avpn june webinar: china’s social enterprise sector and impact investing landscape
DESCRIPTION
China’s social entrepreneurship sector is still in its early stages but its growth expectations for the next few years is exponential given the size of the economy and the social needs. In addition to the regular challenges faced by social entrepreneurs, Chinese Social enterprises face unique challenges due to the influential role played by the government.Non-Profit Incubator will provide us with an overview of the Chinese social sector, the development of the social enterprise sector and highlight some of the key challenges and opportunities including the need for seed funding for early-stage social enterprises, scaling up supporting networks and intermediaries and building the human resource capacity.TRANSCRIPT
Interdependency of the start-up Social Enterprise and SI Fund in China
Interdependency of Social Enterprise and SI Fund in ChinaBy: Ding LiNon-Profit Incubator
BackgroundThe notion of social enterprise first came to China at 2004First batch of Social Impact Investment Fund came to China around 2008Getting popular after 2010 with the strong advocate by Mr. Xu Yong Guang from Narada FoundationIn 2014 Youchange foundation set up first alliance of Impact Investing InstitutionsIn Jun 2015 the First CSESIF attracted more than 300 participants
Social enterprise provides a self-sustained model for creating social impactTraditional Philanthropy(return -100%)Typical BusinessVenture Capital(return >25%)Venture Philanthropy and Social Impact Investment Fund(return 0-10%)LowHighFinancial returnNot pursuing profit-maximizing
Apply market mechanisms selling products & services
Maximize social impact while keep ends meet, or create certain financial return
NGO/ traditional charityCommercial EnterpriseSocial EnterpriseCan You Group, founded in 1997, over 34 SEs, job creation for over 3000 disabled people, training over 10,000 nation-widehttp://www.canyouchina.com/index.asp?bianhao=2207
Founded in 2002, full range: from SE execution to Investment, 4 pillars on SE: Vocational Training & Community Services, Micro-Finance, Eco-Agriculture and Early educationhttp://www.fdi.ngo.cn/en/
He Tong Elderly Care, founded in 1994, 18 Social Enterprise with revenue above 50 Million RMBhttp://www.hetong.org.cn/en/index.aspx
Some most successful social enterprise in China
Still at nascent stage, SE has been facing a series of challenges in ChinaDifficult to recruit & retain talentGoal is not clear & Low compensationLess training and professional development opportunitiesLimited external resources and servicesLack of sustainable & effective funding mechanismFunding source and amount not matchResource allocation not rationalized (few innovation)Operation efficiency not on par with commercial standardInsufficient business skill setsDifferent mindset and KPIs not efficiency drivenFew social enterprises with meaningful scaleSlow growth rateSocial impact not maximizedFinancial return not attractive
Lack business model proliferation and innovationDespite dozens of Venture Philanthropy and SI Fund operating in China, very few of them had good portfolioHundreds of millions of RMB still searching for low hanging fruit Lack of clarity and assessment in the fieldThere is no pipeline development for SE in ChinaThe eco-system for SE development is forming
The reality checkSome future stars?
SMART AIR
Venture Philanthropy and Social Impact Investment Fund can play a vital role to enable social enterprise to create bigger social impactEnhancing business model to create social impactCapital with reasonable financial returnBoost social impactAdopts venture model to cultivate social innovation
Accelerates enterprise growth through non-financial supportLeverages business skills for strategic & operational adviceProvides other non-financial support (marketing, coaching, resource access, etc.)Attracts and retains talentProvides professional develop opportunitiesOffers competitive compensation to reward employee
Some Incubators/ Accelerators for SEsFYSE www.fyse.org
Running virtual incubation programs across Asia in past 6 yearsThree major programs:Youth Employment and entrepreneurshipWomen EntrepreneurshipSEEDiT Accelerator for SE focus on Tourism
FYSEhttp://transi.st/en
TheECSEL Incubation Programrunning for 2 years provides mentorship, training, and investment to Chinas most promising social enterprises.TheChina Energy Incubator Programme is jointly initiated by Shell Foundation and Transi.stSeed Fund for innovative SMEs, typically invest up to US$500,000 as debt or equityTransi.st
www.ied.cn/en Established in 2003, with the support from World Resource Institute (WRI)New ventures China program 1st environmental Incubator in ChinaYouth Sustainability and Energy Education Program (YSEE)Research & Policy advocacy on Climate ChangeInstitute for Environment and Development
Annual Budget: 53 Million RMB(in 2014) 21 offices & project sites national wide > 200 full-time staff & Consultant Incubated 500+ NGOs & SEs Supported 3000+ Social Entrepreneurs Managing 60,000 m2 Public facilities Mobilized 300 Million for 1000+ NGOs & SEs Strategic partner with UnLtd and initial member of GSEN (Global Social Entrepreneur Network) on supporting start-up Social Entrepreneurs
NPI
What is Kunpeng? A program dedicated to help SEs to Scale upAmong 27 Selected SEs1.3 Million RMBAverage annual income78%Already operated in multiple citiesServeOver 2,000beneficiaries85%* Stage One:DiagnosisStage Two:Develop action planStage Three:Matching fund/ investmentActivitiesProvide capacity building and resources to support selected SEsWhats the future direction?Investigations/ Study need to unwrap certain mystery of SE development in China
Alliance to fill in the gaps to create enabling environment
Seed fund + capacity building to foster Potential Ses
Accelerating programs for future stars