A new fund is ready to serve female entrepreneurs in Southeast Asia. Shuyin Tang and Lee Fitzgerald, partners at Singapore-headquartered Patamar Capital, earlier this week announced the launch of the Beacon Fund, which has an initial target of USD 50 million and targets women-led companies based in the region, notably Vietnam, Indonesia, and the Philippines.
Beacon will focus on debt products, a funding scheme suitable for moderate-growth and cash flow-positive businesses, Tang said in a webinar on Wednesday. The fund aims to make its first investment before the end of the year, with ticket sizes ranging from USD 500,000 to USD 2 million, although they are also willing to go with a smaller amount if the business contributes to COVID-19 recovery efforts.
So far, Beacon has received support from other women-focused funds such as Australia’s “Investing in Women” and America’s “USAID Invest.” Patamar Capital injected seed funding.
Unlike most other funds which run on an equity model, Beacon believes that venture debt answers the funding problem commonly faced by female entrepreneurs. Tang said that many women-owned businesses have a growth profile that doesn’t match the expectations of traditional VC firms, which are looking for exits.
“Debt, rather than equity, would be the most suitable tool,” she said. “Most of the [target] companies are not interested in exits, which most equity investors are interested in.” Sectors such as agribusiness, education, and healthcare are full with this kind of companies, according to her.
Open-ended fund
The fund will assess the eligibility of potential companies from their cash flow. It is furthermore run with an evergreen fund structure. Other than the usual 10-year closed-ended vehicles commonly used by VCs and private equity, the evergreen model is open-ended—the debt is invested directly into the company on an ongoing basis without termination date of fixed capital quotas.
“The wonderful thing about the evergreen fund vehicle is that we can continue to grow,” Tang added, hinting that Beacon’s check size can be larger than the target. The overall objective, however, is the same: The fund aims to generate steady cash flows and long-term capital appreciation.
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