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Tokyo Social Ventures : a Venture Philanthropy Model

For SEforum 2007 March 31, 2007 Ken Ito, Director Tokyo Social Ventures

Tokyo Social Ventures

1. Tokyo Social Ventures – a Venture Philanthropy Model •

Mission Tokyo Social Ventures aim to support social ventures which provide innovative solution to social issues, through provision of financial resources and functional management expertise. SVT also aims to withdraw the evolution of the community and increased capability of individuals who committed to the social innovation and change.

•

Goals & Objectives (1) To support social ventures in finance and management capability by utilizing methodology of venture capital (2) To educate SVT partners to increase their capability and knowledge on philanthropy (3) To conduct research on business model of social venture (4) To promote information on social venture to community

SVT Pursue to Support Social Entrepreneurship

Tokyo Social Ventures

2. SVT’s Objectives – Two Outcomes • Incubation of “High Leverage” innovative social ventures - Innovative business model which can leverage limited resource - Improved management capability of non-profit organization - Sustainable value creation to beneficiary - Social impact in the community – “Systemic Change”

• Personal growth of SVT partners - Provide opportunity for personal growth - Discovery of self-value through volunteering as a professional - Self-realization by contribution to a solution to a social issue - New lifestyle as a engaged philanthropist

SVT focus on “High Leverage” innovative social ventures and creation of new lifestyle as engaged philanthropist

Tokyo Social Ventures

3. SVT : Organization Profile Name :

Tokyo Social Ventures

Legal Status :

Voluntary Partnership

Affiliate Relationship :

Social Venture Partners from 2006

Year Founded :

in 2003

Representative :

Hideyuki Inoue, Founder

# of membership :

40 (as of March 2007)

Unit Annual Contribution :

Yen 100,000 (US$ 850)

Annual Budget :

US$ 36,000

# of Staff :

1 Part time staff

# of Investee :

5 organizations

Average Size of Investment :

Yen 900,000 (US$8,000)

Accumulated Investment :

Yen 3,400,000 (US$30,000)

Tokyo Social Ventures

4. Tokyo Social Ventures as a SVP Affiliate • Tokyo Social Ventures(SVT) joined Social Venture Partners(SVP) as the first international affiliate in Asia in Oct 2006 • What is Social Venture Partners? - A venture philanthropy organization started in 1997 in Seattle, Washington - 25 affiliate organizations with 1,200 partners in North America - Accumulated investment : US$19MM in over 100 non-profit - SVP affiliate share the common mission as (1) Educating individuals to be well informed, effective, and engaged philanthropists (2) Investing time, expertise, and money in innovative nonprofits to collaboratively strengthen their organizations.

Leverage SVPI’s Experience and Know-How on Venture Philanthropy

Tokyo Social Ventures

5. SVP Model – Comparison with Traditional Foundations Tokyo Social Ventures share SVP’s venture philanthropy model – to creates systemic social change by supporting organizational growth of non-profit and personal growth of SVT partners through providing the resources which social ventures are in need of. Traditional Foundations

SVP / SVT Model

• Provide funding but not management know-how

• Provide funding and management expertise

• Usually single-year commitment

• Mid-long term commitment with exit strategy

• Project-based and does not support management infrastructure • Low commitment • Not output-based. No clear definition of “exit” strategy • Does not share risks

• Investment in management capability and infrastructure • Measurement of mission achievement and performance • High commitment • Share the risk

Multi-year Commitment with Investment in Organizational Capability

Tokyo Social Ventures

6. SVT Model – How it works Tokyo Social Ventures

Social Venture

Social Venture A Social Venture B

Funding Capacity Building

Membership Fee

Team A

Professional Volunteer

Team B

Fin. Return

Fin Return

Social Venture C

SVT Partners

Team C Voluntary Partnership

Learning Opportunity

• Grant making cycle : once a year to invest in innovative non-profit organization • SVT provide funding to investee organizations with a unit of Yen 1,000,000 yen/year with minimum 2-3 years of commitment • SVT also provide capacity building training and management support to the investee Engagement to Investee : Provide Funding and Capacity Building Training

Tokyo Social Ventures

7. Selection Criteria to Evaluate Investee SVT’s Investment Criteria (1) Social Impact Significant impact as a solution to a social issue (2) Innovative and Sustainable Business Model Business model which generate income flow to support business Replicatable business model which enables horizontal scale-out Unique business model which bring innovation to the society (3) Compassion to attract external resource Make external resource internal by emphasize people’s mind (4) Matching with SVT’s functional expertise Matching is important to make best use of our resource Development stage of investee is also considered (Start-up or Scale-up)

Identify High Potential Seeds for Social Innovation

Tokyo Social Ventures

8. Investment Cycle - From Investment to Exit (Take Off) 6 month

1- 3 years

Capacity

Building

Applicati on

Investment

Manage -ment Support

ReInvestment Decision

Evaluation on Performance

Capacity Assessment

Exit (Take Off)

SVT’s “Service Menu” 1. 2. 3. 4. 5.

Strategy Financial Planning / Accounting Fund & Revenue Development Organization Development Board and Governance

6. Information and Technology 7. Performance Evaluation 8. Business Expansion 9. Publicity 10. Referral to resource person

Management Support for Enhanced Organizational Capability

Tokyo Social Ventures

9. Capacity Building Examples of Capacity Building Trainings Area of Improvement

By Whom (SVT Partner)

Description of Trainings

Publicity

Journalist in a National Newspaper

“How to Write a Effective Press-Release” Workshop to Increase Media Exposure

Fund Raising

Certified Fund Raiser in Gov Aid Agency

Fund Raising Strategy Planning Workshop / Progress Monitoring and Advise

Financial Planning

Financial Analyst in a Securities Company

Profitability and Pricing Analysis / Annual Financial Plan Creation

Strategy

Ex-McKinsey Venture Capitalist

Strategy Building Business Plan Analysis

Accounting Process

Business Process Analyst

Configuration of Package Accounting Software/ Accounting Process Analysis

Capacity Training Utilizing Partner’s Business Expertise

Tokyo Social Ventures

10. SVT Investee Profile (1) “Florence” 1. “Florence” - Child care service for infants with slight sickness Year of Establishment : 2005, Annual Sales : Yen 30MM Business Model : Child care services to infants who has slight sickness or fever Background : Nuclear families in metropolitan Tokyo has critical needs for such service especially in case both of the parents work in a full time basis (Only 2% of public nursery provide care for infants with sickness) Income Source : Membership fee costs $50-$100 a month and a member is eligible for on-call pickup of children and nursery service with medical consideration What’s Innovative about them? : To fill the gap between government/ private nursery and real needs of young families SVT Support : Building business strategy, financial planning, publicity and provision of IT facilities

Helping Working Mothers to Keep Themselves on the Job

Tokyo Social Ventures

11. SVT Investee Profile (2) “Multi Cultural Center Tokyo” 2. Multicultural Center Tokyo - Education and Information Service for New Immigrants (Established in 1995) Business Model : Provides tutoring and study support to middle school age youth to prepare high school entrance exam Background : Foreign nationals, especially “new comer” encounter issues to adjust their life upon immigration. MCT entering to public high school is very important gateway to enter Japanese society Income Source : Tuition What’s Innovative about them? : Focus on middle school age youth’s integration to Japanese society SVT Support : Organizational development, NPO Certification, publicity and marketing.

Support New Immigrants for Integration

Tokyo Social Ventures

12. SVT Investee Profile (3) “Bilingual Deaf Education Center” 3. Bilingual Bicultural Educational Center for Deaf Children (BBED) (Established in 2001, Annual budget : Yen 17MM) Business Model : Schooling for kindergarten and primary school age children with hearing impaired Background : No Deaf school in Japan use sign language as a medium in education. BBED is established to realize the education by sign language, which Deaf children has no handicap to communicate with Income Source : Tuition, Subsidize from Government What’s Innovative about them? : New teaching method using sign language as a primary language with emphasis on development of learning ability SVT support : Financial planning, fundraising and organization development

Provide Education by Sign Language for Deaf Children

Tokyo Social Ventures

13. SVT Investee Profile (4) “Madre Bonita Project” 4. Madre Bonita (Beautiful Mother) Project (Established in 2000, Annual budget : Yen 15MM) Business Model : Provide physical self-care program for after-childbirth mothers, which is not provided by national healthcare scheme Background : Medical healthcare is provided to infants and pregnant women but postpartum care is not provided. Madre Bonita is to fill the gap between needs and supply of such public services What’s innovative about them? : Identified postpartum care as a critical part Of healthcare issue SVT’s support : NPO certification, Business model patent registration, Organization development

Addressing Critical Needs for Postpartum Healthcare for Mothers

Tokyo Social Ventures

14. Forming “Social Capital Market” In order to establish “Social Capital Market” we need to facilitate these components:

z

z

z

z

z

Clear Performance Measurement

z

Legal Status

z

Capability for Risk

• Recognition of Social Enterpreneurship

Assessment / Credit Rating

• Integration with CSR Effort

Expertise to Support Scale-Out-Stage SEs

• Win-Win Relation with Core Business

Financial / NonFinancial Disclosure Increased Total Market Size

Fund Provider

Intermediary Organization

Investee

z

“Social Capital Market” make the funds flow from market to high performing social ventures Fair market competition stimulate the motivation for SEs to perform better – to attract larger size of funding for increase their coverage : could be a solution for mid-stage SEs Mobilize Capital Market for Social Innovation

Tokyo Social Ventures

Thank you very much! If you are interested to know more about us, Please contact Ken Ito at [email protected]