YPO’s 2019 Global Leadership Survey revealed that young business leaders overwhelmingly believe business is a force for good. Of the CEOs surveyed, 57 per cent want their business to make a positive difference, 49 per cent want to create jobs and prosperity for people, and 43 per cent want to teach/mentor others.
Moreover, reducing waste and having an environmental impact were key focal points for participants in Asia (44 per cent), Europe (44 per cent) and Africa (43 per cent). The survey was conducted 23 December 2018 through 4 January 2019 with more than 2,200 CEO respondents.
For additional perspective on these findings, YPO concurrently surveyed more than 1,800 future leaders, people ages 18-31 with at least some college education, to see how their thoughts on these same topics compared to those of the current stewards of business. This group also overwhelmingly agreed (92 per cent) that the purpose of business is to have an impact on society beyond pursuing profits and wealth.
A Shift in Mindset
The survey results showed a remarkable trend as compared to what people used to think of business and investment.
Traditionally, impact investment has not been regarded as cool. People thought that making money and making a positive impact on the world did not match. However, as the YPO global survey has shown, the younger generation of entrepreneurs have a more socially responsible mindset. As such, the businesses they are starting, and want to work for, tend to fall into the category of making a social impact besides making a profit.
In the area of investment, social impact investment can be an alternative way to do good. This is no longer a goal just for dreamers to achieve. If the company has a solid business model, a strong team and is run well, it can both generate revenue and return on investment for investors.
The Business Case for Social Impact Investment
“We have 90 angel investors in the Angel Investment Network Indonesia or ANGIN, and half of them care about creating an impact. So, we are driven by the interest of our members to invest in social enterprises or impact oriented organisations,” said David Soukhasing, managing director of ANGIN.
“We are strong believers that social enterprises are factors of change. And we also believe that the social aspect enhances the business instead of slowing everything down. But we are still investors, not philanthropists or NGOs, so we will look at the social enterprise from the business side – the investment case has to be strong,” added Soukhasing, who was a speaker at the ASEAN Angel Alliance Summit in Kuala Lumpur.
“The business must be able to track their impact, for example achieving certain sustainable development goals or SDGs. Intentionality is also very important. The social enterprise must intentionally create an impact.”
Soukhasing explained that labels were not so important. For instance, there are grassroots organisations that do work to produce a social impact, but they do not call themselves social enterprises and they are not familiar with the SDGs. However, it is very important that they find a way to generate revenue and be self-sustaining.
He further added that many of these social enterprises operated in places with a lot of friction, which is also due to the nature of their work. They have to be able to handle the additional difficulties faced. Sometimes because of these difficulties, the business model is not as scalable as investors want it to be.
“Also, if you want to be true to your impact in the long term, you need to track it. Then, whatever happens in your business, you can still be true to your mission and your impact,” said Soukhasing.
“Many people criticise social enterprises as something for hippy people and idyllists. But we can only prove them wrong with our own successes. It is an alternative model for development, and it will work if we have a concrete case.”
So, if you want to set up your own social enterprise or looking to invest in one, you have to make sure it has a workable business model, a strong team and good implementation. Sustainability and scalability are also important aspects to look into as well.