MaGIC Startup Academy Launch : Day 4 - Why Should We Invest In Social Enterprises? ( Grace Sai )

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

1

2 3 4

5

6

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

+

• 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 | NAME@EXAMPLE.THE-HUB.NET | +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

36

14 HNWIs

37

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 | NAME@EXAMPLE.THE-HUB.NET | +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

52

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