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About Us
We believe many women-owned and women-led businesses have been overlooked by mainstream venture capital and private equity. This is despite the fact that women-owned and women-led businesses perform at least as well in terms of economic and social value creation (in fact several studies have indicated their performance is on average better!). Our goal is to turn the spotlight towards these businesses through investing in them, supporting their growth and telling their stories. In doing so, we aim to shine a light on alternative models of entrepreneurial and investing success. That’s why we’re called the Beacon Fund.
Having a set of values to guide our decision-making is incredibly important to us, so we invested in developing these early on.
Our five core values are:
1) Care personally, challenge directly (i.e. radical candour)
2) Reason from first principles
3) Own it and commit to it
4) Grow with intention
5) Enjoy the journey 🙂
For more on our values and how we developed them, please read Shuyin’s post about them here.
Our thesis is centred around investing in moderate-growth companies that are commonly sidelined by traditional venture capital and private equity firms. These companies have often not raised large amounts of outside capital but rather grown organically over time. We’ve observed this is a common trajectory for women-owned and women-led companies in particular. Given the lack of other capital providers focused on this segment, we have chosen to focus on meeting the financing needs of these types of moderate-growth businesses.
In addition, women tend to lead diverse types of companies ranging from those deeply rooted in their local communities, cooperatives, high-growth companies, venture-backed companies to public companies. Beacon recognises that some women-led companies want to grow quickly, while others aspire to be great instead of simply being big (by the way, Bo Burlingame’s Small Giants is a fantastic read on this subject). Beacon aspires to support these different aspirations.
For more specifics about our Investment Process and Product please see the relevant sections of this FAQ page.
That’s right, investing in tech start-ups is not our focus at the Beacon Fund. Not because we’re not interested in tech start-ups, but because we see that the capital markets and ecosystem supporting tech start-ups is relatively more developed. At Beacon, we are focused on creating financing solutions for the “missing middle” of women-owned, women-led companies that may not meet the exponential growth expectations of venture capital firms but are instead geared towards generating cash-flow and achieving steady growth over time. Instead of winning by scoring one home run, we aim to achieve consistency, inclusivity and depth through lots of smaller wins. In other words, rather than looking for the elusive unicorn, we seek to back the whole herd of zebras (What’s a zebra? Read more here!).
That said, if you are an impact-focused tech company you should consider speaking to our sister fund at Patamar Capital.
The Beacon Fund was seeded by Patamar Capital, which contributed resources and expertise to get Beacon off the ground. Beacon will remain part of the Patamar platform and in addition is building its own dedicated team to fulfill its distinct mission and vision.
Beacon’s investors are a mix of individual and institutional investors who share our long-term commitment to making investment work better for women. We are also grateful for the support of USAID and Investing in Women, who have provided catalytic capital to the Fund.
Yes, though we can only accept investments from accredited investors. If you are interested in learning more please contact us here.
Investment Process
From the date we receive the necessary documents to start the due diligence process to disbursement, it typically takes about 3 months. In particular, the first 1 month is mainly spent on due diligencing the company in all aspects, the 2nd month for getting the final termsheet and definitive agreements signed and the last month for the governmental registration process. During the first few weeks of due diligence, if the deal shows evidence of feasibility, Beacon will issue a Non-binding Termsheet which contains the key terms of the deal. Once this Non-binding Termsheet is signed, both sides can proceed to the next steps of due diligence and propose the deal to Beacon’s Investment Committee. That said, in any step of the investment process, if Beacon finds the company unfit with our investment criteria and mandate, we will inform the company right away. We try to give clear and constructive feedback about why it’s not a fit when passing so that you don’t feel being left in the dark, and know exactly what’s missing to make the partnership work.
Refer to our Resources page for our investment process infographic.
Short answer is we don’t have a fixed benchmark for any of these criteria because they highly depend on the business model as well as the investment structure. For example, if the company receives upfront payment from customers (e.g. a subscription business model), or a short cash conversion cycle, we may be able to accept lower revenue / profitability levels. Our Mezzanine structure allows companies that can’t afford a fixed repayment schedule right away to still be able to access our funding. That being said, we put some proxy benchmarks here so you have the approximate view of when a business can unlock our smallest investment ($200k). Bigger investments will require higher financial performance.
Proxy only, depending on business model and investment structure:
Minimum revenue per year $2.2m
1 year with positive cashflow from operations (CFO) in the last 3 years
For a detailed list of criteria, please refer to our Investment Criteria leaflet in the Resources page.
That being said, we require the company to have at least 3 years of historical financials, prepared properly and in accordance with the local market’s accounting standards (i.e. Vietnam Accounting System for Vietnam…)
Besides the gender impact, Beacon expects the company to bring products / services which can enhance the livelihood of those along the supply chain or the end beneficiaries of the company. The impact must be measurable and tracked over time. We will guide the company to track its impact using IRIS+ framework.
For the technical definition, women-owned/women-led businesses are businesses which meet at least one of these criteria:
- At least 20% female ownership, 1 CEO / COO / key manager is female, 30% of Board Members are female
- At least 50% female ownership
Nevertheless, what is most important for us is not merely to ‘tick the box’ for these criteria, but the actual sense that the women in the business have the voice, the decision making power and the right incentive (yes, ownership) for the hard work they put in.
Think of us like a fund. Even though we most likely don’t have a Board Seat (not until we make equity investments a few years down the road), we will still be the company’s sounding board / advisor / partner along the way as the company strives to achieve its mission.
Definitely, a lot of people mistakenly think that a male entrepreneur can’t access Beacon’s funding. In fact, we like to work with diverse teams of men and women (like our own!), instead of working only with women. That being said, your business would still need to fit with either the women-owned or women-led definition above.
For funding, please fill out the form in our Contact Page. For other inquiries, you can fill out another form in the Contact Page or email us at info@beaconfund.com
Product
Beacon has a variety of ways in which it could partner with companies to meet their finance needs, and depending on your company’s business profile and need, we can work to craft a suitable structure for you. Some of these structures could include medium-term (2-3 year) loans to help finance a new expansion project, capital equipment purchase or working capital need. Other options include helping companies bridge their shorter-term liquidity needs, less traditional venture debt or mezzanine-style products that can be tailored to your business, including loans with a variable revenue-linked interest component. But no matter which product is offered, it is important for our potential investees to demonstrate positive cash flow.
More information about our investment products can be found in our How We Invest page.
Beacon started out with the realisation that there is a large unmet financing need from SMEs, especially among women-led enterprises, and our mission is to narrow that gap. From what we have seen, what these companies need is debt capital to grow and carry out their plans. At the same time, for companies in this market segment, growth and pathways to exiting an equity investment within a predictable timeframe are less clear than for startups with a high-growth model targeting venture capital investment or for large-scale businesses invested in by Private Equity funds. Given these various angles, Beacon has chosen to focus on debt investing rather than equity financing at the moment.
Having said that, Beacon could potentially still make equity investments in the future, if the right investment is found.
Simple – that is because we offer a different product from the banks! Although we definitely agree that banks generally have better interest rates, they provide their loans with strings attached in the form of large collateral requirements and personal guarantees, most of the time more than the value of the loan itself. Banks can also be quite strict about what assets can be used as collateral, and will often restrict such assets to immovable assets such as real estate. As such, even many SMEs with great businesses can still find it hard to raise capital from banks. This is where Beacon steps in.
Read about the differences between Beacon and banks in this PDF infographic.
At present, Beacon only invests in USD. However, we are actively exploring solutions to lend in local currencies in the future.
As a gender-lens investor, Beacon understands the unique challenges that women face in building and growing their companies, and work to develop suitable solutions for women. For example, we saw that the lack of personal collateral was preventing many women-led businesses from accessing financing, and so to counter that we came up with innovative ways to mitigate risk, while ensuring that personal collateral was not the priority of our assessment. We also realised that businesses want to build deeper relationships with their investors and expect them to bring more value than just their capital, which is exactly what Beacon is built to do.
Depending on your company’s needs, we could work with you to discuss your business ideas, raise your level of financial knowledge and discipline and even help you open doors within our business network. We hope that for many businesses, Beacon’s involvement as an international institutional investor can help enhance the credibility of your business and help open up more avenues of financing in the future. Finding more like-minded enterprises will help us build a self-supporting group of companies that can add value to each other in the group as partners.
At the end of the day, we are also a women-led business and understand what it means to be one.
