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    2013symposium_arun1 2013symposium_arun1 Presentation Transcript

    • 2nd International Symposium on Social Investment Challenges of Social Investment from Japan Takara Tsuzaki, Partner URL : www.arunllc.jp
    • Corporate Profile OUR VISION OUR MISSION We envision a society where all members live and enjoy the full range of their talents and abilities regardless of background and economic status. 1. 2. To create opportunities and empower people in developing countries, through providing financial access to and sharing knowledge and skills with social entrepreneurs. To create a space for mutual learning and action between people in Japan and social entrepreneurs in developing countries, through an interactive Social Investment Platform. Name ARUN, LLC. Established in December 2009 Office Location Isshin Bldg., 2-11-7, Yaesu, Chuo-ku, Tokyo, Japan President Satoko KONO Capital 5,000,000 Japanese Yen   Social Investment in developing countries Business Area Overseas Office HP   Hands-on support for social enterprises in developing countries   Mutual learning and training for social investors   Business matching and advisory support Phnom Penh, Cambodia http://www.arunllc.jp ARUN, LLC 2
    • Business Principle ARUN is Japan’s first platform which promotes social investments, supports value-up of investees (creation of extra values) and brings about social impacts. ARUN identifies and invests to social entrepreneurs in developing countries using funds collected from individual & corporate investors. The investments aim to increase employment opportunities, environmental sustainability and poverty reduction impact through human resources development. ARUN works closely with entrepreneurs who strive to solve the poverty by the power of their independent business and improve the society. ARUN connects the entrepreneurs and the investors through investment activities, aiming to create “meaningful flow of money” which contribute to the sustainable society. Investors (Japan) Investees (Developing Countries) Individuals and enterprises interested in social investment Social Entrepreneurs Social Enterprises Social Investment Platform Supports communication between the Investees and Investors 12/19/13 ARUN, LLC 3
    • Scope of Our Business Investees (developing countries)  Search entrepreneurs with social/development mission  Provide investment program  Evaluation and measurement of social impact Investment Management Support  Advise on management, financial and marketing  Monitoring Investors (Japan +α)  Market analysis on social enterprises  Evaluation on social enterprises  Business matching  Technical assistance and support through investment Research and Advisory Services Marketing and Promotion  Promote social investment through marketing and public relation  Provide opportunities for social investment  Organize Study tour (direct interaction with investees)  Feedbacks on investment activities
    • Main Activities 1. Investment and Value-up of BOP Business ・ Investments to enterprises which solve social problems such as poverty through business ・ Value- up of investees by financial support + management support and business matching among companies 2. Participatory Social Investment Platform ・ Building a platform where Japanese investors and entrepreneurs of developing countries can share ideas and grow together ・ Active participation of professionals and talented people inside and outside of the platform ・ Implementation of human resource development for effective flow of capital 3. Evaluation of Social Impact, Monitoring and Reporting ・ Developing social impact monitoring and reporting scheme that reflects business activity and social impact in the community and wider society ARUN, LLC 5
    • Management & Organizational Structure (1) 【 Organizational Structure 】 Representative Advisory Board Directors Cambodia Office   Business Management Investment Committee Marketing Promotion IT ・ Information ARUN LAB 【 Directors 】 Satoko Kono, Founder/President MSc .Social Policy from London School of Economics. After graduating from International Christian University (ICU) and working for a private company, she lived and worked in Cambodia for 10 years since 1995 as a development specialist of business NGO, the Japan International Cooperation Agency (JICA) and the World Bank. She gained extensive knowledge and personal network in the country, and inspiration to establish and promote social investment emerged. ARUN believes that building a new scheme of development cooperation can be realized through innovative approach. 12/19/13 ARUN, LLC Hiroyuki Tsuzaki, Director of Business Planning Master’s degree in International Development Policy from Duke University. He has solid experience on financing. He has worked for Grameen Bank, Shinkin Central Bank, and Citi Bank, and currently residing in the US and working at the World Bank. Kazuyuki Tsuchiya, Director in Marketing /Promotion Master’s degree from Tokyo University. He is Economic analyst for social infrastructure improvement at a think-tank. He also serves as Executive Board member of an environmental nonprofit organization, and is a leading figure on promoting social finance in Japan. 6
    • Management & Organizational Structure (2) The Partners (Investors) of ARUN are professionals of finance, consulting, agriculture and media in their main professions and their experiences and networks are fully utilized in ARUN’s activity. Their professional skills and strong social mind symbolize ARUN’s operational structure and ARUN keeps dynamic, sustainable and selfreliant management system. Profession of partners :                 2009 Dec. Investor : 10 Amount of investment : 16 miillion yen Partners   2013 September Volunteers Investor : 92+1corporation Amount of investment: 67.5 million yen Consulting     International Development     Finance      Education     Self employed    Manufacturer     Media Trading company    IT   Others Agriculture    Corporation ARUN, LLC 7
    • Targeting on the Missing Middle ARUN is filling the gap of financing small/medium-sized social entrepreneurs/enterprises through social investment Currently, ARUN is the only fund targeting small and medium sized enterprises (SMEs) in Japan. SMEs have the great potential to building local capacity and economy, but faces greatest financial needs. They are too small for commercial institutions, yet too large for microfinance institutions. ARUN is filling this gap and solve the problem of the ‘missing middle’. Financial Needs Existing financial support entities Commercial financing institutions Large-Scale ARUN’s target SMEs Absence of financial support mechanism for SMEs For commercial banks   requires complex loan procedures (= Cost efficiency ) For MFIs    Too large financial needs, too long lending period Micro business by individuals and families 12/19/13 MFIs ARUN, LLC 8
    • Business Model of ARUN investment 1. Individuals Enterprises Exit 2. Corporate Investors, Development Finance Organizations 3. Foundations Funds Social Investment Platform Sales Administrative Expense Business Income Investment A B   C E D F Social Return Pro bono activity Nonprofit Corporation Investigation Study                ■ Countries targeted                    Cambodia, Myanmar, India etc.                ■ Size of Investment ( per portfolio)                  USD 10,000 – 100,000 A                ■ Field of Investment : Scale-up of social B business in                  Agriculture, Environment conservation, Education, C Health and Hygiene, Water, Tourism etc.                                   ■ Investee’s stage E                  Several years after starting business ~ Medium-term stage D                ■ Investment scheme                  Equity investment, Loan                ■ Targets of Investment F                  Entrepreneurs, Local SMEs, Local advance Japanese Value-up -affiliated companies, Local micro –finance Social Nature and Businessinstitutes. related Improvement ARUN, LLC 9
    • Why Social Investment Now? In Japan the capital market of philanthropy debenture goods is underdeveloped. Globally, social investment and impact investment are still a new concept, and rapidly emerging in the last few years. Global Current ‘Impact Investment’, coined in 2007, aims to solve to social or development issues, such as poverty and environment while pursuing economic return. Market for impact investment is expected to grow up to 4 billion to 1 trillion US Dollars in 10 years (Monitor Institute, USA). Recipient of Funds Excellent and highly minded ‘Social Entrepreneurs’ who seek for social challenges through enterprises have emerged in many countries in the world. They are promising investees. Lender of Funds ‘Social consumption’ spreads around the world of investment, which is to chose more socially helpful product if the quality is same. Among investors the notion of ‘Sociality = Value’ is wide-spread. The total sales of philanthropy type bond and number of debenture ARUN, LLC 10
    • Investment Results ARUN offers practical services to developing markets with high growth potentials and aims at the two wheels model of growth of enterprises and social impact creation. ARUN Investment History (USD) The investment results (number) according to the stage Early ※Includes short-term investment of the unit for several months in multiple times Agriculture (organic rice) Agriculture (organic honey)   Beauty IT   Seed Amount of investment ( 2009-2012 ) : 1,145,000 USD Period : 1-3 years (short-term 1 month) Interest rate : 10-12% Collection result (2010-2012 ) : 904,035 USD Expected collection ( 2013-2014 ) : 256,759 USD Financial returns (estimated) : 123,046 USD Hotel ARUN, LLC 11
    • Investee: Sahakreas CEDAC (organic rice & wild honey) Dr. Yang Saing Koma Founder. Born and raised in the rural area of Cambodia. Received a doctorate degree in agriculture from Universität Leipzig (Germany) in 1995. While teaching at the Cambodian Royal University of Agriculture, Dr. Koma established CEDAC, a development NGO in 1997. He serves as an advisor for NGOs and foundations, and a recipients of the Ramon Magsaysay award. Business: Purchase and sales of organic crops Major activities: 1. Sahakreas CEDAC purchases organic crops at a reasonable price from the group that cultivate organic crops under the guidance of CEDAC at a reasonable price, and distribute to market (Union of small farmers: Approx. 300 groups). 2. Return the portion of the profits to the farmers union, and support rural development activities for self-reliance. *CEDAC NGO operates across the country, and covers 70,000 households in 2,800 villages (30% of the whole nation) Sahakreas CEDAC Farmers Retail Rice mill, packing with CEDAC branding Paddy rice Milled rice Sahakrea CEDAC bought about 1,500 tons of paddy rice and sold mainly in the domestic market in the fiscal year 2010. ARUN, LLC 12
    • Investee: Arjuni (hair extension) Profile of the Founder: Janice Wilson U.S. citizen. After graduating from the University of Washington (B.A. in Political Science), developed her career as a dancer / choreographer and attained graduate degree from Columbia University of Law. In the US, she provides advisory services to real estate company and venture capital, and has extensive knowledge and experiences on both non-profit and private sector. Arjuni’s Business manufacture and retail human hair products – “The World’s Purest Human Hair” 1) Purchase hair from women in rural villages in Cambodia 2) process the hair extension by hand 3) Sell online Arjuni’s Comprehensive Manufacture/Sales Model:      【 Manufacture 】   Collection 【 Sales 】 Website Blending Fabricatio n Sanitization ARUN, LLC Trade Shows & Special Events “Arjuni is able to provide custom-made products through the unique vertical integration model.” by Janice 13
    • Investee: Frangipani Villa (Boutique hotel) Company Profile: • • • • The Frangipani Villa (Cambodia) Co., Ltd, Established in 2007 No. of Hotels in operation : 7 ( 5 in Phnom Penh, 2 in Siem Reap ) URL: http://www.frangipanihotel.com/ 【 Hotels in Phnom Penh 】 Frangipani Royal Palace Frangipani Fine Arts Features: • • • • • Mid-range priced, contemporary boutique hotel Frangipani Villa 60s (rare to find in Cambodia, pioneer in the industry) Low cost, high design hotel buildings Operate in long-term lease of land, and reduced the initial cost Management team with wide range of background; architect, Frangipani Villa 90s development consultants, government agencies Strictly against sex tourism, and strong social mind in all aspects of management (employ minorities and homeless people, provide trainings) Frangipani Living Arts 14
    • Success Cases: Recognitions ARUN’s investees are getting high recognition worldwide. ARUN is successful in supporting promising entrepreneurs and enterprises from the seed stage by building strong relationship of mutual trust and networks. SKC Founder 2012 Ramon Magsaysay Award Social Return (2009-2012) Frangipani Owner Appeared in the Phnom Penh Post Arjuni Founder Appeared in the New York Times and BBC ・ Improvement on living conditions ( 3000 households growing organic rice , 500 households producing organic honey ) ・ Employment ( training and employment of youth from 250 poor households, education and employment opportunities for 40 women ) ・ Environmental conservation ( organic agriculture , community forest preservation ) ・ Self-sustained organization ( productive cooperation of natural honey, organic rice ) ARUN, LLC 15
    • Value-up through Investment ARUN has developed a method for value-up for business growth and has been providing technical assistance and management support to maximize the social impact of business throughout the investment period. ARUN’s management team, partners, and regional office (Cambodia) engage closely with investees. ■Value-up of natural honey business: By mobilizing financial, technical and human resources through various channels, ARUN succeeded in improving the quality of natural honey in Cambodia. As a result, community based natural honey business improved and Cambodian natural honey was exported to Japan for the first time. ARUN, LLC 16
    • Social Impact Evaluation Scheme ARUN selects investee enterprises in conformity with both social and business criteria. ARUN has developed its own social impact evaluation scheme and utilizes for DD, reviewing and reporting of investment activities. Social /Developmental Effectiveness Criteria Business/Management Criteria Commitment by entrepreneurs to bring about social changes for the cause Business Model Financials Degree in which social value is created Employment Governance Leadership Impact on Community ■Social Monitoring: Stakeholder analysis Return on Investment Local ■Evaluation of Social Impact   (applied to our investees) Leadership Customers Environment ARUN Entrepreneurs Workers Innovativeness Suppliers Contribution to local communities Employment Family ARUN, LLC 17
    • Awareness Raising and Capacity Development ARUN cooperates with wide variety of stakeholders to disseminate the concept of social investment, putting efforts in awareness raising, research and studies and capacity building. The achievements of such efforts benefit social investment sector. ■Raising Awareness and Networking – Building Eco –systems in Japan and abroad -Dissemination of information through website, SNS and its newsletter. -Regularly organizing fund raising events, workshops, symposiums, investment briefing sessions -Building networks with corporate investors, development financing organizations, foundations and social investment institutions. -Developed research arm and conduct study on BOP business and social impact assessment. -Participate in social/impact investment conferences and seminars abroad and present cases ■Human Resource Development for the Next Generation - Organize Social Business Competition in Cambodia twice a year (participants: university students from Japan, Cambodia and Myanmar) ARUN, LLC 18
    • Grants & Award, Recognitions Research Grant ( JICA ) •Study on BOP business and Social Investment ( 2011-2013 ) •Study on Assessment of Development Effectiveness and Financing Method for BOP Business ( 2013 ) Grant •Japan Foundation: ‘Intellectual Exchange Grant’ ( 2012 ) •Mitsubishi-Tokyo UFJ Foundation: ‘Enlightening Activity’ ( 2011-2013) •National Land Afforestation Promotion Organization: ‘Support for the Green Fund’ ( 20102012 ) •KDDI Foundation: ’Social and Cultural Activity Grant’ ( 2010-2011 ) •The Toyota Foundation: ‘Asian Neighbors Program’ ( 2009-2011 ) Prize •Eco Japan Cup: Environmental Business Women Award ( 2010 ) •SBI Business Plan Contest :Award for the Excellence ( 2009 )
    • Growth Strategy ARUN’s one of the top priorities in the coming years is to develop mechanisms that can support a number of investments in an efficient manner and simultaneously enhances the growth and expansion of social investment sector. Strategy Strategy Strategy for 2013 Infrastructure building to support the growth of social investment -Making mechanism of value-up method -Development of monitoring methods -Network building in Southeast Asia Cooperation with other institutions Portfolio growth through collaboration with social investment organizations (equity investments, including debt, etc.) Foundation Foundation of ARUN of ARUN Amount of total investment 60 million yen (0.6 million USD) Start-up   2010-12 Enhancement of portfolio -Industry -Growth stage of investee companies -Investment amount & period Expansion of social investment through platform building Value-up of investees and extension of social investors network is the key element for success. 300 million yen (3 million USD) Growth 2013-15 1 billion yen 10 billion yen Expansion   2016-18 Progress 2019-21 (10 million USD) (100 million USD) - Develop and refine social impact assessment - Cooperation with other social - Awareness of social investment - Provide investment opportunities for domestic investment and relevant institutions (mainly individual investors) and foreign institutional investors and organizations globally - Pilot investments (foundations, development institutions etc.) - Provision of greater and wider - Development of analytical - Expand activities to neighboring countries in services in social investment methods (screening, DD, report) Asia - Expanding targeted regions for - Activities in Cambodia - Equity investment investment ARUN, LLC Provision of platform that connects the investees and private and institutional investors 20