Senior Jongmin Jeon reflects on his experience at Asia Impact Investment Exchange (IIX), an impact investment firm based in Singapore.
Thailand rice farmers, Singaporean ex-convicts, Malaysian juveniles, Philippines native inhabitants, Indonesian uniform knitters -these are beneficiaries of social enterprises that I came across last year.
As the list goes on and on, you will be, just as I was, surprised to find Southeast Asia as an action-filled region for social entrepreneurship. While working at Asia Impact Investment Exchange (IIX), I had an amazing opportunity to meet dozens of social entrepreneurs across numerous industries from agriculture and renewable energy to mobile technology and consumer goods.
My team’s main task consisted of screening and connecting social enterprises with impact investors: a group of people, foundations, and funds that look for both social and financial returns on investment. For the first few weeks of work, reviewing business plans with brilliant ideas and great social mission deeply inspired me. Every day on the train back home, I would recall enthusiasm of social entrepreneurs and ponder different business ideas of my own. The prospect of becoming a social entrepreneur seemed exciting, if not fun.
However, deeper involvement in the work forced me to face the reality: a large portion of social enterprises fail. Being an entrepreneur is challenging. Being a social entrepreneur is much, much more challenging. We reviewed many social enterprises that have adopted the latest technology or successfully identified a market gap. They have great social missions and innovative products. But at the end of the day, we, as investors, have to ask tough questions: How many $10 clean cook-stoves do you have to sell to achieve scale? How do you develop a profitable revenue model for a mobile health information app? Can poverty-stricken people afford solar-powered water purifier? Thorough assessments of business plans and financials often led us to conclude that the enterprise is not ready or suitable for investment.
This is when I realized that a social enterprise has to be an outstanding “enterprise” before being “social”. Many social enterprises target base of the pyramid, who generally lack purchasing power. Many of the middle class, especially in Asia, tend to relate the term “social” with “uncompetitive” to a degree that many social entrepreneurs choose not to market themselves as social enterprises. Impact investors, who are less demanding of financial returns, still ask whether the business is scalable and applicable across borders, cultures, and socio-economics classes. All these factors require social entrepreneurs to be more creative, thorough, and smarter to successfully manage their businesses.
However, the experience of working in the field has shown me that the prospect of social entrepreneurship is far from grim. The rise of social entrepreneurship is a very natural response to a global public outcry for more just, inclusive capitalist system. More investors, customers, and young talents are identifying themselves with the mission of social enterprises. Asia IIX is an exemplary, with dozens of extremely intelligent and passionate talents from all over the world.
It is important to leverage on this natural demand for the field, to achieve even greater growth than $1 trillion market for impact investment by 2020 as predicted by WEF. This is why I believe advocacy work should take a critical role in changing people’s perceptions of the field.
Social entrepreneurship is no charity: it should not depend on mere good will of a few groups of millionaires. It should rather be a game changer where powerful market force can be adopted to both address social problems and satisfy consumer needs.
I am truly excited to see more leaders like Paul Tudor Jones, eminent institutions like Wharton, and young talents like my summer colleagues work with passion, intelligence, and experience to grow the space. After all, we are all witnessing serious problems of growing income gap and polarization of the society. Some decide to accept it, some decide to change it. The latter are courageous fighters and deserve our respect.
Jongmin (Chris) Jeon is a senior in the College of Arts & Sciences studying PPE (philosophy, politics, economics). He is passionate for utilization of the market force for social good. His previous interests before impact investment revolved around microfinance and Corporate Social Responsibility.