From 2007-2017, Development Finance Institutions (DFIs) and Private Impact Investors (PIIs) such as family offices, corporations, foundations, and development banks have deployed more than USD 12 billion of impact capital across Southeast Asia (GIIN, 2018, Landscape for Impact Investing in Southeast Asia). As the pool of impact-driven financiers continues to diversify and grow, how do approaches to risk vary across these actors and emerging markets in Asia.
What do financiers consider when determining their tolerance for risk? What are the tools and strategies available to help mitigate financier’s concerns, particularly for entrepreneurs implementing perceived high-risk projects or technologies. We asked a panel of both financiers and entrepreneurs to share their insights and respond to these questions and further discuss on different perspectives and strategies to mitigate risk.
Be a dynamic entrepreneur with a flexible business model to adapt to the changing environment.
Social Enterprises should know their market, map all the stakeholders and map their pitch clearly, according to Peter Crowhurst, CEO at the British Chamber of Commerce in Myanmar. Adding to that Dondi Hananto, Partner at Patamar Capital explained: “Risk consideration always comes with return expectations. Financiers will always ask you for scalability potential. How are you going to grow?” And it’s ok to say that you don’t know yet.
Have the right data to have someone helping you with risks.
No historical mapping means you need to create the track record. It’s not about the current risk. It’s about the future risks.
According to Nathalie Risteau, Co-founder and Director of Mandalay Yoma Company Ltd., there are 3 essential components in businesses: strong process, proper planning & data collection as data collection could be used to size the demand and predict the results.
Business plan: is it credible or incredible
Be realistic. Data numbers is what drive businesses no stories. You need to distinguish between facts and assumptions.