Impact and Gender in Vietnam: an Interview with Lotus Impact’s James Dien Bui

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James Dien Bui is the Managing Director of Lotus Impact, a social impact fund and incubator based in Ho Chi Minh City with investments across Southeast Asia. Women Effect spoke to him about women effect investing in Vietnam and Southeast Asia, the different gender lenses he uses when investing, and some of the challenges facing investors.

Could you give me a primer of the impact investing space in SouthEast Asia and how Lotus got started?

Lotus started out three years ago, I was the founder. I was really looking at a way to do institutional finance but at the same time looking at small-medium sized enterprises that could do both social good (meaning achieving lots of the Millennium Development Goals) and creating institutional finance for these private enterprises thereby hopefully unlocking ways to commercialise and do both impact and be commercially and financially successful.

Embarking on that three years ago, it was pretty much non-trivial. We had to work out how to do a fund that had all the legal structures and networks to support it and the economics to be sustainable. Meanwhile be authentic to the fact that we wanted to work with small private enterprises that would work with us in developing a lot of the social impact metrics. And the metrics were anything from clean water, education, livelihoods and jobs, gender equity in the sense of human resource policies within companies – being able to promote with more of a balance. We tried that for three years, learned a lot because we made a lot of mistakes, lost a lot of time, couldn’t work out the fund economics partly because investors weren’t really aware of Southeast Asia and if they were aware how would that work with social impact? How do you define social impact, etc. As you can imagine it became quite a daunting task to pitch these kind of things in a cogent manner. For Lotus we prototyped our way to what we are now, which is a small $15m venture fund which is one side of it, the other side is an advisory arm called Lotus Hub. We decided to take on this approach to work with early stage companies – in fact, we’re not looking for companies per se, we’re looking for entrepreneurs that we can work with and co-create impactful companies.

We still invest in Southeast Asia but the bulk of our work is really Vietnam. We’re aiming to replicate and scale, and then we’ll do more investments – maybe in Myanmar, Cambodia and those places.

What made you start considering gender in your investments?

Gender was always part of our social impact view. It’s just that the more we experimented in Southeast Asia we began to winnow it down to the types of impact investing opportunities that we felt had the clearest as well as the broadest potential. Gender lens investing began to quickly accelerate for us about a year and a half ago when I was talking to USAID with Patty Alleman and also Joy Anderson from Criterion Institute. They worked together to do this report on Southeast Asia and I was part of that mix. The more we talked it seemed clear to be that by looking at these entrepreneurs in these rural communities the clearest way to work with these types of companies was through a gender lens. From there we wondered how to define [gender lens] – in theory at a high level of how it could work but also at a practical level, how it could be applied to these companies. And so I see three different buckets:

The first bucket is to look at women-led businesses. This can mean at least female ownership, or a certain percent at the management level. But when you thought about through an analysis what would create advocacy around how gender really helps these companies, it’s not that clear. But it’s the first starting point.

The second level is gender equity, which I mentioned earlier. These are the most practical things you can do at a basic level. The HR policies – how do you treat maternity leave, what do you do about healthcare, how about sexual harassment cases? How do you deal with benefits for women within the context of being a migrant worker, for example? So those are the type of things. Corporations are heading that way, but really for us trying to figure out how to work with these companies.

Lastly what we’re trying to do now is look at women from the beneficiary point of view. What does that mean in terms of consumers? I realised in hindsight that I’d been doing this prior to Lotus, with water and sanitation. When I looked back at the data we took by analysing 216 piped water systems which we built and transferred to private entrepreneurs – the majority were women. Their ability to oversee and manage these water projects, they effectively became a distribution network for the entire community by making sure that affordable and clean water was accessible to everyone in the commune. It was a value that these women shared as operators. The next commercial opportunity after clean water was sanitation – we were working on this major project with the World Bank and what we realised that the women in each of these households were the key decision maker in [buying a hygienic toilet] and taking on these microcredit loans. More importantly making sure that their households had a hygienic toilet and the women were making decisions vs the men. With some support from the Gates Foundation we actually did a randomised controlled trial of our project – over 100,000 toilets in both Cambodia and Vietnam – and it turned out that statistically women do make those decisions.

Now we’re moving on in our venture hub arm so we’re trying to co-create and grow these companies, just trying to be cognizant and mindful of these angles when we build them. It could be anything – a health app, for example. How does a health app create access for these rural women who may use it, what are their user preferences, how can we engage them around hypertension referrals for example, because women in a family structure make those types of decisions.

Measurement and metrics are clearly a core part of your work. We’ve heard several investors interested in this space (outside of Asia) say that one of the key challenges is there isn’t enough data and people just aren’t tracking the metrics enough. Would you agree and what could we do about this?

I would agree and disagree. I would agree insofar as the analogy drawn here is what I mentioned earlier about women-led businesses. Metrics to me is basically syntax – it’s just a symbol you ascribe to measure something, which is a start. When you begin to have this structured way of saying ‘Ok, we need to have a way of counting hygienic toilets’ – that’s great. But what’s missing there is what we need more of versus metrics: analysis. Without the analysis we can’t speak of anything meaningful about gender lens investing. In the investment world it’s all about value proposition, it’s all about return, it’s all about social return – without that kind of analysis it’s not going to happen. I’m more concerned about that versus metrics. Through hindsight because of our experience but also looking at the hygienic toilets and microcredit data, we’re able to get down enough to look at the analysis where women had a major role in these kind of decisions. What this means for the future is how do we think about this type of finance, how do we think about these type of products for rural households or growing third tier cities.

We could use more metrics but it’s still 1.0 – the larger conversation we need to have is really about analysis. Understanding how we use the data to really tell us something with credence about gender lens investing.

Lotus Hub recently hosted an event asking for gender equality solutions to be part of your next incubator. How is that going?

It’s doing OK. In Vietnam when you talk about gender lens it’s still very abstract. I anticipate probably ten applicants [to the incubator], but that’s OK; what’s nice about it is the way we went about marketing. We went through every single incubator, hub, NGO you could think of in this market, so everyone looked at it and took time to think about it. Once we start to get these ten or so people into our incubator space we can start to put it through its paces. It’s a learning moment to think about how these entrepreneurs/companies can test their ideas against how we think gender lens investing could be applied.

Are there any challenges around investing in this space that are particular to Southeast Asia or Vietnam? To back up, outside of gender lens investing (not that they’re mutually exclusive) the difficulty in Vietnam is pipeline for a number of reasons. This is why Lotus in recent years pivoted towards venture building, which is why we have an incubator. You can’t be an investor at board level and just provide governance, that’s perhaps in a more mature market. We need to work below the board, work with companies at the operation level and consider the impact play and then after that think about the exit. That’s the biggest thing in Southeast Asia right now, we need to have some kind of precipitating moment where investors will think ‘hey this is growing’ because there are real exits happening.

Another challenge might be making men feel equally included in the gender lens space – we’ve noticed it in conversations here. Is this something you observe too and what could we do about that more generally? I always thought it was inclusive from the get-go. At the same time, I think in awareness raising there could be a module that was debunking myths about gender, and intentionally including like minded men who see that as a valuable social impact and are well aligned with women effect. And just having numbers who can participate. I was reading the New York Times article about mansplaining – when a man is in a room and taking control of the conversation. The most basic thing you take away [from that] is that when more women are present and more women are in the conversation you can have different narratives on this type of topic. The same logic is true for gender lens investing – if men were more involved in the conversations, that allows it to grow as well.