Business women at a meeting table.

The Path to Inclusive Finance with Dany Khy and Raya Papp

| 9 Minute Read
Access to Finance | Business Enabling Environment | Entrepreneurship and Enterprise Development | Financial Services and Access to Finance | Gender

How can we make capital allocation more diverse? And why is this important?

Evidence shows that women and diverse fund management teams deliver better financial returns compared to their peers. Chemonics is working with Sagana to bring more money into the hands of women fund managers who are changemakers and leaders in their communities. We sat down with Dany Khy, Senior Director of Chemonics’ Private Sector Engagement team, and Raya Papp, Founding Partner of Sagana, to delve deeper into this partnership and how their personal journeys and professional achievements led them here. 

1. How have your identity and background influenced your journey to be a leader in sustainable development (Dany) and social impact (Raya)?

Dany: For me, representation and inclusion are deeply personal. Decisions made in Washington in the 1970s greatly changed the trajectory of my family’s life and brought us to the United States as refugees from Cambodia. This experience has shaped my journey and continues to influence how I see the world. Early in my career, I mobilized immigrant communities while working on political campaigns, championed more sensible foreign policies in Congress in the aftermath of 9/11, and witnessed the impact of U.S. foreign assistance. Despite the significance of this work, I felt disenchanted by our political system and wanted to directly engage with the people impacted by our policies. This prompted a journey back to Southeast Asia and led me to a small NGO that facilitated financing for women entrepreneurs in rural Cambodia. Inspired by these resilient women, I continued working in the region and met refugee women starting their own businesses along the Thai/Myanmar border, promoted exchanges between local and U.S. startups, and supported the growth of the nascent but promising entrepreneurship ecosystem in Yangon.

All these diverse experiences have one thing in common – to empower and give voice to those who are underrepresented, marginalized, and lack the opportunity to advocate for themselves. It also taught me that representation matters. As a Cambodian refugee and frequently the only woman in leadership discussions, I understand the challenges that women, particularly women of color, face in both politics and economic development. I became acutely aware of these realities as I forged unexpected alliances to pass foreign policy legislation and formed corporate partnerships to help entrepreneurs expand into new markets. These early experiences also taught me that seemingly disparate issues are often deeply connected – how foreign policy decisions made in Washington, D.C. are linked to the ability to access a loan for the first time in rural Myanmar. Years later, I represented USAID in high-level economic discussions and the insights I gained from these experiences allowed me to better advocate for funding to support small businesses across Asia and the Middle East. It was clear that the most successful programs not only incorporated the input of local communities but ensured they were stakeholders in the outcomes. Simply put, high-level decisions in D.C. or New York impact the lives of millions of people around the world. And the people impacted must be involved in designing these solutions. 

As I think about my family’s journey, they were resilient and resourceful as they rebuilt their lives in America. Without a college degree or a strong grasp of English, they started as entrepreneurs out of necessity. The sacrifices that my parents made, particularly my mother, provided me with opportunities that were never possible for them. 

I strongly believe that the path to prosperity lies in the ability of ordinary people with extraordinary ambitions to create a better future for themselves. Unfortunately, systemic and structural barriers can prevent even the most promising entrepreneur from accessing the financing she needs to create the change she seeks for her family and community.

I have seen this over and over again in my work, and believe that as donors and investors, we could do more to fundamentally address these structural issues and invest in women as leaders and change makers. 

Raya: My experience working in the male-dominated world of traditional finance taught me what I did not want in a work culture. With an engineering degree from the University of Virginia, I embarked on a career in investment banking, excited to learn more about global capital markets and how money flows. I first noticed the gender disparity during my engineering studies where there were significantly fewer women than men in my classes. This disparity became more pronounced when I interviewed for investment banking jobs and encountered gender biases head-on. Despite securing offers from multiple Wall Street banks, I faced a number of challenges once I joined, such as exclusion from key networking and relationship building events that targeted men (golf, cigar bars) and biased comments from colleagues. These experiences highlighted the cultural issues that I wanted to avoid, ultimately steering me towards a tech startup where I could thrive in a more inclusive environment.

My next role at a tech start-up was noticeably different from the bank. Every day was exciting, and people put the work first. We were a diverse group and I got to experience the power of diversity as we completed the last two rounds of private equity and successfully IPO-ed on the NASDAQ. We were a passionate mix of young people just starting our careers to very experienced people who were veterans in their field; people from different countries, races, religions and genders. While I felt I could thrive at the company, I did wonder why there weren’t more women at the top. The only woman executive was the head of legal. The private equity investors were all men. The board members were all men. And when a new CEO was brought in as we prepared for the IPO, one was hired because “he had been a CEO at a publicly listed company before,” not because he had been a “successful” CEO at a publicly listed company before. In fact, he hadn’t been. I’ve seen this nepotism repeated over the course of my career and believe it is one of the most detrimental things to diversity and inclusion.

After 15 years working in traditional finance, I came to a crossroads. Then living in Singapore for 5 years and having traveled to most of the Southeast Asian countries, I felt a growing discord between my day job moving billions of dollars, and the prevalence of inequality and poverty and lack of infrastructure and good governance in the countries around me. Economies were struggling or failing, as were governments and currencies. I could no longer spend my weekdays solely pursuing increased profits and higher shareholder returns and then spend my weekends seeing underfed people without opportunities to thrive, burned forests, and contaminated water and fields. I took a leave of absence and explored a career in the non-profit sector, helping a clean water NGO in Cambodia. It was inspiring to experience the passion and effort that was behind most NGOs and their missions in the country. However, I found they often lacked the business toolkit I was familiar with to really scale their work. After a year, I was seeking something that blended the business skills with the development goals. Thankfully impact investing was just beginning to take shape and I switched into that field – where I could do well and do good – influencing and allocating capital to companies that have innovative solutions to our environmental and social problems. Where there are big problems, there are big opportunities – financially and for positive impact. I’ve had the pleasure of working in that space for over 10 years, and while there have been many amazing companies and funds I’ve helped to invest in and grow, there is still a noticeable lack of diversity in both the allocators of capital and the founding/leadership teams.

I’ve learned that the majority of people are open to diversity, but they often don’t know where to start, don’t have the time and resources to do things differently, or are afraid of saying or doing the wrong thing. Sagana means “abundance” in Tagalog and it’s a core principle at our company. I’ve learned it’s critical to shift from a place of fear and scarcity to a place of abundance, creativity and win-win-win. So, we’re there to meet people where they are and take the first step together. But we must take the first step, and the second and the third. We must walk the talk. And in our world affected by climate change, unplanned immigration, and wars, there is urgency to act quickly.

Small changes can have a ripple effect – which is what happens when you shift capital into new hands. New people spot new opportunities, new products and services, new customer segments, and new possibilities.


2. We are seeing a surge in blended finance innovations to address the issue of scale. What are the remaining gaps that you see in the market?

Dany: When I joined Chemonics, I became singularly focused on bridging the gap between local entrepreneurs and private capital through blended finance and other catalytic tools to crowd in private investors. Although innovations in blended finance abound across Africa, Asia, and Latin America, the tools can vary significantly from one region to another reflecting each region’s unique challenges and opportunities. For example, in Asia alone, there’s significant variation across regions. India is rich with innovative solutions that can deliver strong financial returns and create tremendous impact with examples such as the $250 million SAMRIDH Blended Finance Facility that mobilizes capital for more affordable health care leading the way. In the rest of South Asia and Southeast Asia, the field is still growing and in the Pacific Islands, the field is nascent but promising.

While operating in these dynamic markets, I have met so many remarkable women – entrepreneurs, innovators, and financial leaders – all with exceptional ideas, products, and services that will create jobs, spur innovation, and disrupt entrenched interests. But their potential has been largely untapped due to structural barriers and implicit biases. Many are not able to access the financing they need to succeed. This is the number one gap to achieving impact at scale. We need to invest in women – as asset allocators, leaders, and change agents. Yet, women are rarely at the table when financing decisions are made. If they’re considered at all, they are often seen as beneficiaries and not leaders. When I served at USAID, I witnessed the gaps in assistance despite well-intentioned and well-designed programs and I vowed to work toward more comprehensive solutions. I’m convinced that we can do so much more. And we can do better.

Fortunately, donors and other stakeholders are now recognizing the need to facilitate financing to both women fund managers as well as women-led businesses. Last year, we partnered with Sagana Consulting to map the ecosystem of support to women fund managers, particularly those considered ‘emerging,’ and explore levers to make capital allocation more gender diverse. The evidence is astounding: women and diverse fund management teams deliver better financial returns compared to their peers, up to 20% higher net internal rate of return. Further, they’re two to three times more likely to invest in other women. Despite the strong evidence of higher returns and greater development impact, women remain severely under-represented in the investment field. Significant capital moves through private equity (PE) and venture capital (VC) markets annually, yet investments remain largely out of reach for women fund managers. Only 3% of PE/VC capital is invested in women fund managers and even less (2.3%) flows to women-led companies.

Chemonics and Sagana are working together to solve this problem. We are committed to facilitating financing so that more money is in the hands of women fund managers who are changemakers and leaders in their communities. Specifically, we plan to tackle the most significant barriers that women fund managers confront in developing countries: access to working and catalytic capital. Our recently published technical brief Unlocking Opportunities for Women Fund Managers dives deeper into our approach.

We plan to tackle the most significant barriers that women fund managers confront in developing countries: access to working and catalytic capital.

Dany Khy

Raya: There are many admirable solutions in the market that are already solving important parts of this systemic puzzle: mentoring and coaching fund managers, wholesaling to crowd in new actors, and creating greater interest among limited partnerships for innovative vehicles. For example, we see an expansion of market-level initiatives like GSG that are building and researching the effects of wholesaling. This initiative is focused on bringing capital directly to emerging female fund managers. Private and blended capital have a very important role to play in meeting the gap Dany speaks about. Simply put, not enough capital is reaching the fund managers that can put the capital to work in new and innovative ways.

The more proof points we generate in supporting emerging fund managers and their investment theses, the more solutions we will see. This can influence private wealth beyond blended vehicles as well. As investment advisors, we at Sagana are seeing more women coming into generational wealth who are exploring the financial and social impact effects of their money. This is a catalytic pool of capital.  To direct it toward like-minded fund managers, we will need to design a market where family offices and emerging fund managers are able to find each other.

3. What are the benefits of having more women in leadership positions in development and finance?

Dany: I am a fierce believer in unlocking private capital at scale for women entrepreneurs and innovators and supporting the next generation of women leaders. Women’s full economic potential remains unrealized. For example, structural issues discourage the growth of female fund managers and create roadblocks for women operating in the PE/VC industry. This disparity costs $4.5 trillion in foregone economic opportunity with significant ramifications for gender equality, financial inclusion, and growth. By putting more money into the hands of women, efforts to scale women fund managers will create a strong multiplier effect on downstream investments in women-led businesses, health systems, and climate change solutions. Simply put, investing in women means valuing women as fund managers, leaders, and change agents.

Raya: Diversity in leadership is part of Sagana’s abundance approach, and it is why we are involved in this partnership with Chemonics. At its core, the impact of this work is to ensure that we have diversity of perspective, and we are finding and funding solutions needed for our future that are already out in the world. This means ensuring capital reaches emerging fund managers, especially those that represent viewpoints not proportionally represented in finance to date, to build a future that we know is possible.

To learn more, read the technical brief Unlocking Opportunities for Supporting Female Fund Managers and check out Chemonics’ work with the private sector. Posts on the blog represent the views of the authors and do not necessarily represent the views of Chemonics.

About Raya Papp Headshot of Raya Papp

Raya Papp is Founding Partner at SAGANA, a global impact investing and advisory firm where she focuses on Healthcare and Gender-Smart Investments. Raya also advises PE/VC funds in integrating a gender lens across their firm, investment processes and portfolio companies. She co-authored several reports in the sector including “Gender Lens Investing in Waste Management and Recycling” and “Gender Lens Investing Landscape – Asia”. She is a member of the Criterion Institute Advisory Board, and is passionate about her work with Cartier Women’s Initiative supporting women impact entrepreneurs. Raya began her career on Wall Street holding various positions in corporate finance and M&A at Morgan Stanley, Thomson Reuters and Deutsche Bank. She holds an MBA from Harvard Business School and a BS in Systems Engineering from the University of Virginia.

A professional headshot of Dany Khy.

About Dany Khy

Dany Khy is a senior international development professional with more than 16 years of experience leading programs in economic development with a focus on entrepreneurship, finance, and forging innovative public-private partnerships in the world’s largest emerging markets. She is currently serving as a director for Chemonics’ Private Sector Engagement Practice. Prior to Chemonics, Dany led…