Presentation_Pham Kieu Oanh_CSIP

7/30/2019 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

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Presentation_Pham Kieu Oanh_CSIP