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On November 6, the American Chamber of Commerce in Japan Alternative Investment and Women in Business Committees invited Pocket Sun, co-founder and managing partner of SoGal Ventures, to speak at an event entitled Next-Gen Investing and Women Entrepreneurs.

One of the youngest people ever to be featured on the cover of Forbes Asia, Sun co-founded SoGal Ventures, the first female-led millennial venture capital company, with her business partner, Elizabeth Galbut. Since 2015, the two partners at SoGal have invested in some 65 startups, and Sun has become one of the most prominent young female venture capitalists and entrepreneurs in Asia. She has been invited to speak at the Microsoft CEO Summit, Fortune’s Most Powerful Women Summit, TEDx, and many of the world’s leading events on entrepreneurship and investing.

Create Your Solution
Sun never planned to be an entrepreneur. She applied for the master’s degree program in entrepreneurship and innovation at the University of Southern California (USC) out of necessity. “I didn’t pass the lottery to get a US work visa, and I decided to go to a grad school to stay in the country,” she explained.

Initially, she wasn’t interested in the master’s degree she was pursuing, but that changed very quickly. “I thought I would go back to my corporate job right after my master’s program,” she said. “But two months into the program, I dramatically changed how I viewed my career path and what I could do with my life.”

During her time at USC, guest speakers would come to Sun’s classes every week to share their successes as entrepreneurs or investors. But they were all men, and that lack of diversity felt wrong to Sun.

“In my venture capital class, none of the weekly speakers were women. It was difficult to relate to them. I thought, Why am I always one of the only women in the room? I remembered that the entrepreneurship program taught us that you need to solve your own problems, and that’s how you find solutions. You have to help others by creating solutions for your paint point.”

So, she created a solution: SoGal.

“It started as a student organization, and the goal was very simple: to bring more entrepreneurship exposure to young women.” The community for women entrepreneurs that she created grew quickly, and there she met ambitious and talented young women that came to her all facing the same problem: no access to capital.

According to Sun, access to capital is the biggest bottleneck for women entrepreneurs. In 2018, just 2.2 percent of venture capital funding went to female founders. This means that, for every dollar in funding a female founder receives, her male counterpart gets $49. Moreover, fewer than 10 percent of partners at venture capital companies are women, fewer than 25 percent of venture capital companies in the United States have had female investors, and 94 percent of venture capitalists are men.

“Venture capital, to a large extent, dictates the future of tech­nology, innovation, and even our lifestyle,” she said. “That is why I find these stats to be very dangerous. Women need to be part of making those decisions.”

Both Sides of the Table
Despite receiving the vast majority of venture capital, men are also impacted by the lack of diversity. “Venture capital investors have similar interests as well as socioeconomic backgrounds, and are in very similar social circles. When you put all your eggs into one basket—which usually means guys who look like Mark Zuckerberg—then all your winners, of course, would look like him. But all your losers would, too. Most investors choose to just ignore that second part,” said Sun. “We realized that we really need women on both sides of the table. And we have to enable women to be decision-makers and the creators of the next generation of innovation.”

Evidence supports the benefits of a diverse team. Sun cited a 10-year study by the well-established venture capital company First Round Capital that shows companies with at least one female co-founder performed 63 percent better than those founded entirely by men. “Women are more capital efficient, because they have been trained, unfortunately, to do more with less. They just never had the luxury of expecting SoftBank to put in a few billion,” Sun said. “Woman-led businesses are striving much harder to be profitable and break even much earlier.”

The Next Generation
In early 2017, SoGal launched its current fund and has become an institutional investor in 23 portfolio companies, growing its ecosystem of women entrepreneurs in more than 40 cities. To date, these 23 companies have raised more than $300 million and their combined market valuations total some $1.4 billion.

“All have at least one female co-founder, and 17 are led by female CEOs,” Sun said. “What’s really exciting is that, when a woman starts her own business or is at the helm of a business, that company is 2.5 times more likely to hire minorities and globally. We’re not only supporting female CEOs and female founders at the top, but are also supporting them to hire more diverse talent in the workplace.”

Additionally, female-founded startups can create a ripple effect. “When they become billion-dollar companies, these women founders will usually invest in other women. Their diverse employees could also potentially start their own businesses. This is how we grow the ecosystem.”

That growth is exactly what Sun hopes for. SoGal currently invests in 10 to 15 companies per year but, to move the needle, three things must happen.

“One, we need to get as many women and minorities as possible to become entrepreneurs or be entrepreneurial. Second, we need to help good quality entrepreneurs get pro­perly funded and resourced. And third, we need to train and encourage more women to be investors, so that we have more women on both sides of the table.

“We are very intentional about educating women—especially younger women—to start investing as soon as they can. It’s only in this high-risk, high-return kind of asset class that you can create wealth. We are in this business to create a new generation of wealth among millennial women.”

What’s Next?
SoGal isn’t slowing down. Sun said that they had just launched a retail partnership with Macy’s, the largest department store chain in the United States, which is also the largest limited partner in SoGal’s  fund. “We are very excited to be the first venture capital fund that has ever had direct-access premium retail space in the United States,” she said. “We are bringing 12 female-led brands from our portfolio and community to seven of the largest Macy’s locations, with 1,000–2,000 square feet of space in each location.”

SoGal is also hosting the largest global pitch competition for women and minorities. “We’re bringing about 80 teams of diverse founders from all over the world to Silicon Valley in February 2020 and providing them with a three-day boot camp to build a community and a global support system,” Sun said.

As for Japan, SoGal Tokyo has a vibrant and growing commu­nity led by talented young women, and Sun expects to expand to other locations.

Aaron Baggett is a staff writer at Custom Media for The ACCJ Journal.

Photos: Embassy of the United States, Tokyo