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Transcript of Presentation_Pham Kieu Oanh_CSIP
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Social Investment in Vietnam:
Landscape, Opportunities andChallenges
Hanoi, 22/8/2013Pham Kieu Oanh
Centre for Social Initiatives Promotion (CSIP)
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Positioning social enterprises
Charity NGOw/trading
activitiesSocial
enterpriseSocially
driven
businessMainstrea
m business
Impact
first
Finance
first
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Growth of social enterprises in Vietnam 60 social enterprises have been incubated andsupported by intermediaries and social investors
(2009 - 2012)
Approximately 165,000 organizations arepotentially recognized as SEs
Social enterprises are now present in 37 provinces
and cities throughout Vietnam.
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Type oforganization
Quantity Aims Profitdistribution
Self-identified socialenterprises
200 Address market failures and socialproblems, provide services and create jobsfor disadvantage people
Not for profit
NGOs 1,000 Address social and development issues,rights of the poor and the disadvantage
Non-profit
Community-basedorganizations (No legal
status)
140,000 Meet the basic needs of communities(clean water, electricity, healthcare, etc.)
who can not approach the public services
Not for profit
Co-operatives 9,500 Cooperate to meet socio-economicdevelopment needs of communities
Mainly use theprofit forcommunity andmembers
Associations 6,900 Support and protect legal rights of
members, contributing to socialdevelopment
Not for profit
Companies 8,000 Balance social and profit objectives Maximise theadvantage butnot maximisethe profit
Total 165,600
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Social Enterprise Development TrendsEmergence of a new generation of self-identified socialenterprises
NGOs/Associations with business arms
Inclusive business: SMEs that pursue shared value and profit
Cooperatives/CBOs - for shared profits and greater marketsolutions
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Social Inclusion Create jobs,buildcapacityand create opportunities,
empowerdisadvantaged and marginalized
communities
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Top five areas of activities & Org. forms
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Social and economic efficiency(Vietnam social enterprises mapping, 2011)
Type of organization Centre Company Association/Club Cooperative Others
Average
beneficiaries/org 1,624 2,865 2,343 142 4,204
Average economic
values/org (revenue
and sponsorship)$42,700 $74,950 $62,700 $67,950 $172,650
Expenses/beneficiari
es $80 $26 $27 $478 $41
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Capital demand
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Types of Funding & Stage of Development
SeedEarly stage
Start-upEarly stage
SurvivalGrowth Maturity
Own
investmentDebtGrant
Private
equityRevenue
from
trading and
services
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Social enterprise Investment Needs Survey(CSIP & LGTVP, August 2013)
Social Enterprise 60%NGO 20%Cooperative 7%Science & Technology Org. 3%Professional Association 3%Community Organization 3%School 3%Total 100%
Type of Organization by
legal structure86%
57%
48%
33%
29%
Sustainable Livelihood / Community
Development
Educational / Vocational Training
Healthcare
Environment
Other
Sector
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Capital (Debt + Equity)(in VND billions) Today Capital Need for Next3 Years> 5B (> 250k USD) 17% 17%1 - 5B (50-250k USD) 21% 48%0.5 - 1B (25-50k USD) 10% 21%0.1 - 0.5B (5-25k USD) 45% 14%< 0.1B (< 5k USD) 7% 0%Total 100% 100%In next 3 years, the median capital from 0.5 billion VND today to 2.8 billion
VND (~140,000 USD).
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Sources of capitalSources of Capital You
Would Consider
Average Capital
Today
44%
26% 25%
13%
Generated
Internally
Equity Grant Loan
57%
70% 73%
Equity Grant Loan
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Access to Investment: ChallengesNot
Challenging(1) (2) (3) (4)
Very
Challenging(5)
Language Barrier 37% 20% 13% 13% 17%Knowledge of Resources 10% 13% 27% 23% 27%Understanding Funder
Requirements 13% 13% 17% 33% 23%Meeting Funder
Requirements27% 13% 20% 23% 17%
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Non-financial SupportCurrent Need
Urgent
NeedNetworking / Training Support 53%Skilled Volunteers 57%In-kind Donations 50%Unskilled Volunteers 23%
80%
50%30% 27%
13%
Networking
& Training
Support
Skilled
Volunteers
In-kind
Donations
Unskilled
Volunteers
None
Non-Financial Support Received Non-Financial Support Currently Needed
100%
41%
22%
15%
15%
7%
4%
Intermediaries (eg CSIP)
Social Enterprise Networks
Companies & Corporations
Corporate Social Networks
Universities
Investment Funds
Not Needed Non-Financial Sources of Support
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Investment ReadinessType of Document Company Possesses
Accounting Systems 77%Financial Statements 70%Clear Organizational Structure 70%Operational Plan 43%3-year Financial Projections 43%Financing Plan 37%3-year Social Impact Projections
27%
Social Impact Assessment Report 23%
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Challenges of Social Enterprises
In Raising Capital
Lack ofaccess: financially unattractive: the average deal size is relatively small
compared, making it a less appealing play for investors
insufficient information about the range of funding sources available,as well as different funders requirements
Lack ofcapacity: under-defined needs for capital and long-term vision
Lack of the basic processes and documents required by most potentialinvestors
Lack ofimpact reporting mechanism: evidence for growth Lack of supportive infrastructure and intermediaries
to build SEs capacity and
bring more investors, players in the market
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Capital Supply
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Donor/ Venture philanthropy
Grant, patient loan, conditional loan/grant
Impact investorsConvertible loan, debt, equity
POTENTIAL SOURCE OF FUNDING
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SOCIAL INVESTMENT ECOSYSTEM IN VIETNAM
Centre for Social Initiatives Promotionwww.csip.vn
Impact First Investors
Intl aid agencies
Foundations
Social venture capitalists
Finance First Investors
Development banks
Socially responsible
investors Private capital (venture
capital firms, angelinvestors or MezzanineCapital)
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Self-generated IntermediariesDevelopment Aid
AgenciesGovernment
MFIs and crowd-funding
CorporationsCSR Corporations
CommercialBanks
Venture InvestmentFunds
VenturePhilanthropists and
Impact Investors
SOCIAL INVESTMENT ECOSYSTEM IN VIETNAM
Centre for Social Initiatives Promotionwww.csip.vn
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Investment trends
A nascent but growing market - Increasing funding sources: using the tools of finance to create positive social impact aligned with
their mission.
impact investing -the investment of capital into vehiclesprivateand publicthat create social or environmental benefits alongsidefinancial returns.
Focuses:
Sustainable agriculture, organic food, alternative livelihoods,
Community development
Health care initiatives: technologies, new-born mortality, safematernity, mental health, injury prevention, disability
Climate innovations: energy efficiency, clean technology,transportation, water Management & purification
Microfinance
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Investing challenges Lacks ofgood projects in term of innovative solutions,
scalability and deal flow
Deal size is too small for most institutional impact investors.
Expected financial returns is higher than SEs financial
capacity Social impact measurement
Shortage of information and dialogue with institutional
investors around social investment opportunities.
Culture realities, weakness ofcivil society, socialinfrastructure and government support
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Recommendations1. Policy: Recognition, education, transparency and
accountability, incentive, integrating in GoVs programs,professionalism.
2. Intermediaries: Education, capacity building, networking,research
3. Development agencies: mainstreaming socialentrepreneurship approach to selective developmentprograms
4. Impact investors: Understanding the market, invest inbuilding pipeline and make deals
5. Corporates: Strategic and long lasting impact CSR fundlocal innovations and social enterprises
6. High-net-worth individuals: shifting the culture of givingfrom charity to investing for social impacts
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Thank youCentre for Social Initiatives Promotion (CSIP)
www csip vn