The Gathering of Big Shots: 2016 IIF Held at WKU

 

638A5876-2November 5 witnessed the holding of 2016 Impact Investment Forum (IFF) at Wenzhou-Kean University (WKU) where big shots from various fields gathered to discuss the issues such as impact investment, and the trend of female entrepreneurship and investment. Yuanchuang Fund, the first impact investment fund, was also initiated at the Forum.

The Forum was jointly organized by the Decision-Making and Consultancy Committee of Wenzhou City, Policy Study Office of CPC Wenzhou Committee, WKU and ONEHRT Group. Renowned scholars from home and abroad were invited, including Mohan Munasinghe, former Vice Chair of UN Intergovernmental Panel on Climate Change, 2007 Noble Prize co-winner and an expert on international ecological industry standards study; Praful Sahl, Executive Director of Rockies Venture and co-founder of Principium Investments Company, Alexandra LaForge, Director of Strategic Programs at Investors’ Circle, an impact investment platform; Liu Manhong, Professor of the Research Center on Fictitious Economy & Data Science of Chinese Academy of Science (CSA) and an authoritative scholar on China’s venture investment and angel investment; Professor Luo Zhongwei, Director-General of the Small and Medium-sized Enterprises Research Center of Chinese Academy of Social Sciences (CASS) and a PhD student tutor and Professor Chen Lizhu from Peking University. The guests were also invited to deliver keynote speeches at the Forum. Cao Jiang, Dean of WKU Business School and Deputy Dean of Kean University Business School, also attended the round-table salon.

Impact investment refers to the investments made into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return. Impact investment focuses on the fields such as environment, medical care, education, public undertakings and underprivileged groups. The Forum also attached special attention to the phenomenon and trend of female entrepreneurship.

The aim of the Forum was to jointly establish a trans-regional and cross-sector platform for dialog by uniting international impact investment community and experts and institutes focusing on female entrepreneurship through various forms of activities. Keynote speeches delivered by distinguished guests included The Connotation and Development Tendency of Impact investment, Impact investment and its Potential in China, and Why Investing in Female Entrepreneurs. The topics for round-table discussions included The Importance of Impact investment at the Early Stage, Impact investment and Charity and so on. Yuanchuang Fund, the first impact investment fund, was also initiated at the Forum.

Phillip Connelly, Executive Vice Chancellor at WKU made the welcoming remarks. He, on behalf of WKU and Kean University, expressed his welcome to all attendees of the Forum. According to him, the Forum was the one that could bring all important values. He hoped that the Forum could allow participants to learn the most knowledge or have the greatest gains in the shortest possible time. Dr. Holger Henke, Vice Chancellor for Academic Affairs at WKU, introduced the university to the attendees.

CQ1C5571-2                  CQ1C5595-2

Ying Qiheng, President of ONEHRT Group, said it was a great honor to be with all distinguished guests and friends in Wenzhou, a place full of the enthusiasm for entrepreneurship. As Wenzhou people are all over the world, their entrepreneurial spirit and dedication to work have also been brought to the rest of the world. The Forum was of great significance as it allowed more foreign friends to get to know Wenzhou.

In the end, Yuanchuang Fund, the first impact investment fund, was initiated by Liu Manhong, Phillip Connelly, Chairman of Wenzhou Federation of Humanities and Social Sciences Pan Zhongqiang, Director of the Decision-making and Consultancy Office of Wenzhou CPC Committee Ni Kaomeng and Ying Qiheng together.

 

 

Highlights of the Forum

 

Subject: The Connotation and Development Tendency of Impact investment
Speaker: Mohan Munasinghe, former Vice Chair of UN Intergovernmental Panel on Climate Change, 2007 Noble Prize co-winner, expert on international ecological industry standards study.

CQ1C5630First of all, I would like to share with you a wonderful life recipe: Making money first, then do something nice and good, and be satisfied at last. The first one is an economic goal, the second is a social environmental goal and the third is a personal goal.

I think everybody knows how to make money, so today I would like to focus on the second and third goals and give suggestions accordingly. I hope sustainable development and continuous life progress could be achieved in this way.

Greenhouse gas emissions have witnessed a significant increase during the past 200 years. The emission level in 1850 was within the safety net whereas in 2016, the emission has reached a very dangerous level. With temperature increase, the sea level has risen by 18 mm. If the course were allowed to continue, at the end of this century, we would face an environment with a temperature increase of at least 2-3 degrees Celsius and an average sea level raise of 50 cm. Moist places would be more moist whereas dry places would be drier, leading to a series of problems. Great changes would take place in the climate system and would impose serious dangers on human activities.

I would like to share with you my personal experiences, which is also my understanding of sustainable development. For a man, this triangle represents his or her career, health as well as families and friends. Families and friends are the equivalent of society and health stands for environment. The development of each person and that of society are interconnected and integrated, complementing each other. It is important for a person to strike a balance, which also applies to society. I hope everybody can do more good deeds as they can guide us to our third goal – the fulfillment of a sense of achievement. Last but not the least; it is true that we are facing a severe reality. But meanwhile, we are blessed with the opportunities through which we can advance social development in a more integrated and interconnected way. Therefore, I hope the Forum could make its unique contributions to the sustainable development in the 21st century.

I would like to end with a Sri Lankan poem as a present to you all. If it is translated into English, it means favorable weather is wished for, rich harvests for farmers are wished for, happiness and health for people are wished for and a nicer place for the earth is wished for.

 

 

Subject: Impact investment and its Potential in China
Speaker: Liu Manhong, Professor of the Research Center on Fictitious Economy & Data Science of CSA, authoritative scholar on China’s venture investment and angel investment.

CQ1C5705The impact investment I want to talk about is actually different from normal investments. It is different in many ways.

First, it is different from traditional charity in terms of giving. This is because while doing something useful to society, we still pay attention to investments and returns. The difference lies in teaching one to fish or giving him fish. It can be said that such investment model revolutionizes traditional charitable deeds.

Second, such investment is different from VC and PE, that is to say, impact investment is not like traditional angel investment and venture investment. Impact investment has three bottom lines, which are economic returns, social benefits and environmental benefits.

Third, though a lot of people make social impact investments, part of the nature of impact investment is like the nature of VC and PE. What we are investing are not ordinary companies, but the ones with innovative ability.

 

 

Subject: The Achievements and Experiences of Investors’ Circle
Speaker: Alexandra LaForge, Director of Strategic Programs at Investors’ Circle

CQ1C5730-2My speech is mainly about how to build links and set up projects and the way to integrate angel investments and social benefits via impact investment.

In the 1990s, the concept of impact investment had just emerged. Only a small proportion of wealthy people used their own wealth to invest in some small-scale projects to promote social development. However, today, we have more than 400 angel investors in the global angel investment alliance.

Impact investment became the mainstream in 2007. The highlights of the investments of the alliance include: First, we have 200 angel investment groups. One third of the rest are members of early investment, venture investment and foundations. In other words, we have various investment sources and projects. And our members are all around the globe.

Moreover, our members are not limited to a certain field as they come from different enterprises and are an integration of social and environment benefits. The investments we have made up to now have exceeded 30 billion US dollars with our projects being all over the world, bringing in the annual revenue of 500 million US dollars in five years.

We believe that among all business models, problems can be solved by the pursuit of economic benefits by entrepreneurs and the integration of environmental factors and social benefits. We hope that the way we solve problems can be made into a sustainable business model through our investments. Clean energy or medical industry, for instance, is a field where impact investment is very appropriate. For some other projects, environment and social benefits could be increased through the guidance of our investments.

 

 

Subject: Why Investing in Female Entrepreneurs
Speaker: Praful Shah, Executive Director of Rockies Venture Club and Chairman of the Consultancy Committee of Principium Investments Company, both US-based companies.

CQ1C5771-2In fact, I have invested in over 50 companies and I believe that investments are likely to generate returns as long as they are driven by good motivations. Among all the companies that I have invested in, the majority were founded by female entrepreneurs.

For investment projects, we mainly focus on their education, selection and delivery processes. Of over 1,000 project offers, we selected 85 out of them as potential targets before further selecting out another 16 as the final investment targets. Undoubtedly, the choice we made was based on our own evaluation, including our preferences for risks. Up to the education stage, we may give our entrepreneurs some basic knowledge training such as what VC and Angel Wheels are exactly.

As we examined the profit margins of the top 1,000 companies that were successfully financed, we discovered that in most cases the ROIs of those led by female executives are higher than those with rather monotonous executive team. Besides, compared with the performance of S&P 500 companies, the ROIs of the companies with female leaders among the top 500 are way above the average level. Actually female leaders contribute to 35% and even higher percentage of revenues of a company. It is also the case for The Fortune 500 where those with female executives enjoy rather high returns.

If you take a look at the renowned list of “the Richest Women in the World”, you will find 8 Chinese are up in the rank, with whom I have reached out and had a conversation. Actually female employees may help save cost while staying highly dedicated. They usually surprise the investors with higher-than-expected performance.

 

Subject: A Shift from Seeing Profits to Solving Social Problems
Speaker: Xu Yongguang, Vice Chairman of China Charity Alliance and President of Narada Foundation (Video)

CQ1C5744I’ve recently designed a target board for Chinese enterprises where I found that most of them only score 0, 1 and 2 and even miss the target. These underperforming enterprises are actually heavy polluters and culprits of countless social issues. Apart from these enterprises, there are also some conscientious Internet, high-tech and environmental-protective ones who score 7 and 8 as technological innovation enablers. For those who score 10, I believe that they are capable of grabbing the rigid demand and solving pain points of the society as a force that exerts social impacts where they are needed. We need more investors and entrepreneurs who pay attention to our social problems and get people together.

There is a growing need for China impact investment and social enterprise development. A major reason behind the big room for development is that some departments in service sectors, particularly those associated with public services suffer from serious undersupply problems, which is answered with the supply-side reform by the Central Party Committee. These under-supplied areas are represented by elderly care industry, which measures a mere RMB 500 billion market size for now and is expected to reach RMB 8 trillion in 2020 and even RMB 30 trillion in 2030, as well as education, medical care, environmental protection, organic agriculture and safe food production industries, all of which present a considerable room for investment and service growth. Therefore, in my view, though China is the second largest economy in terms of business, the country is still flawed with numerous social issues awaiting to be solved, some of which are what the government is good at and some are not. However, profit-seeking enterprises tend to ignore the problems. I hope that more investors and entrepreneurs can be brave enough to shoulder social responsibilities and make more impact investments and social investments.

It is well-proved by cases across the globe that social responsibility investment not only deals with social problems but also contributes to a sound economic report, especially by cases in the US, Japan and the UK. I hope that Chinese investors and entrepreneurs can stay vigilant with the global trend of development and shift their focus from seeing profits to solving social problems, which actually can be practiced by making profits by pursuing a moral course while still coping with social problems. In this way, I believe that China will be the greatest country in terms of impact investment and social enterprises within five years.

 

 

Subject: Specific Opportunities for Impact Investment in China
Speaker: Cao Jiang, PhD in Finance from Temple University, Dean of Business School, Wenzhou-Kean University, and Deputy Dean of Business School, Kean University, US.

CQ1C5793Nowadays, the field of investment is experiencing a round of “asset shortage”, i.e. lack of fine assets and positive investment method.

Though impact investment may generate good returns, it must be kept in mind that there is no such thing of low-risk high-return investment. But the risk can be minimized by implementing some policies in the field of impact investment.

First, focus on green economy and environmental protection. There are cases like photovoltaic companies and you are aware of how they perform nowadays. Owing to the change of policy, a low-risk enterprise can turn into a high-risk one overnight, typically represented by photovoltaic companies which have suffered a policy crisis since 2010 and countless ones went bankrupt.

Second, lift those in the bottom of a pyramid out of poverty.

Third, promote green agriculture.

Fourth, focus on technological innovation-based enterprises that are related to environment protection.

Polices of local governments at various levels could be used in these aspects. Ever since the 18th CPC National Congress, in particular, it has been a very unique development opportunity for impact investment. The Chinese government is generous in terms of investment. While they have capitals, they hope these investments could generate returns and impacts as well. While a lot of money cannot be spent, they dare not waste it on investments. Therefore, if you have a good project that can bring about public benefits, for government officials and departments, they are willing to make such investments through various ways like PPP. At that time, President Hua of ONEHRT Group realized that impact investment had a great potential in China if we could do this together.

On the other hand, China’s lots of SMEs are generally small in scale. Compared with the US, the obstacles for women are less and their social status is higher. It is easier for females to do impact investment.