AVPN Webinar 4 December 2013 Myanmar series #1 - The Social Investing Landscape Project Hub Yangon Insitor Management

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Start-Up incubator | Co-Working Space Yangon, Myanmar Presentation for AVPN Webinar Allison Morris Co-Founder

Outline
The environment for social enterprise in Myanmar Barriers to entrepreneurs in Myanmar What does Project Hub Yangon do to help entrepreneurs? Our work so far

Capacity Building Restaurants

Products for/by BoP

Social Enterprises in Yangon

Barriers to entrepreneurs in Myanmar

Lack of financing options (loans, investment) Uncertain regulatory environment Limited capabilities of human resources Lack of infrastructure Its expensive Lack of entrepreneurial skills training

Our mission
Support the development of a vibrant start-up scene in Yangon How do we do it?

Creative space to work

Incubation Programs

Global Entrepreneurship Week

Co-Working Space
Providing start-ups and consultants with an affordable, flexible and great place to work.

Wifi / Coffee / Desks Networking Seminars Event space rental

Global Entrepreneurship Week

Over 140 countries 20,000 events One week An opportunity to highlight the challenges entrepreneurs face and to inspire future entrepreneurs.

In 2012, Project Hub hosted the first GEW Myanmar with 4 events. In 2013, 10 partner organisations joined us to put on 9 events.

Incubation Programs

Ran first incubation program in 2013 8 Entrepreneurs 6 start ups 15 workshops 7 Mentors 5 months

Our approach to incubation

Entrepreneur

Experienced Mentor

Targeted workshops by experts

Exposure and Networks

After 5 months, theyre ready to pitch to investors

Start Ups launched by our Fellows

Prepaid Master

Thank you

Social Investing Landscape in Myanmar

Avpn webinar 04 December, 2013

Insitor Management introduction

An investment advisor focused on frontier markets

Insitor Management is an impact investment firm with operational headquarters in Phnom Penh and offices in New Delhi and Yangon. Insitor Management is the exclusive investment advisor of Insitor Impact Fund, a venture capital fund that finances businesses with the potential to improve the lives of lowincome families in emerging and frontier markets. Geographic focus is on Developing Asia, where nearly 2 billion people have limited or no access to clean water, quality food, secure shelters, affordable healthcare, efficient infrastructures, or comprehensive financial services.

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Insitor Management approach

Invest and build

Target investees are start-ups and early stage businesses, with the intent to bridge the gap between initial grants/seeding investments and the later stage funding that is available from most impact investors. Goal to build companies to a larger scale and higher profile that will be attractive to larger pools of capital. Our locally-based team offers hands-on support, drawing from our experience as entrepreneurs, strategy consultants, and finance professionals. We have been active in Myanmar since 2011, we have set up our representative office, built out our network, and screened companies. For the next 6-12 months we will keep providing preinvestment services to promising start-ups with the expectation to close the first investment by the end of 2014.

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MYANMAR the market

Frontier market, substantial opportunities, barriers remain

A rapid shift to democracy, marked by the military-led governments political and economic reforms in early 2012, is seeing the country open up to the rest of the world. However, roads and power infrastructure are in short supply, foreign investment law is constantly shifting, and the banking sector is severely undeveloped. Multinationals have been undeterred, as interest in the largely untapped market grows. Already, Japanese companies have started to enter the market. Chinese, Thai, and Singaporean companies have been active in Myanmar for some time. The sectors of immediate interest are agriculture, oil and gas, real estate and infrastructure, and consumer goods. Manufacturing and other sectors will develop gradually. A low-cost labor force and growing manufacturing base are also likely to attract businesses that are looking for viable alternatives to China. Some small PE funds are already starting to focus on Myanmar but few transactions have taken place.

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MYANMAR macro indicators

Equival ent to 10m people

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MYANMAR social enterprise landscape

High need country, impact being created by diverse set of actors

With one third of the countrys 60 million people living below the poverty line and with limited or no access to basic services, the need for social businesses is clear. The agriculture sector is particularly attractive as 70% of the population is rural and depends on agriculture for their livelihoods; the majority of them have no access to affordable credit, insurance, crop inputs, or training on modern farming techniques. While social business is a new concept in Myanmar, a few pioneering Burmese social enterprises already exist. A community is being built to accelerate growth in the sector. Regional social businesses are also exploring replicating their models in Myanmar either through dedicated country operations or through franchising models. Organizations other than self-identified social enterprises making impact are extremely diverse and decentralized - SMEs, associations, co-ops, nonprofits, etc.
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Myanmar the Challenge

Pioneers have a bumpy road ahead

issues
Few impact players NGOs, co-ops, and associations still dominating the market and promoting the sustainability culture Lack of relationships across sectors and legal entities Little grasp of international standard reporting and corporate governance Very new culture of equity partnerships Lack of government capacity or organization Undeveloped banking sector Lack of reliable and frequent data In a loose investment scene

options
Focus on existing players in traditional industry with natural social impact Go greenfieldwith the right partner Work on NGOs spinoffsacknowledging the challenges Provide angel investments or grants to fund pilots and prototypes Educate entrepreneurs on the requirements of international investors Provide training on business planning Contribute to frameworks development as much as possible Lobby, lobby, lobby first comers are in a good position to contribute to setting standards

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Recap lessons learned

Be local and flexible if interested in the short-term

Although important everywhere, critical to be local to invest in Myanmar:

Building trust with entrepreneurs Establishing extensive network in decentralized market Conducting primary data collection and market research Overcoming local entrepreneurs and institutions fatigue of foreigners Following investments with an intensive hands-on approach Keeping current on changes in legal and regulatory environment

In the short-term investors must either adapt their approach to Myanmar or wait:
Start-ups, greenfield, mixed model SMEs, or NGO and SME spinoffs Flexibility on reporting and governance with the view of improving post-investment Unclear and shifting regulatory environment Invest and build Understanding the players, their roles, and their commitment/timing to Myanmar

Better coordination needed to develop ecosystem:

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MYANMAR insitor plans

Slow investment pace, primary focus on agriculture and energy

We expect to make 4 to 6 investments in early-stage companies across the country over the funds investment period (5 + 1 years). In the early stages, the Fund will focus on the following sectors: Agriculture-Related Companies Traditional focus on technology inputs and creating higher outputs and prices for farmers; Silos and crop-storage facilities to help obtain higher prices year round; Value-added processing of abundant and regionally competitive crops to help raise farmer incomes and create an export market. Low-Carbon Energy mainly hydroelectricity and solar mini-grids Affordable Housing in the next few years, plans for affordable housing in the suburbs and peri-urban areas of Yangon will have great potential In later stages, the Fund will focus on companies that offer low-income families options for increased access to clean water, sanitation, healthcare, and education.

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Example of investment approach

Greenfield implies hands-on approach pre-investment, limited risk in first stage, potential for follow-on

Conducted extensive market research on agriculture sector with the view of investing in a greenfield project:
Identifying key needs, challenges, and opportunities in order to short-list areas of priority Networking within the industry and outside of the typical impact space to identify local partner

Created partnership with local institution aligned with our view of the sector. They pitched an idea for a business working with a specific group of smallholder farmers to create both financial returns and strong impact to the community. Together we are working to further define the potential business model, and cocreate a feasibility study and business plan based on their experience. Currently conducting primary data collection and market research to confirm/reject major assumptions of business model. If confirmed, aim to create a new joint venture and provide capital for pilot (<USD 250k; primarily working capital). If pilot is successful, prepare to scale business and provide follow-on investment (up to USD 2m) while beginning to identify potential third party investors.

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Question & Answer

- Please type your questions into the box on the control panel

Register for next webinars at: http://www.avpn.asia/events

11 December 2013: Myanmar webinar 2: International foundations in Myanmar 15 January 2014: Myanmar webinar 3 Myanmar in Context: Internal Dynamics and the Contest for the Nation