Dee Dee Chan - The Last to Jump
Dee Dee is still learning to bridge her passion for philanthropy and her keen focus on investment returns. While entrepreneurial in spirit and a member of SFi’s pilot Investor Circle, Dee Dee describes herself as a “very cautious investor”: she does not take risks easily, and she prefers to invest into funds – especially funds with a track record – as opposed to making direct investments. A recent setback has also taught her that being conservative can be positive, as she navigates this new world of sustainable finance.
Dee Dee Chan’s sustainable finance journey did not begin with a moment of inspiration, a sudden awakening or vision for a new mission in life. Instead, her impact investing has grown organically from her career in finance and her family’s long history of philanthropy, driven more by logical allocation choices than by emotion.
The matter-of-factness of Dee Dee’s approach has resulted in a conservative strategy that relies upon offerings from the traditional finance industry rather than riskier and more involved direct investments in the entrepreneurial and social enterprise sector. She has tried those too, and learned from those experiences that she prefers more established channels.
“I’m definitely the last to jump, even though they all want me to jump faster!” Dee Dee said, referring to her conservative investment approach.
Education and Finance Careers
Dee Dee was born in Hong Kong and moved to San Francisco when she was one year old. Her studies at Claremont McKenna College included a thesis on the Chinese diaspora in the Indian Ocean. After graduating she turned down a job in finance to spend a year on Reunion Island where she continued her research and taught at a rural school.
She eventually found her way back to finance, working in New York as a banker, analyst and trader before moving to Hong Kong, where she earned her Masters of Education at University of Hong Kong and then taught in the classroom for several years. This experience sparked an interest in educational technology.
“It’s so clear to see that many people in developing countries just need that first leg up. If they can earn a vocational or undergraduate degree their lives are dramatically changed for them and their families, and then the families can change society. Technology can help make that possible.”
Her family eventually persuaded her to leave her teaching job to run their single family office, including their charity, The Seal of Love Charitable Foundation. Baking and decorating elaborate cakes, which at one point was her passion-fuelled side business, became a creative outlet and hobby as she focused on running the family office.
Dee Dee now teaches those baking skills to domestic helpers, empowering them to start a small business when they retire or return to their home countries. She also founded the Next Generation Organisation, which creates intimate groups of next generation asset owners to mentor them in philanthropy.
“I was doing philanthropy and investing separately, and then I started to see opportunities come across my desk that were neither black nor white, but somewhere in between the two things I was doing," she said.
Allocating some of her assets to those sustainable finance funds was a logical choice, and two years after her first investments Dee Dee estimates that about 5% of her portfolio is invested sustainably. While Dee Dee’s heart is still in education, this interest is reflected more in her philanthropy than in her impact investing. She still finds it hard to align these values with her investments in a more comprehensive way, in part because there are so few local direct deals that are sizeable enough to make the due diligence worthwhile to do. She’s found it challenging to deploy enough capital toward local direct investment opportunities.
“We have channels set up for our pure profit business, and deals come through the door faster than you can review them. On the other side, charities and NGOs are constantly knocking on our door. The stuff in between is a lot harder to find.”
Learning From Your Mistakes
Dee Dee does most of her sustainable investing through managed funds focused on sectors such as healthcare and food technology.
“I prefer funds to doing direct investment but funds in their first vintage without a portable track record and clear manager expertise still make me nervous. It’s a long term relationship building process with fund managers, so if they come knocking on my door with a first vintage and I have never met them before, I will usually pass and just monitor them for a while.”
Dee Dee places herself firmly at the traditional, profit-focused end of the sustainable finance spectrum, which ranges from traditional capital finance to venture philanthropy.
“I’m becoming more curious about investments where part of the return is the impact, whether it is quantifiable or not,” Dee Dee said. “As I see more deal flow and walk alongside more seasoned investors in this space I think I will begin to feel more comfortable and see the picture more fully.”
Dee Dee also sees sustainable finance as an important way for women who want to learn about and participate in investing but have been too intimidated to explore it. She is an investor with Next Wave Impact, an investment company run by women, for women.
It’s not that Dee Dee hasn’t explored more adventurous forms of impact investing. About two years ago Dee Dee and her father created a small micro-finance fund in Cambodia, where they had already formed relationships with the local community through the scholarships given out by their charity Seal of Love.
“We helped a lot of people for about two years, and we kept reinvesting the money as the micro-loans were paid back. Then I noticed the accounting started to look funny,” Dee Dee said.
This September they found out that their loan officer, a village elder, had stolen the capital they had invested, bringing the project to an end. It wasn’t a large sum of money, and Dee Dee writes the experience off as a lesson to size investments according to their risk. She reasons that the money was still better spent than paying to read case studies in an executive classroom, and she’s confident there will be more opportunities.
“The experience makes me feel like we’ve taken the right approach by being conservative for now, because being conservative does not mean inaction. We took some risks with a small amount of money, saw good results, but in the end it didn’t work out,” she said. “I’m not throwing the baby out with the bath water. I’ve learned how to evaluate my partners better and work with them more closely next time.”