has become more obvious in recent years. It started subtly, with a group of Hong Kong male colleagues excluding her from dinners during business trips. But then Yan was cut off by male co-workers when giving views on investment projects and asked to take minutes for meetings even though she wasn’t the most junior executive in the room. She was told that, as the only woman present, it’s what she was supposed to do.

“For women to do well in private equity in Asia, it seems to me that it is best for them not to say anything. You should remain silent and never complain. In Asian culture, and especially in Hong Kong, it is better for a woman to keep her head down and not draw too much attention,” says Yan.

The poor treatment of women has not been confined to private equity. Yan witnessed some senior female managers in her portfolio companies struggle to impose themselves when dealing with male co-workers. In one instance, a US company failed to meet its performance targets and the COO, who was the only woman on the board, was roundly blamed by her male colleagues. In Yan’s view, the male CEO should have borne most of the responsibility for the company’s shortcomings.

“I studied at a women’s liberal arts college in the US and that makes me think a lot more about sexism issues,” Yan says. “I spent over a year feeling frustrated because I had to deal with discrimination and couldn’t do anything about it. The good thing is that I survived and have thought it through.” 

Proactive mandate

Three years ago, Yan took her grievances about sexism to Chow, whom she viewed as a mentor. Despite having worked in the male-dominated financial services sector for about 30 years, Chow was broadminded – he was pursuing philosophy and engineering doctorate programs at university in his spare time – and open to discussing different working cultures. While he couldn’t change the industry status quo, he did back Yan’s idea of launching a fund dedicated to supporting women leaders.

“I have seen quite a few funds in the US that focus on female entrepreneurs, but many of them are in the venture capital space. There aren’t any such funds – particularly on the PE side – in Asia, so I thought we could give it a try,” she says.  

There was no fixed schedule for establishing the fund, but Yan wanted to roll it out within five years. However, when she introduced the concept to female high net worth (HNW) clients, and explained how her personal experience had influenced the investment thesis, it resonated with them. These female HNW investors were willing to provide capital, networks and guidance to make the fund a reality.

“I was about to delay the fundraising plan. At first I thought I would do it in five years, and then I said I would postpone it for another five years. But some HNW friends and mentors challenged me. ‘Why don’t you do it now? No one else in Asia is doing it,’ they said. I followed their advice. That’s how the fund went from being discussed as a five-year plan to actually happening a bit earlier,” says Yan.

A new GP, namely Delphinium Capital Partners, was incorporated in October 2015 through a 50-50 joint venture between Yan and Harmony. One year later, Delphinium Female Leadership Fund I was launched. Within few months, it reached a first close of $16 million, receiving commitments from several family offices and female entrepreneurs.

Delphinium is seeking to provide growth capital to mid-sized companies operating in Asia with strong female participation at CEO, CFO and COO level, with no limitations as to sectors in which it can operate. Backers include Ka Shi Lau, managing director and CEO of BCT Group, Ming San Kwan, founder of A&K Consulting and former COO of Alibaba Group, and Shelly Painter, regional managing director of Vanguard's Asia Business. They will make introductions to prospective LPs and provide operational support to investee companies.

“Through the fund, we want to showcase female-led companies, or more gender-balanced companies, as high quality assets for private equity investment. I don’t think gender balance is a metric other fund managers use right now, but they should,” Yan says.

The increasingly significant role played by women in the global economy is clear for all to see. Women account for approximately 80% of consumer purchases, spending about $20 trillion per year. By 2021, that figure is expected to be $28 trillion. It could be argued that companies with a strong female presence at senior level are better equipped to meet the needs of these consumers.

A McKinsey & Company study of 230 companies, excluding financial services, across six European countries as well as Brazil, Russia, India and China found that those with gender-balanced executive committees have a 56% higher operating profit than those with male-only committees.  

A further claim is that gender-balanced companies have lower volatility and clearer long-term orientation – and Yan believes this thinking also applies to private equity. Although female representation in the industry globally is small, female GPs are more effective at identifying and working with companies led by women because they have a better understanding of the female personality, which makes communication easier.

“When I talk to women entrepreneurs, they come across as more realistic in their goals and evaluation of their companies. Men have a greater tendency to boast about what they can achieve, and their projections on returns are a lot more handsome than what they can actually deliver. As an investor, you would probably get a better valuation when dealing with a more conservative woman, who is also more likely to achieve her goals,” says Yan.

Indeed, the Kauffman Foundation tracked nearly 5,000 businesses started in the US in 2004 over a three-year period and calculated that those run by women entrepreneurs brought in 20% more revenue than their male-run peers, while using half as much funding. However, finding strong female-founded companies in Asia isn’t easy. If a business is successful, the founder is generally less inclined to ask for external capital due to a cultural bias towards women asking for help. However, once they receive funding, they feel a strong sense of responsibility towards their investors, Yan observes.

Investment targets

While Yan hopes her fund will encourage women to be more ambitious, she wants to avoid early-stage risk and therefore focuses mainly on growth and pre-IPO stage companies. “We have to build a track record. We want to be able to say that investing in female-led companies is profitable,” Yan explains. “We have chosen to invest in more mature companies that could list within four years, or companies that could be trade sale targets in the longer term.”

The fund currently has three deals in the pipeline: a Thailand-based food manufacturer with a presence in the US, Asia and Europe; a Chinese confectionary distributor; and an international baby products manufacturer. It will commit $1-3 million to each deal.

While companies founded by male entrepreneurs would be considered for investment, there must be strong female representation in the management committee. When Delphinium makes investments, it asks companies to sign a voluntary code of conduct that expresses a desire to create a gender-balance working environment. Yan sees that is an important step because it encourages management teams to reflect on their broader efforts in creating a female-friendly environment. 

“It's not obvious to a lot of people that there is a need for the promotion of female leadership. If you look at the numbers of women at work, the fact is you're losing them in the middle of their careers,” says Yan. “In a way, we are just trying to improve society’s discomfort with a woman’s ambition and leadership skills through investment in female leaders.”

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• GPs
• Delphinium Capital Partners
• China