Summary  of  the  East  and  Southeast  Asia  Impact  Investing  Forum  

At  the  Impact  Investing  Forum  held  on  March  14th  and  15th,  2013,  in  Hong  Kong,  the  Rockefeller  Foundation  and  Asian  Community  Ventures  launched  the  Impact  Economy  Innovations  Grant  Fund  (IEIF).  The  fund  aims  to  support  initiatives  that  will  help  accelerate  the  impact  economy  in  the  East  and  Southeast  Asia  region.  The  IEIF  will  award  grants  totalling  US$400,000  and  we  are  looking  to  fund  3-­‐4  proposals.  

The  Impact  Investing  Forum  brought  together  close  to  400  members  of  the  impact  investing  community  from  15  countries  including  the  field’s  most  active  practitioners  and  thought  leaders  to  discuss  and  identify  some  of  the  most  pressing  barriers  and  promising  opportunities  facing  the  growth  of  the  industry  in  the  region.      This  summary  note  captures  insights  from  the  forum  that  will  provide  directions  and  priorities  for  the  IEIF  proposal  selection.      Insights  from  the  Impact  Investing  Forum    Four  breakout  sessions  focusing  on  the  following  themes:  

1. Growing  the  Demand  Side:  Building  a  Culture  of  High-­‐Performing  Impact  Entrepreneurs  2. Enabling  Policy  Environment:  The  Role  of  Government  in  Impact  Investing  3. Impact  at  Scale:  Unlocking  New  and  Larger  Sources  of  Impact  Capital  4. Impact  Measurement:  Effectively  Accounting  for  Social  and  Environmental  Performance  

 The  sessions  identified  the  following  three  issues  as  among  the  most  critical  bottlenecks  that  need  to  be  addressed.    

1. Growing  the  Demand  Side     Issues  and  observations  

a. Social  enterprise  (SE)  pipeline  is  currently  sporadic  and  fragmented  i. Many  growth-­‐stage  SE’s  have  been  ‘fished  out’  by  investors,  while  there  are  few  

mid-­‐  and  earlier  stage  SE’s  that  can  be  developed  to  scale.    ii. There  is  a  misalignment  of  capital  to  the  needs  and  risk  appetite  of  demand  side  

actors  within  the  ecosystem.  There  are  many  impact  investors  waiting  for  social  enterprises  at  growth  or  scale  stage,  but  actual  capital  needed  is  mostly  in  early  stage  social  enterprises.    

iii. Many  early-­‐stage  social  enterprises  often  lack  and  need  expertise.  Some  investors  and  incubators  have  had  to  send  in  their  own  human  capital  to  work  within  social  enterprises  themselves,  e.g.  serve  as  CFO.    

iv. Connections  –  network  access  is  crucial  for  early-­‐stage  social  enterprises.    b. There  are  misaligned  return  expectations  between  impact  investors  and  social  

entrepreneurs.    c. Sourcing  the  right  talents  is  a  challenge  

 

                           

i. We  can’t  only  invest  in  “good  and  passionate  people”;  we  need  to  invest  in  “good  and  passionate  people  who  have  experience”.  Many  people  who  came  from  NGO  background  had  the  passion  but  not  enough  or  relevant  business  expertise.  Conversely,  many  from  business/investment  background  don’t  have  grounded  experience  in  social  development  issues.  

ii. Salary  and  remuneration  difference  between  traditional  commercial  sector  and  SE  sector  remains  a  barrier  to  attracting  young  generation  into  the  space.    

iii. Cultural  expectation  from  society  and  from  parents  in  regards  to  career  pathing  in  the  SE  space,  while  changing,  remain  a  challenge.  Role  models  are  needed.  

  Potential  solutions  surfaced  at  the  forum  that  IEIF  may  support  

a. Network  of  support  for  incubators  i. Organize  dialogues  amongst  intermediaries  to  leverage  existing  knowledge,  

experiences  and  resources,  and  promote  sharing  of  best  practices  among  incubators.  Might  consider  leveraging  established  platform,  e.g.  ANDE  (Aspen  Network  of  Development  Entrepreneurs)  and  set  up  an  Asia  chapter.    

ii. Mapping  of  incubators  or  capacity  building  support  for  social  entrepreneurs  to  understand  the  available  resources,  core  competency,  and  stages  that  they  work  on.  Build  an  alliance  of  incubators  that  can  share  multiple  functions  e.g.  incubator  training,  clearing  house.    

iii. Other  incubators  can  collaborate  with  local  incubators  in  a  “smart  way”  to  help  increase  the  success  rate  of  social  enterprises,  as  individual  incubators  might  have  their  own  strength  and  opportunity  for  collaboration.  Services  provided  and  collaboration  can  be  both  short  term  and  long  term,  or  on  engagement  basis.  Meanwhile,  forms  of  compensation  could  be  fee  payment,  share  of  investment,  etc.    

iv. Social  Enterprise  Innovation  Lab  –  bringing  specific  social  enterprises,  corporations,  and  other  partners  to  create  new  bankable  social  enterprise  or  partnership.  Also  can  be  used  for  replication  and  scaling  purposes.    

i. Establish  a  source  or  network  of  patient  capital  which  could  be  shared  among  multiple  incubators.  This  may  also  promote  shared  services  for  the  common  development  of  the  social  enterprise  space.    

ii. Active  fellowships  (IDEX,  AIESEC,  Net  Impact,  iCats)  might  collaborate  and  work  together  to  place  fellows  in  social  enterprises    

b. Mentors  Network    i. Organize  a  local  “advisory”  platform  for  incubators  (including  mentors)  with  

quarterly  or  semi-­‐annual  meetings  c. Creating  a  more  efficient  marketplace  to  address  demand-­‐supply  disconnect  

i. Establish  a  SE  Mart  Asia  –  a  marketplace  for  innovative  social  solutions  provided  by  social  enterprises  in  the  region.  Governments  or  buyers  could  post  the  problem,  and  allow  for  the  best  social  enterprises  to  bid  for  projects.    

ii. Online  platform  to  share  best  practices  and  connections  for  capacity  building  

 

                           

iii. Create  a  regional  social  enterprise  map  and  directory  for  South  East  Asia  &  East  Asia.    

iv. More  donor  education  to  expand  their  understanding  of  the  context  of  philanthropy  and  social  change  models  (i.e.  Social  entrepreneurship)  

v. Philanthropic  funders  (i.e.  donors,  investors)  education,  so  that  they  know  where  they  sit  at  the  social-­‐financial  continuum.  They  will  then  know  the  appropriate  types  of  ventures  they  should  support  and  how  they  can  engage.    

vi. Philanthropic  and  impact  investing  guide  (“101”)  to  help  manage  expectations  from  the  get-­‐to-­‐go  (“it  doesn’t  get  easier”).    

vii. Corporates  to  redirect  CSR  resources  to  support  SEs  and  incubators.  They  might  invest  in  talents  for  social  enterprises  through  HR  subsidy,  as  a  means  of  CSR.    

d. Awareness  and  Profile    i. Encourage  media  to  play  a  stronger  role  in  showcasing  social  enterprise  role  

models  to  increase  aspirations  and  awareness.  

 2. Enabling  Policy  Environment  

  Issues  and  observations  

a. Existing  regulations  and  policies  that  could  support  SEs  are  highly  fragmented  b. Areas  that  demand  greater  government  attention  include    

i. How  to  embed  measurement  metrics  and  reporting  requirements  into  existing  financial  infrastructure  in  order  to  meet  the  impact  investors’  intentions  to  have  positive  social  and  environmental  impact?  

ii. What  types  of  policies  can  reduce  barriers  for  impact  investors  and  emerging  social  enterprises  in  navigating  the  landscape  and  scale  up    

c. Do  people  lack  the  motivation  to  work  with  a  government?  Who  are  best  positioned  to  engage  with  the  government?  

a. The  champion  concept  or  humanizing  a  government  policy  can  help  build  rapport  and  trust.  

d. Potential  roles  and  tools  available  to  government:    i. Regulatory  polices    ii. Catalytic  funding    iii. Directing  Capital    iv. Create  knowledge  tools/  networks  through  convening  events    v. Policies  on  enhancing  awareness  and  education    vi. Develop  conceptual  frameworks  (but  need  to  avoid  growth-­‐limiting  definitions)    

  Potential  solutions  surfaced  at  the  forum  that  IEIF  may  support  

a. Improving  relationship  between  government  and  public  

 

                           

i. Conversations  between  public  and  government  can  often  be  a  one-­‐way  delegation  by  the  public.  The  dialogue  may  be  more  helpfully  framed  by  the  public  or  II/SE  actors  as  “how  can  I  assist  the  department  in  tackling  the  policy  goal  together”  as  a  way  to  help  the  government  confront  its  agenda  and  identify  ways  forward.      

ii. Government  may  not  necessarily  need  to  lead  the  conversation,  but  rather  create  a  platform  which  allows  leaders  to  take  charge  and  start  a  conversation  about  what  they  can  do  together  

iii. The  government  might  identify  internal  champions  to  improve  public  relations.  iv. The  space  need  not  be  only  limited  to  consultation  purposes;  funds  can  be  

directly  injected  to  the  space  and  encourage  the  development  of  solutions  within  the  space  to  foster  actions  forward.    

v. The  government  might  consider  convening  events  to  share  their  working  practices  across  industries  and  share  ideas.    

b. Fostering  collaboration  within  government  departments,  and  across  national  governments  

i. II/SE  issues  cut  across  the  remits  of  many  government  departments  and  we  need  to  break  down  the  silos  between  departments.  

ii. Create  a  “safe”  space  for  “a  few  people  to  step  forward  and  to  talk  to  each  other”  —  i.e.  help  broker  proactive  individuals  within  and  across  departments  to  dialogue  and  initiate  inter-­‐departmental  work.  

iii. Instead  of  creating  a  new  department,  the  government  can  consider  create  a  new  role  for  existing  officials  to  leverage  on  their  existing  portfolio.  

iv. “G-­‐to-­‐G”:  Government  to  Government  dialogues  can  help  reduce  political  risk  when  implementing/adopting  successful  policies  from  other  regimes.    

c. Improving  Data  Metrics  and  its  Appropriate  Access  i. More  bottom-­‐up  data  surveys  can  be  conducted  to  understand  investor  

appetite    ii. Regulatory  tools  on  data  measurements  for  impact  investors  can  be  considered    iii. Identifying  a  compelling  case  for  definition  of  social  enterprise  is  important  for  

providing  favorable  policy  treatment  iv. Identifying  ways  to  appropriately  capture  data  to  create  relevant  social  metrics  

d. Funding  and  Resources  i. Resources  allocated  to  help  promote  entrepreneurship  through  education  

programs  at  the  university  level    ii. Government  might  consider  funds  that  support  the  building  of  the  ecosystem  

(building  on  infrastructure  needs  identified  by  investors  and  SEs)  iii. Government  might  consider  establishing  a  liquidity  pool  to  support  secondary  

markets      

3. Impact  at  Scale     Issues  and  observations  

a. Impact  investing  can  have  attractive  returns,  but  we  need  to  educate  investors  about  it    

 

                           

b. Patience  -­‐  understanding  that  it  takes  anywhere  from  6-­‐9  months  to  close  a  deal  from  engagement  to  transfer  of  funds  and  not  just  a  few  weeks  

c. More  effort  will  also  be  needed  on  education  awareness,  for  both  incubators  and  accelerators  

d. Engage  more  high  net  worth  individuals  and  family  offices  to  increase  the  pool  of  impact  capital  

e. There  is  the  need  for  stronger  infrastructure,  and  a  collaborative  effort  in  ecosystem  building  

  Potential  solutions  surfaced  at  the  forum  that  IEIF  may  support  

a. Educate  institutional  investors  and  high  net  worth  individuals  who  are  new  comers  in  the  space.  Provide  them  with  the  opportunities  to  learn  about  the  services  that  they  can  work  in  to  spur  them  into  action.  

b. Financial  Innovation:  Structure  financial  products  specifically  for  high  net  worth  individuals  and  institutional  investors  

i. Securitization  of  bond  structure  ii. Introduce  guarantee  funds  in  order  to  de-­‐risk  investments  

c. Clubs/pooling  of  investors,  e.g.  Angels  networks  d. Industry  Association:  Regional  collaborative  network  with  domestic  working  groups  

i.  Tap  into  international  resources  and  network  while  having  a  regional  voice  ii. Leverage  to  influence  policy  makers  and  larger  institutions  

e. Structures  within  each  country  is  quite  different,  the  conversations  will  move  into  the  specifics  of  each  country  while  recognizing  the  role  of  regional  gatherings  

f. Explore  the  role  of  sovereign  funds,  in  particular  their  potential  to  help  address  large  scale  issues  (e.g.  healthcare).  However,  need  to  be  aware  of  potential  political  risks  (sovereign  funds  are  seen  as  "soft  power”)  and  backlash  from  the  public.      

 4. Impact  Measurement  

  Issues  and  observations  

a. Use  existing  metrics  and  tools;  don’t  reinvent  the  wheel.  How  do  we  make  the  metrics/tools  we  already  have  more  easily  applicable  and  scale  up.    

b. The  discussions  around  measurement  can  be  very  abstract  and  esoteric;  the  measurements  have  to  be  contextualized  for  the  each  country,  sector  and  business  model  for  better  applicability.  

c. Even  when  it  is  contextualized,  measurement  takes  time,  money  and  effort,  and  might  not  fit  the  needs  of  philanthropic  investors;  not  everyone  is  asking  for  validated  data  

d. Need  consistency  and  customizability  across  reporting  which  is  a  tough  balancing  act.  “Everyone  seems  like  to  make  their  own  modification  on  the  measurement.”  

e. Time  horizon  of  intended  impact  vary  across  philanthropy  funders  and  need  to  be  asked.  

f. Need  to  bring  the  government  into  the  discussion.  Identifying  and  approaching  the  appropriate  government  entry  point(s)  is  challenging.    

 

                           

g. Businesses  can  collect  the  data,  but  require  incentives  from  funders.  People  with  funds  to  do  robust  impact  evaluation,  and  others  can  leverage  the  data  generated      

Potential  solutions  surfaced  at  the  forum  that  IEIF  may  support  a. A  hub  for  information  and  practice  sharing  including  

i. Best  Practices/white  paper  on  Asia  impact  investing  ii. Sharing  of  metrics  examples  

o Sharing/collection  of  different  examples  of  measuring  performance  o Crowd  source  best  in  class  examples  o Set  up  a  metrics  dictionary  for  various  sectors  

iii. Develop  benchmark  report  for  sector  or  country-­‐specific  impact  iv. Sharing  experiences  (open  dialogue  between  SEs  and  impact  investors)  

b. Innovative  Data  Collection  Method    i. Use  more  visuals/visual  records    ii. Journey  impact  record,  filled  by  the  beneficiary    iii. Highlight  existing  cost-­‐effective  and  technology-­‐enabled  tools,  e.g.  mobile/SMS  

reporting  iv. Crowd  sourcing  data  

c. Standardized  Practices    i. Be  clear  on  methodology  for  who  and  understand  the  target  audience    ii. Leverage  B-­‐corps/IRIS  and  adapt  for  local  context.    Translate  IRIS  into  local  

languages  used.  iii. Push  for  common  metrics  to  be  uses  in  stock  exchange  iv. Learn  from  other  industries,  e.g.  energy  sector,  green  mark  for  sustainability,  

“caring  company”  in  Hong  Kong.  And  avoid  their  shortfalls.  d. New  Actors  –  Who?    

i. Academic  and  research  organizations  ii. Rating  Agencies/3rd  party    

o CRISL  (Credit  Rating  Information  and  Services  Limited)    o Moody’s  /  S&P/  Fitch    o Bloomberg    

iii. Accounting  firms    o Deloitte  and  other  Big4  

iv. Incubators  v. Philanthropists  and  government  as  funders  of  measurement  efforts