Financing Social Enterprises – Practical tools to work with Social Investors
The Phare Performing Social Enterprise team in Phnom Penh hosted on the 16th of January a seminar for the Social Enterprise Network on Financing for social enterprises. The Social Enterprise Network has been set up by Hagar International and organizes monthly conferences on topics related to social entrepreneurship in Cambodia. The seminar took place at Romeet the art gallery of Phare Ponleu Selpak in Phnom Penh allowing a crowd of social entrepreneurs to get an overview of financing issues for their businesses, and at the same time enjoying the latest exhibition at Romeet, featuring graduate of Phare Visual Arts school Ben Thynal.
The seminar was attended by 35 people, mostly social businesses operating in Cambodia either start-ups or existing companies seeking to expand and looking for outside investments. The conference was presented by the investment fund Arun LLC (Ratheany Uy) and the investment consulting company Devenco (Frederic Dubois) and Davina MacPhail (Phare Performing Social Enterprise). The first two speakers gave some very useful insights on what social investors focus on; the Social Goals of the company but also the strength of the Top Management, a solid business plan with strict accounting structures. They both mentioned that there are many interesting social projects in Cambodia looking to scale up, as well as social investors seeking opportunities for investments. However they insisted on the fact that transparency in the projects and a solid long term strategy are often major issues slowing these investments.
Davina Macphail, Finance Manager of PPSE finally presented the PPSE experience with social investors. She presented the ownership structure of Phare Performing Social Enterprise, a private company which is owned more than 71% by Battambang based association Phare Ponleu Selpak. The remaining shares are owned by social investment fund Grameen Credit Agricole Microfinance Foundation (16%) and a small group of private investors (13%). These external investors have not only provided capital to the company but are also providing loans (providing working capital to the company until it reaches profitability). She explained that working with both private and institutional investors together was very important, due to the fact that the investment process with institutional investors can sometimes take a long time to finalize. Having the support, initially, of smaller private investors was vital to kick start the project until institutional funds got in. She also stressed how the reputation of Phare Ponleu Selpak was crucial in attracting social and private investors in the first place. Then, she insisted on the fact that hiring a team for the social enterprise that is very focused on business and returns was essential to finalize their investment. The audience asked many practical questions to understand what makes a project worthy to investors and then enjoyed the opportunity to network among the colourful paintings of Ben Thynal.
