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Interdependency of Social Ent

erprise and SI Fund in China


By: Ding Li

Non-Profit Incubator

Background
The notion of social enterprise first came to China at
2004
First batch of Social Impact Investment Fund came to
China around 2008
Getting popular after 2010 with the strong advocate
by Mr. Xu Yong Guang from Narada Foundation
In 2014 Youchange foundation set up first alliance of
Impact Investing Institutions
In Jun 2015 the First CSESIF attracted more than 300
participants

Social enterprise provides a self-sustained model fo


r creating social impact
Traditional Philanthropy
(return -100%)

Venture Philanthropy
and Social Impact
Investment Fund
(return 0-10%)

NGO/ traditional charity

Social Enterprise

Low

Financial return

Not pursuing profit-maximizing

Apply market mechanisms


selling products & services

Maximize social impact while


keep ends meet, or create
certain financial return

Typical Business
Venture Capital
(return >25%)
Commercial Enterprise
High

Some most successful social enterprise in China


Can You Group, founded in 1997, over 34 SEs, job creation
for over 3000 disabled people, training over 10,000 natio
n-wide
http://www.canyouchina.com/index.asp?bianhao=2207

Founded in 2002, full range: from SE execution to Invest


ment, 4 pillars on SE: Vocational Training & Community Se
rvices, Micro-Finance, Eco-Agriculture and Early education
http://www.fdi.ngo.cn/en/

He Tong Elderly Care, founded in 1994, 18 Social Enterpris


e with revenue above 50 Million RMB
http://www.hetong.org.cn/en/index.aspx

Still at nascent stage, SE has been facing a series of


challenges in China

Lack of sustainable & effective funding mechanism


Funding source and amount not match
Resource allocation not rationalized (few innovation)

Difficult to recruit & retain talent


Goal is not clear & Low compensation
Less training and professional development opportunities

Operation efficiency not on par with commercial standard


Insufficient business skill sets
Different mindset and KPIs not efficiency driven

Limited external resources and services

Few social enterprises


with meaningful scale
Slow growth rate
Social impact not
maximized
Financial return not
attractive

Lack business model


proliferation and
innovation

The reality check


Despite dozens of Venture Philanthropy and SI Fund operating
in China, very few of them had good portfolio
Hundreds of millions of RMB still searching for low hanging fru
it
Lack of clarity and assessment in the field
There is no pipeline development for SE in China
The eco-system for SE development is forming

Some future stars?

SMART
AIR

Venture Philanthropy and Social Impact Investment Fund c


an play a vital role to enable social enterprise to create big
ger social impact

Enhancing business model to create social impact


Capital with reasonable financial return
Boost social impact
Adopts venture model to cultivate social innovation

Accelerates enterprise growth through non-financial support


Leverages business skills for strategic & operational advice
Provides other non-financial support (marketing, coaching,
resource access, etc.)

Attracts and retains talent


Provides professional develop opportunities
Offers competitive compensation to reward
employee

Some Incubators/ Accelerators for SEs


FYSE www.fyse.org

FYSE

Running virtual incubation programs across Asia in past 6 year


s
Three major programs:
Youth Employment and entrepreneurship
Women Entrepreneurship
SEEDiT Accelerator for SE focus on Tourism

Transi.st
http://transi.st/en
TheECSEL Incubation Programrunning for 2 years provides m
entorship, training, and investment to Chinas most promising
social enterprises.
TheChina Energy Incubator Programme is jointly
initiated by Shell Foundation and Transi.st
Seed Fund for innovative SMEs, typically invest
up to US$500,000 as debt or equity

Institute for Environment and Development


www.ied.cn/en
Established in 2003, with the support from World Resource Instit
ute (WRI)
New ventures China program 1st environmental Incubator in
China
Youth Sustainability and Energy Education Program (YSEE)
Research & Policy advocacy on Climate Change

NPI
Annual Budget: 53 Million RMB(in 2014)
21 offices & project sites national wide
> 200 full-time staff & Consultant
Incubated 500+ NGOs & SEs
Supported 3000+ Social Entrepreneurs
Managing 60,000 m2 Public facilities
Mobilized 300 Million for 1000+ NGOs & SEs
Strategic partner with UnLtd and initial member of G

SEN (Global Social Entrepreneur Network) on supportin


g start-up Social Entrepreneurs

What is Kunpeng? A
program dedicated to help
SEs to Scale up
Average
annual
income

1.3 Million
RMB

78
%

Among 27
Selected
SEs

85%

Already
operated in
multiple
cities
Serve

Over 2,000
beneficiaries

Activities

Stage One:

Diagnosis

Stage
Tw o :
Develop
action
plan

Stage
Three:
Matching
fund/
investment

Provide capacity building and


resources to
support selected SEs

Whats the future direction?


Investigations/ Study need to unwrap certain mystery of SE dev
elopment in China
Alliance to fill in the gaps to create enabling environment
Seed fund + capacity building to foster Potential Ses
Accelerating programs for future stars