Australian woman co-founds fund for Vietnamese SMEs

She says: "I came to work in the field of social impact investing. It was a new industry at that time, especially in Asia. When the opportunity arose in Vietnam, I grabbed it immediately."

Her contract was for one year, but it was enough for her to fall in love with Vietnam and find a way to stay.

Her contract was extended and 10 years have passed, making Vietnam her second home.

She got a new name, Duyen and began to like wearing the ao dai (traditional long tunic) and eat crab noodle soup with lots of fried onion.

Shuyin Tang in a purple ao dai. Photo courtesy of Shuyin Tang

Shuyin said SMEs have not received much attention. She called them a neglected segment.

"They are too small for private equity (PE) funds, too big for microfinance, not fit for the growth model of venture capital (VC) funds and they do not have effective access to bank loans."

Many SMEs deserve access to capital but are seriously undervalued, she thinks. Besides, they also lack a strong support ecosystem unlike startups, and so says she wanted a different model from traditional VC and PE funds.

That was her opportunity to co-found Beacon Fund.

Unlike a VC fund, because it is a debt fund, Beacon does not convert its funding into equity or interfere with how companies are run.

Beacon lends is also more flexible than banks, and lends up to US$2 million for the medium term against various kinds of collateral such as inventories, receivables, shareholders’ shares, and intellectual property.

She explains: "The story behind the numbers is very important. We focus on internal business strengths and what businesses can achieve instead of what they own."

Beacon targets SMEs owned or led by women. She says in the case of SMEs the challenges are even bigger for those led by women due to the gender bias and the pressures of having to take care of their families.

But it is not as if it invests exclusively in businesses owned or led by women.

‘Cockroach hunting’ during the pandemic

Her fund was established amid great hardship in 2020 when the Covid pandemic made the macro environment challenging.

Many investors stopped allocating funds to emerging markets, and businesses reconsidered expansion plans as well as capital mobilization.

"At a conference on private debt investment, I described the businesses the fund invested in as ‘cockroaches’," Shuyin recalls.

Lack of access to capital meant, during the difficult times, businesses had to focus heavily on cash flows to survive. Their resilient existence resembled that of cockroaches.

"So, while most investors talked about hunting unicorns (startups valued at $1 billion), we were hunting cockroaches."

With initial support from investors such as the Visa Foundation in the U.S. and Sasakawa Peace Foundation in Japan, Beacon began to "hunt for cockroaches" and faced the not-so-easy reality.

The concept of loan investment is still new in Vietnam. When it comes to raising capital, most people think of VC funds. When thinking about borrowing, the fear of debt dominates.

"I admit taking out a loan can seem scary at first for some business owners, but if companies have a steady cash flow and a clear business plans, it is often a cheaper option than taking on investment in exchange for shares," she says.

Shuyin Tang, a co-founder of Beacon Fund. Photo courtesy of Shuyin Tang

To help businesses choose the right capital channel and to find "cockroaches," Shuyin encourages founders to ask themselves: Can my business model double or treble revenues a year? Am I addressing a billion-dollar market? Do I want to exit my business within 3-5 years?

"If the answer to these questions is ‘yes,’ perhaps VC is for you. If not, it is worth considering other options."

In the next step, Shuyin "pans sand to find gold" using three main factors.

First, her fund considers the capacity and reliability of the founding team of a potential borrower.

Second, in terms of finances, the fund carefully scrutinizes the enterprise’s cash flows to ensure it will generate enough to repay the loan, and the fund is ready to coordinate with the business when it encounters difficulties.

Third, Beacon looks for measurable social or environmental impacts. In addition to focusing on promoting gender equality, the fund is also interested in other impact goals such as making high-quality education more accessible and promoting sustainable agriculture.

To date it has invested in six businesses, including MindX, a school system that teaches programming to students in grades five to 12.

It made its first disbursement in November 2021 and continued to participate in a series B capital call worth a total of $15 million, led by Kaizenvest of Singapore.

Last year MindX opened 18 new training centers and its revenue surged 88%, while maintaining positive cash flows. As of June it had 41 centers and 9,557 students.

Nguyen Thanh Tung, co-founder of MindX, says working with Beacon helped them realize there are other ways besides VC funds to raise capital.

"Because it is a loan investment fund, its working process is practical, thorough and strict, especially in terms of financial indicators compared to equity investment funds."

Nguyen Thi Thu Ha, co-founder and CEO of MindX, says this has helped the company prepare well for larger capital mobilization.

"The questions the fund asked during the appraisal process and throughout the cooperation process really challenged us to think about our business direction and strategy."

She says that is the added value in addition to getting a loan.

Impact investing is a rapidly growing field in the world. The Global Impact Investing Network estimated the market’s size at $1.164 trillion in 2022, the first time it exceeded the trillion-dollar mark.

Recently Beacon received a new boost. After U.S. President Joe Biden’s visit to Vietnam, the fund, besides two Vietnamese private lenders, signed deals with the U.S. International Development Finance Corporation, which pledged $50 million to Beacon for investing in businesses.

Shuyin and her team continue to look for new businesses.

They are deeply interested in the education and healthcare sectors because they tend to have stable, predictable cash flows and need capital to expand and create a social impact.

In 2015 Shuyin was named one of Australia’s "100 Women of Influence" by the Australian Financial Review.

In addition to co-founding Beacon, she is also on the the board of the Equality Fund and the Impact Investment Council of the Global Private Capital Association, and is chairwoman of the south and central Asia jury of the Cartier Women’s Initiative.

Asked how a woman runs a business besides taking on so many tasks, she says the first requirement is to take care of herself and learn how to manage her time and energy because they are the most valuable resources.

"Some people might say it is selfish, but only by taking care of yourself will you appear to others and the world the way you want to."