WHY SHOULD WE INVEST IN SOCIAL ENTERPRISES?MaGIC Startup Academy18 Oct, Cyberjaya
@GRACESAIDirector, Social Entrepreneurship, MaGICCo-Founder, The Hub Singapore
TODAY’S AGENDA
Why is ‘everyone’ talking about SE?
The 5Ws of Impact Investing
Workshop Activity
2006 - 2009 : Others’ Identity of me
2009 – 2011 : Finding Identity
2011 – present: Found (..need more time…)
A bit of me…
Do you believe your business can change the world?
A home for purpose-driven people who use
entrepreneurial ideas to create sustainable impact
Vibrant Community. Inspiring Space. Meaningful Content
Part of a global network: 60+ HUBs, 5 continents, 10,000 Hubbers
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Work in Progress - For internal use only
Legalities and Definitions
SE Education
Initiative
(Edu. Inst)
Sector Development (Media, Services, Platforms)
Global Partnerships & Impact Investing
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2 3 4
5
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MaGIC‘s Social Entrepreneurship Strategy
MaGIC‘s Operations, Tech Platforms, Media & Story-Telling, Programs
*Collective Impact Approach
MaGIC
Partnership for
Impact
(Intermediaries)
Investment Fund
(Impact
Enterprises)
Who’s in the room?
WHO?
There are people who change to follow ‘reality’
And there are people who change
Reality.
Impact Investing: a for-profit investment activity to create intended, measurable, positive benefit for society and/or the environment
Entrepreneurship: a mindset to take advantage of uncertainty –to go after opportunity irrespective of the resources at hand
Social entrepreneurship: Entrepreneurial mindset applied to significant social / environmental problems
Blended Returns: Emerging evidence: no trade-off between high impact and financial returns.
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Private & Confidential Source: Grabenwarter & Liechtenstein „In search of gamma“, IESE 2011; Ronald Cohen „Second Bounce of the Ball“
Defining Impact Investment and Social Entrepreneurship
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• Social entrepreneurs use entrepreneurial approaches andinnovative solutions to solve society’s most pressing
problems.
• They are ambitious and persistent, tackling major social
issues and offering new ideas for wide-scale change.
• They change systems, not organize problems.
SOCIAL ENTREPRENEURS
Mhmd Yunus (Grameen Bank)
Devi Shetty (Narayana Hospital)
World’s largest cancer hospital, Asia’s
largest cardiac care center
Walmart of Healthcare (1/10 the price of
American surgeries, 1.4% mortality rate vs
1.9% in the US)
Farmers covered for maximum surgeries for
Rs10-/month
Dr Shetty has never said ‘No’ to any kid..
TOMS Shoes
Jane Chen (Embrace)
Jaipur Foot(Product/ Technology)
Room to Read (Market Domination )
TED (Brand)
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Movember(Idea)
THE INVESTORS
Joining the #ImpInv Movement
SILICON VALLEY HIGH-PROFILE INVESTORS
VENTURE PHILANTHROPISTS AND IMPACT INVESTORS
Pierre Omidyar (eBay) Omidyar Network
Jeff Skoll (eBay) Skoll Foundation, Participant Media, Capricorn Investments (USD 4-5bn)
Bill Gates (Microsoft) Gates Foundation (USD40bn)
Vinod Khosla Khosla Ventures
Paul Allen (Microsoft) Vulcan Capital
Reid Hoffman (LinkedIn) Endeavour
TONIIC.COM PRIVATE & CONFIDENTIAL ©TONIIC LLC
Invest for ImpactAN UNAPOLOGETIC REQUEST FOR YOU TO JOIN OUR MOVEMENT
OVERVIEW
23® Toniic LLC 2013
Confidential
MEMBERS
100+ and growing
HNI, Funds, Family offices (80%)
20 countries
5 continents
100% Network ($4.6bn)
DEALS
500+ deals screened
>$20m invested
45+ transactions
~30% follow-on investments
30 deal-flow partners
TONIIC GLOBAL
Limited Liability Company
Certified B Corporation
Break-even, impact-maximizing
Revenue: membership fees and
sponsorships
TONIIC INSTITUTE
Non-profit organization
Mission to share best practices
Training and workshops
Quarterly Newsletter
Briefs and Guides E-Guide to Impact Measurement
E-Guide for Early Stage Impact Investing
Crowdinvesting Brief for Impact Investors
24® Toniic LLC 2013
Confidential
IMPACT INVESTING ACTORS
WHY?
Case for global impact investing
Public sector failure
Citizen of interconnected world
Charitable giving limitations
Long term view for planet and people
Why we do what we do?
The Good News
• People are understanding the world better
• There is more purpose and consciousness in the world
• Changemakers are getting younger
• Younger people are looking for more purpose
• Ideas (not status, wealth) will top the hierarchy
• There is capital (money, talent, infrastructure) available for good
P/S: Capitalism took 100+ years, Social entrepreneurship is at 20+ years.
HUB NAME | [email protected] | +123 456 789 | STREET NAME, CITY, COUNTRY
People are living for a bigger purpose.
The Millenials / Gen Y Profile
You…..
…….have many ideas …….are impatient …….want to make an impact NOW…….are intrigued and interested in social entrepreneurship……. your parents don’t get you …….don’t want just a job… you want a job with meaning
WHAT/HOW?
Let’s look at the spectrum of entities
Types of Funding – External Capital
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Source: Woelfel, Thornley, and Sirull
Government Foundations Philanthropic
Individuals
0-5% Returns Scaled Impact
Impact Investment Funds
HNWI/Family Offices
5-10% Returns Moderate+ Impact
VC/PE Funds Clean Tech Funds Family Offices
15-20+% Returns Bonus Impact
Types of Funding
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Internal
1. Your pocket
2. The organization’s pocket (profits)
External
1. Membership of association fees
2. Donations – financial or in-kind
3. Capital – Foundations, public entities, businesses, investment funds, individual investors
Stages of Growth - Funding Needs & Sources
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Spectrum of financial actors and tools
100% Network
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14 HNWIs
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4.6 Bn
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Commercial Start-ups Social Ventures
Problem Social / Env Problem
Solution Theory of Change
Market Size Market Size
Competition Competition & Partners
Product Product/ Service
Business Model Business Model
Team Team
Financials Financials
Social/ Env Impact
Sustainability Plan
Scaling Growth
What are investors looking for?
Source: https://www.sequoiacap.com/grove/posts/6bzx/writing-a-business-plan
What do you need to get funded?
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1. Strong social entrepreneur
2. Good idea
3. Relevant and experienced team
4. Plan (for a pilot or for expansion)
5. Budget
6. An idea of what type of capital and investor is best suited to your needs
7. Access to an attorney + a point person for capital raising
GLOBAL PRODUCTS
• Dealflow Screening
• Unique global impact dealflow
• Member engagement platform
• Global meetings/investor calls
• Local expertise through unique
partnerships
• Service provider-database
• Investee recruitment database
• Institute publications: Eguide, Impact
measurement
LOCAL SERVICES
• Local meetings and hosted events
• Local diligence trips
• Support members and entrepreneurs
(fundraising and recruiting)
• Assistance for creation of new impact
investor clubs and networks
Moving beyond Angel only
Integrating 100% Impact
Network
Funds and Fund of Funds
Portfolio Approach
Crowdfunding
Online engagement platform
Impact analysis
Toniic Institute
Inside an impact investing network
Impact Measurement
PerformanceThough data on direct private investments is scarce, more data is emerging on performance
of impact funds and cutting edge portfolios such as KL Felicitas Foundation
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PRIVATE & CONFIDENTIAL ©TONIIC LLC
When to exit?
TOMS @ 50% exit – USD665mil (Bain Capital)
Ben & Jerry’s (Acquired by Unilever)
HUB NAME | [email protected] | +123 456 789 | STREET NAME, CITY, COUNTRY
“Never doubt that a small group of thoughtful,
committed citizens can change the world; indeed,
it is the only thing that ever has”
- Margaret Mead
Thank you@GraceSai
Options/ESOP –Employee Stock Ownership Program
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10-20% Total
Michael Porter: From
Competitive Strategy to
Creating Shared Value
“The implication of this for business..is
that social entrepreneurship
represents not only a new opportunity,
but also a new responsibility.”
“It is really the source, the purpose. If you cannot
deal with social needs in mainstream business,
there are a whole cadre of young people that say,
“well, gee then, I am not going to go into mainstream
business, I have to find another vehicle.”…..
Social entrepreneurship has been this incredible
vehicle for people.
My prediction is that over time,
mainstream business will be a more welcoming andmore exciting place to be again, I hope…..”
-Michael PorterHarvard Business School
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