Welcome to 2020 - is this the year impact & commercial goals finally align?
There’s a fundamental shift happening globally across all industries. Social impact is not just a ‘nice to have’ anymore, it’s expected.
As a venture fund and startup accelerator, we’ve experienced a shift in the conversations that we’re having with our partners and investors. Impact is no longer considered only a philanthropic endeavour but something that adds real value to the commercial deals and partnerships that we are part of and that we facilitate with our startups.
I’ll be honest, when we first started talking about the startups we work with, we never used to mention the social impact aspects of their businesses – it was always purely commercial. In fact, we often advised them away from talking about their social impact as this could hurt a deal from going through.
This was based on our past experiences of having to educate people on the business model and defend the commercial viability of a business because many stakeholders had preconceived ideas about what impact actually meant.
Of course every business idea should be defensible, but I’m talking about more than just that - social impact to many people often meant that the commercial viability of a business and the potential of the investment opportunity was compromised, even impacted negatively.
“No, our startups are not non-profits”.
“Yes, the market opportunity is big enough”.
“Yes, they have a viable business model that is scalable”.
“No, impact does not mean they can’t make money”.
You get the idea.
But, something has finally changed.
Welcome to 2020!
We’re noticing more investors excited about the potential for highly scalable startups that are doing good in their communities too. The government and multinational partners that our startups engage with now have increased incentive to work with them because it not only helps commercial KPIs but also supports their organisation reach social and environmental goals. It is also one of the major things that Limited Partners in Accelerating Asia’s venture fund get excited about.
Having come from a social impact background myself, it’s taken too long to get to this point - why wouldn’t you get excited about the idea for commercial AND impact returns?
At Accelerating Asia, we believe that more investment needs to go into fundamentally good businesses.
What does this mean though?
We look to invest in startups that not only present an exciting opportunity to change an industry or ecosystem through the use of technology, but that also have a positive benefit to the community and stakeholders. We look for this in the startup operations and for us it’s essential that the business does its best to avoid causing harm.
We’ve chosen to focus on high growth pre-Series A startups that have the potential to scale quickly. When impact is embedded into the business itself, as the business grows, impact grows. Impact is not something that is considered separate from the business itself but is part of the commercial business model. Without the business existing and continuing its operations, there is no impact.
The rise of the impact entrepreneur
The job of an entrepreneur is to solve a problem. So in many cases by nature of where our startups are coming from in the region, and the types of problems that need urgent action and solutions for in these places, we see entrepreneurs solving large social, environmental, infrastructure challenges or enabling access to services through technology.
We see this in many of our portfolio companies.
Startups in Bangladesh are delivering solutions to fundamental infrastructure and social issues. They are looking at problems from a business perspective, solving a problem that offers large commercial and economic opportunities. And through their businesses, these companies are often developing much needed infrastructure, which in turn creates opportunities for a larger economic and social impact, elevating not only the business, but everyone that interacts with it.
For example, Romoni’s founders created the platform to fill a gap in the market in delivering beauty and lifestyle services while also providing access for micro and women entrepreneurs to markets.
Logistics company Loop streamlines the movement of goods which presents an opportunity that has the potential to change entire industries, making freight transport more efficient, and contributing to economic and urban efficiencies which can change entire ecosystems.
Portfolio companies, PriyoShop and Hellotask are all catalysing change for underserved communities in Bangladesh as they scale.
When there is limited infrastructure, solutions that may seem simple in other markets, require entire ecosystems to be built. Presenting an opportunity to localise a proven business model, but also providing a moat for competitors, while creating livelihoods for people. We have seen this with Zantrik who are developing a unified service standard for the automotive industry in Bangladesh.
BeamAndGo is a payment and digital marketplace that empowers migrant workers by giving them control over how their remittance is spent by their families back home. Over 200,000 migrant workers use BeamAndGo every month to ensure their hard earned wages are used for productive purposes back home.
DeafTawk bridges the communication gap between the deaf community and the general public through real-time via sign language interpreters. The founders, who are all either deaf or blind have experienced this communication gap themselves. Currently, the few solutions available are very expensive and access is limited. DeafTawk enables people with hearing impairments that face daily challenges in communicating with doctors, teachers, employers and the general public to do so quicker and cheaper.
In Myanmar, Recyglo is a waste management platform that provides circular economy zero waste management, traceability, monitoring and analytics.
Datanest provides enterprises with off the shelf AI-based APIs, in order to improve their performance and profitability through data. Their current focus is on SMEs, currently underserved in Indonesia’s market.
Here in Singapore, Joni.ai is an AI-powered adaptive assessment platform that personalises education and helps students to make sense of their learning data.
Taking an optimistic bet on the future of our world
Ultimately, the job of a venture fund is to look into the future and make a prediction about what the world is going to look like. Spot the talent and the potential, invest in the under-invested and hopefully your bet about what our world will look like pays off.
At Accelerating Asia we believe that entrepreneurs are humanity’s greatest catalysts for positive change, so you could say we have a pretty optimistic view of what our world is going to look like in the future.
While we don’t believe that every issue in the world can be solved or aligned through impact and business, with 65% of our portfolio now considered ‘impact’, we’re excited to see how we can continue to invest in opportunities where they do.
Disclaimer
In making an investment decision, investors must rely on their own examination of startups and the terms of the investment including the merits and risks involved. Prospective investors should not construe this content as legal, tax, investment, financial or accounting advice.