What caught my attention – week of 25 November 2019

Wide range of topics this week from recent stats and update on women in the VC ecosystem, through an update on Hong Kong to migrant workers in China.


1. Women in the VC ecosystem

Title: PitchBook – All Raise All In: Women in the VC Ecosystem

Link: Pitchbook

Few stats that I found relevant:

  • Deal activity to female-founded startups has quadrupled over the last decade. In 2010, 823 VC investments were made in startups led by women; by 2018 that figure rose to 3,477 and 2019 is on pace to come close to that mark
  • Female entrepreneurs are less populous in the technology industry but see higher percentages in pharma & biotech. While the lowest percentages for female tech entrepreneurs are in Silicon Valley, the situation is dramatically better in NYC
  • By dollars invested, female-founded startups took in almost 18% of all capital invested last year, higher than the 12% to 14% range typically seen since 2013. More notable, though, are the combined dollar amounts in recent years. Last year, more than $46 billion was funneled into female-founded startups, more than doubling 2017’s value. For perspective, only $3 billion went to female-founded startups in 2010
  • Several studies have illustrated that women investors are more likely to invest in female-founded startups. In fact, they are twice as likely to invest in companies with female founders and three times as likely in companies with female CEOs
  • Female-founded startups take substantially less time to exit than the broader market
  • Only 12% of US VC checkwriters are women
  • 56% of limited partners have women in decision-making roles

Few questions that came up while reading the paper:

  • Wondering why these studies don’t show data on all-female founding teams (they do so for all-male teams). Is it lack of data?
  • This features US data very heavily but would be useful to showcase other developed markets and emerging/frontier markets. The differences would be more stark I suppose
  • Curious what happens one stage prior (e.g. incubators/accelerators) and one stage forward (e.g. growth/private equity) regarding the same stats

2. Update on Hong Kong

Title: Hong Kong’s precarious future

Link: Brookings

Very level headed analysis on the current situation (although it was filmed before the recent elections). On Thursday, November 21, the Center for East Asia Policy Studies and the John L. Thornton China Center at Brookings hosted a conversation with Christine Loh to address the current state of affairs in Hong Kong and its path forward.

3. Update on the financial markets

Title: Long Pubs, Short Tourists

Link: Greenwood Investors

My dear friends at Greenwood recently posted their third quarter letter. Everything they publish is a must read for me. A brief excerpt from the letter:

There is the ‘pub approach’ wherein the business makes less money from people on each visit but likely generates significant trust and more profits in the long-term. This contrasts to the ‘tourist approach’ in which the company attempts to gouge the customer on a single visit or short-term contract, and is thus less trustworthy. As we look at our portfolio today, we believe we are long “pub” companies and short the “tourist” ones. And while the tourist approach will increase near-term profits, the theory of continuation probability would also predict that, when a business focuses narrowly on short-term profit maximization, it will appear less trustworthy to its customers. This is massively detrimental to the longevity of the business, particularly when the next economic crisis comes.

4. Migrant workers in China

Title: The migrants who made China an industrial giant face a grim retirement

Link: The Economist

Even in a China filled with the shiny and the new, the southern city of Guangzhou stands out. A generation ago it was a smoggy, sweltering sprawl of factories and workshops, a bit embarrassed by its history as a semi-colony of Western powers, who knew it as Canton. Now Guangzhou aspires to be a hub of global commerce. It boasts the 600 metre tall Canton Tower, an opera house designed by Zaha Hadid and high-speed trains that can reach Beijing, 2,300km to the north, in just eight hours. Yet Guangzhou’s rise had human costs. The province of Guangdong, of which it is the capital, is a hotbed of worker unrest, with 129 strikes and protests logged this year by China Labour Bulletin (clb), a Hong Kong-based monitor of workers’ rights. A growing number involve workers reaching retirement age, who discover that—because they fall through gaps in the welfare safety-net, or because employers skimped on pension contributions—a meagre future awaits.

5. Business of death

Title: New funeral parlour ‘Exit Here’ introduces life to the business of death

Link: Wallpaper

Now for something a little quirky…

Often, personal experiences of funeral parlours consist of generous people dealing with the death of loved ones with sensitivity and warmth. However, there’s still a sense of the stuffy, of lace curtains and black trim. Exit Here is the surprising brainchild of restaurateur Oliver Peyton and Transit Studio, and aims to open up funeral parlours; to make them accessible, contemporary, and, for want of a better word, less of a scary prospect. Having previously worked together refurbishing the RA Café, Peyton and Transit seem to have gone a little left-field with their next project. Ben Masterton-Smith, Director of Transit, admits as much: ‘It was such an extraordinary brief to rethink the future of the funeral parlour that we couldn’t say no.’

+1 Book of the week

Author and title: John Mackey – Conscious Capitalism

This book is partially the story of Whole Foods and his framework for how companies in the ‘business 2.0’ era should look and behave. Plenty of food for thought.

“Conscious Capitalism has four tenets: (i) higher purpose, (ii) stakeholder integration, (iii) conscious leadership, and (iv) conscious culture and management.”

“With strong hired leaders at the helm, many large companies increasingly came to be seen as being run more for the benefit of managers than for shareholders. This led to the shareholder rights movement, one of the consequences of which was to start rewarding CEOs heavily for increasing the stock price. CEOs went from being quite modestly paid to receiving exorbitant salaries and large amounts of stock options. The rationale was to give managers strong incentives to become personally wealthy by increasing the stock price of the company. Thus, we went from military-style leadership to “mercenary leadership.” Such leaders manage by the numbers, often viewing the business as an abstraction. They usually have no passion for any particular business, nor do they necessarily enjoy the exercise of power for its own sake. They are hired guns who seemingly possess the ability to spur companies to perform at a higher level and thus increase their market value. However, such leaders usually operate with short time horizons and tend to largely disregard the interests of stakeholders other than shareholders, because their own personal wealth is tied to the share price.”

“Mahatma Gandhi’s approach to nonviolence was once challenged by a history professor, who cited his “knowledge of history” to argue that Gandhi’s philosophy of nonviolence would never work. Gandhi replied, “Sir, your job is to teach history while mine is to create it.”