Jeff Volinski ’12Journal #1
I am nearing the end of my second week in Singapore, working for Impact Investment Exchange Asia (IIX), and I have already been involved with a number of interesting initiatives. IIX currently operates an online platform, Impact Partners, which matches social enterprises in Asia with impact investors. Next year, IIX plans to introduce its second platform, Impact Exchange, which will be Asia’s first stock exchange dedicated to social enterprises.
Currently, much of the work involves evaluating social enterprises that are hoping to list on Impact Partners, which includes reviewing their business plans, analyzing their financial statements (if they exist), assessing their social impact, and evaluating the expected investor response. I am working on a team with a second summer associate — with ten years of experience in investment banking and private equity — to assess the financial side of hopeful social enterprises. Last week, we met with a social entrepreneur who owns a successful fish-processing business and wants to start a sustainable fishery in Indonesia. He signed up for a full impact assessment by IIX’s nonprofit subsidiary, Impact Investment Shujog, and agreed to list his enterprise on Impact Partners. It was great to review his business plan in the company of IIX’s managing director, Robert Kraybill, who has been working in the finance industry for more than 25 years.
A functioning capital market exchange survives on the linkages it forms with investment banks, law firms, accountancies, governments, investors, and enterprises. The reason I was attracted to IIX, is its unique position in Asia’s social enterprise ecosystem. I have already had the chance to investigate capital raising requirements in India and author a report on the microfinance sector in Indonesia. I will also be conducting an investigation into the Chinese social enterprise sector in order to make a recommendation on whether or not IIX should enter China this year.
I am also learning a lot about Southeast Asia from living and working in Singapore. It is an amazing city — the city itself is a case study in Operations 101 — that blends Chinese, Malaysian, Indonesian, and Indian cultures. And, with the continued success of IIX, Singapore may very well be a hub for social enterprise in Asia.
Journal #2
“No Revenue, No Business” hangs on the wall of the IIX office — as both a source of inspiration and a frank reminder of the realities of running an enterprise. If there has been one overriding theme of the past few weeks, it has been one of monetization. That is, how can IIX as an organization turn its resources into revenue? It is an issue that all enterprises face, but a particularly tricky challenge for social enterprises. Not for a lack of skills and resources, but because social enterprises focus on social returns and may overlook opportunities to secure revenue.
Case in point: in order to pitch a new financial product to a potential client, my team performed some research on the regulatory climate and on third parties that might serve as potential partners. Our team thought we would pitch the financial product along with the synopsis of our research to the client, as a way to strengthen our proposal. But, in a conversation with the founder of IIX, Durreen Shahnaz, it became clear that our research was both a valuable public service and worthy of compensation. Instead of disclosing our initial findings to the client, we instead pitched our financial product idea and asked for initial funding to complete an in-depth research report. At this point it becomes a win-win situation — IIX secures initial funding with which to strengthen the proposal and generate a valuable ecosystem report, and the client benefits from the chance to test the waters by funding the project in a phased approach.
If legitimate sources of revenue are overlooked, that puts a heavy burden on fundraising operations and ties up resources that could otherwise be used to generate social and financial returns. It also misses an opportunity to establish precedent for being compensated for a certain product or service.
Running a social enterprise requires a mix of skills and traits: a desire to do good, experience in the field, knowledge of how the system could be improved, and perhaps most importantly, business acumen — for a social enterprise to achieve scale and maximize its social impact, nothing is more helpful than actually running a successful business.
Journal #3
There is a wide range of professions and personalities that make up the social enterprise and impact investing sectors, which are in full bloom in Singapore, and there’s no telling who will walk into the IIX office on any given day.
Yesterday, an old friend, Geoffrey See — whom I met while studying Chinese in Beijing at the Inter-University Program for Chinese Language Skills (IUP) — came into the office to meet with IIX about partnership opportunities with his NGO, Choson Exchange. Choson promotes economic development in North Korea, and like many other social entrepreneurs, Jeffrey wanted to stop by and meet the team in case there is room for collaboration down the road. Social entrepreneurs say they intern here, or stop by on a layover in Singapore, because there is something interesting going on in the social enterprise sector in Singapore. By working in this office, I have learned that there are interesting things going on in Pyongyang, Bali, and dozens of other places.
I have also had the pleasure of meeting a number of individuals from Singapore’s ministries, such as the Economic Development Board (EDB) and the Ministry of Community Development, Youth and Sports. Our work at IIX depends in large part on the support of the Singaporean government, and it has been eye-opening for me to have the chance to work with government ministries that have the authority, capability, and talent to be truly impactful in Singapore. Unlike many departments of the US government, Singaporean ministries tend to be incredibly well funded and empowered to make changes quickly.
There has also been the opportunity to meet with a number of investors looking to push the envelope and develop the impact investing scene. The reality is that IIX exists in a nascent industry that still very much depends on the money of high-net-worth individuals (HNWIs). They not only make up a large portion of the investor base, but also bear a heavy burden in changing the mindset in Asia where there is not a strong tradition of philanthropy and double bottom line investing. In the United States and Europe, impact investing was borne out of philanthropy, yet in Asia impact investing is in many ways pre-dating philanthropy. If Impact Investment Exchange Asia is able to lay the groundwork for a strong social enterprise and impact investing sector, this may drive both traditional investing and philanthropy in Asia.
