Financing Social Returns in Southeast Asia: Barriers
The concepts of social enterprise and social entrepreneurship are newer to Southeast Asia and China than to other parts of the world. If someone was asked to name the most successful social enterprises globally, it is unlikely that an individual or organization from Southeast Asia or China would be the first to come to mind.
But a closer look at the region reveals many entrepreneurial individuals and teams creating impact in innovative ways and striving to develop business models that will financially sustain and grow their organizations. Across Southeast Asia and China, impact focused enterprises are sprouting, growing and building solutions to social, economic, and environmental problems through different business models. They are creating opportunities for women who face barriers to employment, developing distribution systems designed to meet the needs of the poorest consumers and smallest retailers, and developing local economies by creating livelihood opportunities.
As these enterprises demonstrate how impact can be achieved through innovation and interaction with the market, more entrepreneurs with exciting ideas are developing new ventures and turning their ideas into impact.
Take Charles, a student from Hong Kong for whom access to a computer and the internet meant the ability to find the answer to any question. He wanted students like himself in all parts of the world, even those without internet or electricity, to have access to information that would allow them to learn and explore. To address this problem, Charles modified a modern desktop computer to run at low voltage, using solar power. The computer is equipped to hold a large digital library, and comes pre-loaded with offline educational content. Through his social enterprise, SolarLEAP, Charles has now brought computers and digital libraries to off-the-grid communities in Nepal and the Philippines, and beyond Asia to Ghana, Ethiopia and India.
Despite the impact created by entrepreneurs like Charles, new social entrepreneurs in Southeast Asia and China face many challenges. There is often a lack of local understanding of and support for their models. Language barriers prevent some would-be entrepreneurs from accessing available resources, and the sector is still fragmented, in need of strong sector networks through which entrepreneurs and their supporters can build relationships and collaborate.
One of the greatest hurdles to overcome is the lack of appropriate financing available for impact-focused ventures. Time and time again we see entrepreneurs in this region spending a disproportionate amount of time and energy looking for funding, instead of focusing on building and growing their ventures. One cause of this funding gap stems from the fact that different models of social finance that were developed in specific contexts in different parts of the world were introduced in Asia all at once, leaving new funders confused about what a social finance model should look like. What kind of financial returns should social investors seek in addition to social returns? What does the ideal social enterprise look like? Is social finance philanthropy or is it investing?
While there is no one answer to these questions, the confusion about the different models of social enterprise and social finance has resulted in a situation where few matches between funders and entrepreneurs are being made, and entrepreneurs have little access to the critical capital they need to seed their ventures.
Consequently, there is a need for an organization that can provide support to social enterprises and help them answer these tough questions. Part II of this blog post profiles just such an organization.
Photo credit: http://www.flickr.com/photos/worldworldworld/4352771740/