MANILA, Philippines – When Krie Lopez, founder of Messy Bessy, first decided to launch her business in 2007, she approached a bank for a business loan. They turned her down.
Messy Bessy produces home and personal-care products, ranging from laundry detergent to body wash, using natural ingredients. But it’s also a social enterprise designed specifically to help young adults at risk. Lopez employs and mentors young adults who have been trafficked and sexually abused, who are poor, or were formerly incarcerated, all of whom attend college in a joint program with Manila Business College.
“They just didn’t get it,” Lopez said of the bank managers who turned her down at her office. “They said, ‘Why are you hiring unskilled laborers in your workforce?’ A lot of people in the financial institutions don’t understand what we’re doing.”
When she was turned down for a formal loan, Lopez borrowed money from family and friends to get started. A decade later, Messy Bessy is a million-dollar business. Only now, after a year in which her company achieved a 65 percent growth rate, is she seeking formal financing again, exploring avenues that include borrowing from banks and seeking out investment from venture capitalist firms.
While women continue to face challenges in securing funding from banks, venture capitalist firms and other investors such as Patamar Capital, Kinara Indonesia, Accenture and Ernst & Young have turned their eyes to gender lens investing in the Philippines.
Gender lens investing has gained traction over the past few years, as investors funnel money specifically toward projects run by women. Through these gender-specific investments, financial backers are able to achieve monetary goals, while also accomplishing social goals by increasing the visibility of women entrepreneurs.
“Impact investing seeks both financial returns and intentional and measurable social impact,” said Bob Webster, managing director of Small Enterprise Assistance Funds (SEAF), an impact investing group.
SEAF brings together risk capital investors and entrepreneurs in Southeast Asia and around the world to negotiate funding for businesses in emerging markets. They have recently expanded their operations in the region, with an increased focus on gender lens investing in the Philippines and Vietnam.
“It [gender lens investing] provides an excellent vehicle for investors to both realize their financial goals and reflect their personal or organizational values,” Webster said.
While making a social impact is of value to investors, there are obvious financial gains to be had as well. A 2016 report by McKinsey found that if the Philippines matched the same rate of progress on gender equality as its neighbor Singapore, the nation’s gross domestic product could grow by 9 percent by 2025. That’s $40 billion on the line, and investors are eager to seize some of that opportunity.
But women entrepreneurs face a particular set of challenges when it comes to time and resources – particularly in accessing credit. A 2014 International Finance Corporation study found a $68 billion financing gap between men and women small-business owners in East Asia and the Pacific, part of a $287 billion credit gap worldwide.
This lack of access means women often have to raise capital entirely on their own before opening a company, which can delay or derail business plans altogether.
Fortunately for aspiring small-business owners, impact investing is a growing trend. A report by the Global Impact Investing Network found the industry was worth $114 billion in 2017. Women-run businesses will be major beneficiaries of this trend.
James Soukamneuth is the impact investing partnership director at Investing in Women, a gender lens investing initiative launched by the Australian government in 2016. Soukamneuth says the private investors now entering the Philippines are essential to the development of the economy.
“Until we ensure women can access the same opportunities as men in senior management or in running their own businesses, our economies will continue to perform below their potential,” Soukamneuth said.
“To put it simply, we are not yet capturing the benefits of fully integrating women into our economies.”
By financing women entrepreneurs, investors say they are also able to tap into consumer bases that male-owned businesses often neglect.
“[Our] observation has been that women often start and run businesses with products or services that are lacking in the market and that they view as very important to their families, and in particular, women and children,” said Jennifer Buckley, managing director of SEAF.
One such business is Trading Room, owned and operated by Obi Roco, an entrepreneur based in Quezon City, the Philippines. When she first opened Trading Room, Rocco sold customized apparel and her own line of clothing and handbags, which she still produces. She branched out several years ago, however, in a totally different direction – harvesting and exporting seaweed.
In Cebu and Mindanao, coastal provinces far from the metro-Manila headquarters, Trading Room has trained hundreds of locals to gather seaweed that has washed ashore.
The locals collect the seaweed, dry it out in their yards under the sun, and then bring it to a collection site to be traded in for cash. The seaweed is shipped to Quezon City, where Roco’s team grinds it down to a fine powder, eventually exporting it to be used in animal feed. The seaweed is used as an alternative to chemical antibiotics, addressing a growing concern over global overuse of antibiotics in livestock.
For Roco, running a business that makes a difference is inextricably linked to her desire to own her own company. She wanted to help provide jobs to coastal communities, which she described as “the most disadvantaged on the economic scale.”
She said, “You have to be very reflective if you’re going to do it for the long haul. Is it worth your time and your effort? Because if it’s not, then there must be something else to do.”