In response to the innumerable concerns that have engulfed our world, leaders now choose to angle investments towards projects that bring positive social change over those that merely double wealth. Although developing countries have been slow in recognizing the long term benefits of impact investing, many companies have been making strides in creating opportunities for these micro-stage firms. Such a company is Lanka Impact Investing Network (LIIN).
LIIN was founded by Chandula Abeywickrema in 2015 and is the first ever firm in Sri Lanka to dabble in helping transfer private equity to social causes in the country. After having spent around thirty-five years in the finance and banking sector, Abeywickrema was determined to take the initiative to provide assistance to firms that were stuck in the funding stage due to low profit return promises.
Diinisider spoke with Abeywickrema about LIIN’S journey and future goals.
Diinsider: What made you take the initiative to address the financial gap in funding social enterprises in the country?
Abeywickrema: During my time in the finance sector, I mostly specialized in retail and development banking. In addition to serving on boards of other international and national financial institutions, I am associated with Asia’s largest microfinance network, Banking with the Poor (BWTP).
As I continued to pioneer initiatives for micro-stage firms, I recognized two things. One is that there is an urgent need to develop entrepreneurship space because they can best trigger the benefits of economic development in less developed areas. Two, the biggest challenge these firms face is in the form of the high price of debt, often forcing them to retreat at the first stage of funding. Since even private equity is not an option since it favors the corporate sector, I embarked on my mission to create a vehicle to bring Sri Lankan investors to projects that were passionate about economic empowerment.
Diinsider: What are the other forms of barriers, apart from financial ones, for these firms?
Abeywickrema: In most cases, these firms can be seen lacking a proper business model so investors are doubtful about their ability to efficiently manage their resources, finances and business development. Another problem is that, due to their small size, these firms have minimum connection to the supply and value chain. As a result, they end up delivering poor quality products and having a hard time finding markets to sell their products.
Lanka Impact Investing Network founder Chandula Abeywickrema
Diinsider: Lanka Network is Sri Lanka’s first impact investing firm. Were you able to get a significant response from investors and entrepreneurs in need of investment, initially?
Abeywickrema: Definitely. Initially, the people were unaware of the concept of impact investing and what it entails. Once we set up Ath Pavura, people began to know more and our investors grew passionate about the projects we chose to empower.
Ath Pavura is the first TV reality show for social entrepreneurs to showcase their projects in front of impact investors. In our first season, we launched 44 social enterprises and now the show has become the number one watched program in the country.
The entrepreneurs are selected on the basis of the sustainability of their business model, the extent of the social impact they could be creating, and most importantly, their level of passion and commitment to take the business to higher levels.
Diinsider: After the initial selection, how are the entrepreneurs groomed to be prepared to meet investors?
Abeywickrema: After the completion of the initial selection, the entrepreneurs go through pre-investment grooming, post-investment hand holding, and mentoring. Currently, we have around 20 Sri Lankan investors who are willing to invest in projects that have been picked from Ath Pavura. We are always on the lookout for more High-net-worth individuals (HNWIs) in the country who are interested in sponsoring such causes.
Lanka Network is also in a partnership with Social Enterprise and Lanka Social Ventures. Both are small organizations, but they have a pioneering initiative towards developing social entrepreneurs. We work to help them look after entrepreneurs who are in the incubation stage by providing training and guidance. Once the firms have reached the development stage, we prepare them to meet investors.
Diinsider: What are your goals for LIIN in the future?
Abeywickrema: Recently, we signed with UNDP to set up two private equity funds, the Social Entrepreneur Fund (SEF) which would cater to funding from a range of $5,000-$50,000 and, the Social Impact Capital Fund (SICF), which has a ticket size of over $100,000.
The ulterior aim is to bring forth the next generation of landscape financial transformation in the country. It is imperative to create a platform that would cater to the needs of the large number of micro and medium stage firms in Sri Lanka as well as to invite more high-net-worth individuals into the country to join in the good work. This is because economic development that starts at grassroots level eventually transcends towards all sectors and segments of the society, helping eradicate the marks of inequalities.
For future generations, we have partnered with two universities to cultivate the knowledge of impact investing among the Sri Lankan youth. As technology continues to threaten to make more and more job sectors redundant, it is our duty to guide our youths towards becoming job creators and not job seekers.
One day, we hope to see a world where every entrepreneur aspires to start an impact investing enterprise.
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