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Vietnam Impact Investment Landscape Report

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Acknowledgement

Centre for Social Initiatives Promotion would like to express our gratitude for generous supports from

the Canadian Embassy in Vietnam during the production of Vietnam Impact Investment Landscape

Report. We also treasure the cooperation of policy makers, impact enterprises, impact investors,

development agencies who have contributed your invaluable information about the impact investing

ecosystem in Vietnam.

This report used data and information from papers issued by the Organization for Economic Co-

operation and Development, the Global Impact Investing Network, Asia Venture Philanthropy

Network, United Nations Development Programme in Vietnam, National Economics University. CSIP’s

research team could not complete this report without your continuous efforts in supporting the

development of social ventures ecosystem in Vietnam and in the World.

The analysis and the view addressed in this report are the work of CSIP and do not necessarily reflect

the views of the Government of Canada.

Research team: Pham Kieu Oanh, Hoang Le Trang, Phan Duy Quang

August 2019

Hanoi


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Contents

I. Background of the report 4

1.1. Objectives 4

1.2. Methodology 4

1.3. Terminology 5

II. Global impact investing snapshot 9

2.1. Overview of impact investing in the World 9

2.2. Global impact investing ecosystem 11

III. Vietnam’s impact investing snapshot 15

3.1. Overview of impact investing in Vietnam 15

3.2. Impact investing ecosystem in Vietnam 17

3.3. Key challenges of impact investing ecosystem in Vietnam 18

IV. Findings 19

4.1. Finding 1: There is a mismatch between current practices of impact investing

activities and the actual capital demands and capability of impact making

business in Vietnam 19

4.2. Finding 2: Lack of pipeline for impact investment 21

4.3. Finding 3: Lack of investments in early stage impact businesses 23

4.4. Finding 4: Gender lens Impact Investment 27

4.5. Finding 5: Lack of key players among ecosystem enablers to form a well-

functioning impact investing ecosystem 29

V. Recommendations for Development Agencies 32

5.1. Roles of Development Agencies in the impact investment ecosystem: 32

5.2. Recommendations 33

5.3. Further actions: 34


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I. Background of the report

1.1. Objectives

As a low-medium income country, Vietnam faces economic, social and environmental

challenges that cannot be addressed solely by Official Development Assistance flows. In order

to mobilize all resources for socio-economic development, the country is exploring how to use

public resources to facilitate private sector investment towards development impact. This

report seeks to deepen understanding of the impact investment ecosystem in Vietnam and

and potential areas for intervention by multiple actors.

The Vietnam Impact Investment Landscape Report is prepared by the Centre for Social

Initiatives Promotion for the Canadian Embassy in Vietnam. The objective of this report is to

provide a deeper understanding of the impact investment ecosystem in Vietnam and exploring

Canada’s potential engagement in this area would contribute to Canada’s strategic planning

efforts in the country.

In this report, the following key questions regarding Vietnam’s impact investing landscape are

analyzed:

● What weaknesses exist in the impact investment ecosystem that result in a dearth of

investable impact enterprises and what interventions/measures can help?

● Why is there a considerable financing gap for early stage capital, and what

measures/interventions (e.g. venture debt, support to impact angel investor network)

could help?

● What opportunities/challenges exist for gender lens impact investing in Vietnam?

1.2. Methodology

The research team has taken an impact imperative approach while studying about the impact

investing landscape in Vietnam and in the World. Following this approach, the research team

would not only carry out a study about impact investment but put it in a large spectrum of

financing tools for impact making businesses. The purpose is to examine the role of impact

investment in the whole spectrum and figure out whether this financing tool has effectively

addressed social challenges as well as be able served the demand of capital from a wide range

of Vietnamese impact enterprises.

Moreover, a wide range of stakeholders in the development and business sectors have been

involved during the making of this report. The participation of these stakeholders reflect a

belief of the research team that the impact investing ecosystem should not be separated from

the movement of conventional private investment with financing tools such as private equity,

private dents, real assets going alongside with business development supports… Recently, the

development of financing schemes for start-up would also provide good options for social

purpose business while considering about funding for their operation. In fact, those tools

could be good sources of funding and support for enterprises while a mature impact investing

ecosystem is being built.


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In order to meet the objective of the report as stated above, the methodology applied by the

research team is a combination of desk study and gathering market insights from a facilitated

consultative workshop with the participation of key stakeholders in Vietnam’s impact

investing ecosystem.

● The desk study covers reports about impact investing landscape and summarizes

relevant theories and statistics to have a brief overview of impact investment situation

in the world in general and particularly in Vietnam.

● A mapping of current key stakeholders in impact investing ecosystem in Vietnam was

used to better understand and reflect the current impact investment landscape in

Vietnam in the global market, as well as to identify target audience for the impact

investment consultative workshop.

● The consultative workshop was organized in June 2019 in Hanoi. The objective of the

workshop is to collect insights from key stakeholders in Vietnam’s impact investing

ecosystem regarding challenges as mentioned in the three key questions of the report

(see section 1.1. Objective).

1.3. Terminology

Since impact making businesses and impact investing are still a new topic for studying, there

are only a few mutual definitions and terminology agreed upon among researchers.

Consequently, different terms with interchanged meanings are commonly used across papers

of the topic. In this section, we will introduce terms which are frequently used in the

referenced literature of this report and the definitions chosen by the research team as a basis

of understanding for this report.

Impact Investment, Social Investment and Social Impact Investing

According to the Global Impact Investing Network (GIIN), impact investments are investments

made with the intention to generate positive, measurable social and environmental impact

alongside a financial return. This definition is widely recognized in reports and papers about

impact investing across the World. GIIN also defines impact investing practices following 4

core characteristics:

● Intentionality: An investor’s intention to have a positive social or environmental

impact through investments is essential to impact investing.

● Investment with return expectations: Impact investments are expected to generate a

financial return on capital or, at minimum, a return of capital.

● Range of return expectations and asset classes: Impact investments target financial

returns that range from below market (sometimes called cessionary) to risk-adjusted

market rate, and can be made across asset classes, including but not limited to cash

equivalents, fixed income, venture capital, and private equity.

● Impact measurement and management: A hallmark of impact investing is the

commitment of the investor to measure and report the social and environmental


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performance and progress of underlying investments, ensuring transparency and

accountability while informing the practice of impact investing and building the field.

However, in actual practices, impact investments’ portfolios are highly shaped by the interests

of investors, who are giving priority to financial returns rather than social impacts. This

phenomenon poses a big question on whether impact investing deals actually deliver positive

social, environmental and economic results (this issues would be further discussed in finding 1

of this report). Consequently, there has been a need for diversifying investments instruments

for making social impacts.

The Asian Venture Philanthropy Network (AVPN) has introduced the term social investment

which is defined as “a broad area wherein various forms of capital are structured in ways that

consider and value both financial performance and social value creation”1. Accordingly, impact

investment is considered a part of a larger umbrella of social investments2.

In 20153 , The Organization for Economic Cooperation and Developments provided a working

definition of social impact investment (SII).

Box 1. OECD Working Definition of Social Impact Investment

Social Impact Investment (SII) provides finance to organizations addressing social and/or environmental needs with the explicit expectation of measurable social and financial returns.

It is a way of channeling new resources towards the Sustainable Development Goals (SDGs).

OECD also presented the concept of the spectrum of capital that showed all types of

investments available for social and business sectors. They highlighted the tendency of

philanthropies and foundations who have traditionally focused on using grants and are now

including investment models which focus on financial sustainability alongside with social

returns. On the other end, mainstream investors have been increasingly moving from solely

seeking financial returns to achieving social impact alongside financial returns. This is a critical

trend that will influence impact investment in Vietnam in the next 10 years.

1 “Social Investment Landscape in Asia”, AVPN (2019)

2 “Making Sense of Impact investing in Asia”, https://avpn.asia/blog/making-sense-impact-investing-asia/

3 “Social Impact Investment: The impact imperative for sustainable development ”, OECD (2019)

https://avpn.asia/blog/making-sense-impact-investing-asia/


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Figure 1. The OECD Spectrum of Capital (2019)

At the middle of the spectrum, social impact investing covers both impact investment and

social investing (Note: social investing according to OECD is not aligned with the term social

investment of AVPN). Though two categories belonging to social impact investing both focus

on generating social impacts, there is still a distinction in which impact investments put a lager

aim at acquiring financial return at the market rate, while social investing requires return at

sub-market rate.

From research team’s point of view, the OECD working definition of social impact investment

and the Spectrum of Capital model are the most comprehensive and inclusive for analyzing

the current landscape of investing for social impacts. Therefore, this report would take the

social impact investment model as a basis for research.

Social Enterprises, Social Impact Businesses and Social Purpose Organizations

Since the intention of impact investments is to generate positive, measurable social and

environmental impact alongside a financial return, the targeted investees could be any entity

that creates both social impacts and financial returns in their businesses. Across literature on

impact investing, there are many terms used to describe these investees, however the scope

that those terms cover would be different.

The term enterprises or social enterprises are commonly used in the GIIN’s report: The

Landscape for Impact Investing in South East Asia when it mentioned about targeted groups of

impact investing deals.

The report Fostering the Growth of the Social Impact Business Sector in Vietnam released by

UNDP Vietnam and National Economics University (2018) used the term Social Impact


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Businesses (SIBs) understood as “organizations that have both trading activities and a

commitment to positively impacting society/environment as the two central tenets of their

strategic operations”. In the same report, SIBs are further defined to cover following types of

entities: social enterprise, social business, inclusive business, social impact start-up4.

AVPN (2017)5 used the term social purpose organizations which cover both non-profits and

social enterprises as investees of social investing activities.

In the context of Vietnam, businesses creating social impacts are very diverse in terms of legal

entity, organizational structure and business model (e.g. social enterprises, inclusive

businesses, cooperatives, non-profit organizations with business activities, for-profit

enterprises with social purposes, etc.). All of those entities should be considered the targeted

groups for impact investments. Therefore, in this report the term impact making businesses

or enterprises would be used and meant to cover all mentioned entities.

Gender Lens Investment

In the sector of impact investment, gender lens investment is growing to be a strong

influencing factor in deals making. The Government of Canada, on its website6, has provided

an understanding on gender lens investment as to “incorporate a gender analysis into financial

analysis to achieve better outcomes. Through the creation of financial products and vehicles

that reflect an understanding of the gendered nature of our world, innovators within the field

of gender lens investing have created a new set of investment opportunities”.

Sharing the same vision, GIIN (2018) provided a definition and framework to identify gender-

lens investable enterprises7.

Box 2: Gender lens investment (GIIN 2018)

Gender lens investment is investments made into companies, organizations, and funds with the explicit intent to create a positive impact on gender.

Gender lens investing comprises two broad categories:

1. Investing with the intent to address gender issues or promote gender equity, including

by:

● Investing in women-owned or -led enterprises;

● Investing in enterprises that promote workplace equity (in staffing, management,

boardroom representation, and along their supply chains);

4 “Fostering the Growth of the Social Impact Business Sector in Vietnam”, UNDP and NEU (2018)

5 “Social Investment Landscape in Asia: Vietnam”, AVPN (2017)

6 “A Canadian Approach to Innovative Financing for Sustainable Development”

https://www.international.gc.ca/world-monde/issues_development-enjeux_developpement/priorities-priorites/fiap_fsd-paif_fdd.aspx?lang=eng 7 “The Landscape For Impact Investing In Southeast Asia,” Global Impact Investing Network (2018)

https://www.international.gc.ca/world-monde/issues_development-enjeux_developpement/priorities-priorites/fiap_fsd-paif_fdd.aspx?lang=eng

https://www.international.gc.ca/world-monde/issues_development-enjeux_developpement/priorities-priorites/fiap_fsd-paif_fdd.aspx?lang=eng


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● Investing in enterprises that offer products or services that substantially improve the

lives of women and girls.

2. And/or investing using:

● A process that focuses on gender, from pre-investment activities (e.g., sourcing and

due diligence) to post-deal monitoring (e.g., strategic advisory and exiting);

● A strategy that examines and manages an investee in line with the investor’s mandate

and intentions with respect to:

- Their vision or mission to address gender issues;

- Their organizational structure, culture, internal policies, and workplace environment;

- Their use of data and metrics for the gender-equitable management of performance

and to incentivize behavioral change and accountability;

- How their financial and human resources signify overall commitment to gender

equality.

II. Global impact investing snapshot

2.1. Overview of impact investing in the World

GIIN in 2019 conducted its annual survey on 266 impact investors between January and

February 20198. The result shows that the surveyed investors are managing USD 239 billion in

impact investing assets9. The respondents are also expecting a strong future growth. During

2018, they invested over USD 33 billion into more than 13,000 impact investments while the

number would be up to USD 37 billion of more than 15,000 investments in 2019. The results

reflect 13% projected growth in the volume of capital invested and 14% growth in their

number of investments.

The impact investing market also attracts a diversified types investors including fund managers

(both for and not-for-profit), foundations, banks, development finance institutions (DFIs),

family offices, permanent investment companies, pension funds and other types of

organizations such as university endowments, non-governmental organizations, corporations,

community development finance institutions, cooperatives and social impact investment

wholesalers.

About the sector of investment, GIIN survey indicated that the assets under management of

respondents significant allocated to financial services (13% to microfinance and 11% to other

financial services; Figure 19), energy (15%), and food & agriculture (10%). While receiving only

10% of total value of investment, food and agriculture is the most common sector for

8 “Annual Impact Investor Survey 2019”, GIIN (2019). Note: this survey only represents a sample size of impact

investors, majority of whom is from US-Canada and European countries. There is still a lack of global data on impact investing. 9 According to GIIN, the total size of impact investing market could be up to USD 502 billion. See “Sizing the

Impact Investing Market”, GIIN (2019)


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investing, with 58% of respondents reporting some allocation to the sector. Similarly,

education accounted for just 4% of total assets under management but with 40% of

respondents having some exposure to it. Energy is also a common sector for investment, with

almost half of respondents indicating some allocation.

Figure 3. Allocation of impact investment capital to according to GIIN

Regarding the investing instruments and deal size, over one-third of total capital invested and

nearly 70% of transactions were invested by GIIN’s survey respondents are through private

debt. Public debt accounted for 16% of capital invested and 10% of investments, while private

equity accounted for 14% of capital invested and 6% of investments. The average deal size in

2018 was USD 2.6 million as provided by the respondents of GIIN’s survey.

Among the key findings according to the survey result, the most significant challenge facing

impact investors around the world is the lack of appropriate capital across the risk/return

spectrum. This also means that investors find it difficult to identify investment targets with the

risk/return profiles suitable within their existing portfolio. Moreover, the survey also showed

that within the impact investment portfolios, the most significant factor contributing to social

enterprises’ high level of risk is their own capabilities to execute and manage a good business

model. To address these challenges, survey respondents emphasized the importance of

government support in terms of tax or other incentives provision, which can help readjust the

overall risk/return balance of impact investment towards more favorable terms. In terms of

investees’ lack of business acumen, impact investors also highlighted the need for the

government to help build investees’ capabilities.


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About the future trend of impact investing, OECD (2019)10 suggested that technology and

gender lens investing are among the top key trends that would shape impact investing market

in the near future. As the report mentioned, the new technology movements such as fintech

products (e.g. mobile payment) and blockchain would make huge impact on the way investors

and investees connect with each other, thus have significant implications on impact investing

landscape. Meanwhile, gender lens investing is becoming more and more popular among the

financers for impact businesses. Approximately 70% of the respondents to GIIN’s Annual

Impact Investors Survey in 2018 indicated that they apply a gender lens to their investment

process.

2.2. Global impact investing ecosystem

In its 2015 report, OECD introduced the Impact Investment Market Framework. This

framework outlined the ecosystem of investors (supply side), investees (demand side) and

Enablers/Intermediaries.

Figure 2. The OECD Impact Investing Market Framework, 2015

Based on the OECD Impact Investing Market Framework, a mature and efficient impact

investing ecosystem is the one with all sectors are well developed. It must ensure that key

players of the ecosystem address the right social, environmental and economic needs of the

country. It also requires the ecosystem to consist of adequate stakeholders which can cover all

necessary functions of the ecosystem. Refers to the IIEF and other reports of GIIN and AVPN,

the research team grouped the entities in the impact investing ecosystem into three key

groups which are the demand side, the supply side, and the ecosystem enablers.

The following figure demonstrates the three key groups of stakeholders in the impact

investing ecosystem and their characteristics.

10

“Social Impact Investment 2019: The Impact Imperative for Sustainable Development”, OECD (2019), p.91


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Figure 4. Three key groups of stakeholders in the impact investing ecosystem

The demand side consists of entities, which are mentioned by OECD (2019)11 as social purpose

ventures or service delivery organization, and are in need of capital for financing their social

impact business. The demand side is a component of the market domain in the IIEF and may

consist of organizations of different categories: social enterprises, non-profit organizations,

social purpose organizations, for-profit businesses having social purposes (inclusive businesses

and CSR venture projects of big corporation may be counted) and cooperatives.

The entities in the demand side are key drivers in addressing social needs and thus are the

critical elements in the impact investing ecosystem. Also according to OECD in the same

report, the entities of the demand side may have varying financial needs due to their diversity

of geographical context, sectors and industries. Therefore, there is a need for a “resource mix”

to match the need of those ventures. OECD (2015)12 also emphasized the importance of

funding for the demand side in order to grow them into investment ready ventures.

The supply side is also an actor in the market domain of the IIEF and consists of institutions or

individuals who supply the financial capital to the entities of the demand side. They could be

both public investors – governments, multilateral development banks, development finance

institutions (DFIs), etc. – and private investors such as foundations, high net-worth individuals

and philanthropists, banks, pension funds, sovereign wealth funds and other financial service

firms and intermediaries. The table 1 below is an excerpt from the report “Social Impact

Investment: Building the Evidence Base” of OECD and lists out potential impact investors and

investment instruments in the ecosystem.

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“Social Impact Investment 2019: The Impact Imperative for Sustainable Development”, OECD (2019), p.67 12

“Social Impact Investment: Building the Evidence Base”, OECD (2015), p.35


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Table 1. Types of potential social impact investors

Types Summary and preferences Role

Public

National governments Governments focusing on outcome commissioning and public procurement from social enterprises

Grants, Social impact bonds

Development finance institutions (DFIs)

Including multilateral development banks (WB, IFC, ADB, etc.) and financial institutions owned by governments that source their capital from national or international development funds or benefit from government guarantees

Equity, debt, quasi-equity

Private

Philanthropic foundations

Invest endowments in projects, social enterprises and in developing countries

Equity, debt, grants, quasi-equity from seed stage and market building. Typical deal size (direct investment): USD 50,000 – 1 million

High net-worth individuals (angel investors included) and family offices

Invest own capital or capital of high net-worth individuals across a range of asset classes

Debt, equity

Dedicated impact investing funds

Funds with dedication of investing in impact enterprises. Usually, pool own capital with capital of high net-worth individuals, foundations and/or institutional investors into funds.

Equity, debt, quasi-equity, inventory finance and grants (usually very limited)

Venture capital funds Funds that target tech start-up group. Impactful start-up might also be benefited from these investors.

Equity investment

Private equity funds/ asset managers

Invest institutional and retail capital into private companies and funds. Often suitable for mature enterprises during their growth stage.

Debt, equity

Commercial banks Lend to small and large businesses Debt

Investment banks Invest in and/or arrange large transactions for institutional clients.

Debt, equity


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Tenor restrictions driven by capital charges are a constraint for on-balance sheet investments

Insurance companies Invest premium payments from policy holders to provide funding for future claims

Debt, equity

Pension funds Pension funds are established for purposes of providing benefits on retirement for specific groups of employees. Invest pension payments from policy holders to pay for future retirement benefits.

Equity, debt (often restrictions in some asset classes)

Sovereign wealth funds Pools of assets owned and managed directly or indirectly by governments and increasingly directed towards impact investments

Equity, debt

Source: Author, with reference to “Social Impact Investment: Building the Evidence Base”,

OECD (2015)

Although may not directly participate in impact investing transactions the ecosystem enablers

are critical actors in the impact investing ecosystem. They cover the activities in 5 out of six

domains in the IIEF. The role of the enablers is to create a favorable environment for impact

investing deals to be realized and success. The ecosystem enablers may consist of different

types of entities with different roles as stated in the table below.

Table 2. Types of potential ecosystem enablers

Types of entities Role

Financial intermediaries May include banks, wholesale investment banks, fund managers, stock exchanges and increasingly crowdfunding platforms. They create liquidity and facilitate payments mechanism in the market.

Capacity building organizations Including accelerators/ incubators, advisory firms, and networking and knowledge platforms

Policy makers The roles of policy makers are to create a favorable policy environment for impact investing. It may covers policies regarding financial markets, enterprises development and transaction regulations, etc.

Academic and research institutions Academic and research institutions play a pivotal role in raising awareness of the key stakeholders and the public on impact investing and social impact businesses

Source: “Social Impact Investment 2019: The Impact Imperative for Sustainable Development”,

OECD (2019)


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To give an example of a mature impact investing ecosystem, the United Kingdoms’ National

Advisory Board on Impact Investing (2017)13 has provided a vision for a well-developed

ecosystem in which the stakeholders should portrait the following characteristics:

● From the demand side: there is active social sector providing large potentially

investable pipelines

● From the supply side: there is high governmental social expenditure and a wide range

of investors and funds

● From the enablers: there are comprehensive governmental policies; the Social

Investment Research Council (SIRC)14 coordinates impact investing research efforts.

III. Vietnam’s impact investing snapshot

3.1. Overview of impact investing in Vietnam

GIIN also provided some interesting statistics regarding the state of impact investment in

Vietnam in its 2018 report “The Landscape for Impact Investing in Southeast Asia”.

Accordingly, within 10 years from 2007 to 2017, at least 10 private impact investors (PIIs),

mostly fund managers, have deployed more than USD 25 million through 23 deals since 2007.

Six Development Finance Institutions (DFIs) have cumulatively deployed more than USD 1.4

billion in impact capital through 50 deals over the same time period. Among the deals have

been made in Vietnam in the past decade, deal size varies between USD 1 million and 5 million

for PIIs and ranges among USD 10 and 50 million for DFIs. At the same time, while DFIs have

disproportionately invested more than PIIs, DFIs are less likely to provide significant amount of

investment in social enterprises, especially those at the early stages, due to their relatively

larger size of deals. Nonetheless, when comparing with other ASEAN countries in terms of

capital deployed and number of deals, Vietnam impact investment market is still

underdeveloped and not yet highly recognized in the region cross all indicators such as the

number of impact investors, the size of impact investment assets under management, number

of successful deals, etc. The figure 5 below is excerpted from the GIIN’s report and shows the

position of Vietnam’s impact investing market among Southeast Asia region.

Another significant challenges facing social investment in ASEAN in general and in Vietnam in

particular is the skewed distribution of capital across the risk/return spectrum, which mirrors

the challenge faced by impact investors at the global level. The 2015 report “Financing the

Long-tail” by ChangeFusion highlighted the fact that there is excess supply of growth/ scale-up

stage social investment funds, while seed-stage social enterprises in the long-tail suffer from a

severe deficit of capital. This means that many promising enterprises would struggle to survive

pass the early stages, which in the long run reduces the availability and attractiveness of later-

stage impact investment pipelines. Moreover, United Nations Development Programme

(UNDP, 2018)15 reported that most social impact businesses in Vietnam currently rely on some

13

“The Rise of Impact,” UK National Advisory Board on Impact Investing (2017) 14

About Social Investment Research Council (SIRC): https://www.bigsocietycapital.com/about-us/previous-

projects/research-council 15

“Fostering the Growth of the Social Impact Business Sector in Vietnam”, UNDP and NEU (2018)

https://www.bigsocietycapital.com/about-us/previous-projects/research-council

https://www.bigsocietycapital.com/about-us/previous-projects/research-council


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form of share-founder’s equity or personal/family savings to fund their operations and growth

due to limit access to collateralized loans and private equity.

Figure 5. Impact Investments realized by PIIs in Southeast Asia (2007 – 2017)

(Source: GIIN 2018)

Figure 6. Impact Investments realized by DFIs in Southeast Asia (2007 – 2017)

(Source: GIIN 2018)


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Apart from the challenges in both supply and demand, AVPN showed the challenges faced in

lacking of an enabling players. In AVPN’s list of enablers existing in Vietnam in its 2017 report

“Vietnam Social Investment Landscape in Asia” there is a lack of local enablers with the

exclusive focus on as well as knowledge about Vietnamese impact investment landscape.

Moreover, enablers in Vietnam are lacking a leading organization that can unite all key

stakeholders in the ecosystem around a common vision of impact specifically for Vietnam. This

role can potentially be filled either by the government, which is already expected by most

impact investors to provide support for both demand and supply sides, or a capable non-

governmental organization strongly focused on developing the impact investment ecosystem

in Vietnam.

3.2. Impact investing ecosystem in Vietnam

During the production of this report, the research team has conducted a quick mapping of key

stakeholders in Vietnam’s impact investing ecosystem. Although available literatures mention

a number of stakeholders, the research team expanded mapping scope to cover both entities

which are clearly labelled “impact driven” as well as those who are interested in impact

investment and could potentially name for such label. These entities are grouped into three

sectors which are the demand side, the supply side and the ecosystem enablers. The result is a

list of entities as in Annex 1, counting to about 100 entities (19 entities from demand side, 46

entities from supply side and 35 entities are ecosystem enablers). To conduct deeper data

collection, we then identified shortlist of stakeholders with researchable information and

potential for consultative roundtable discussion. The selection of the entities was conducted

to ensure a diverse background of stakeholders (See Annex 2 for the list of participants in the

roundtable discussion).

Box 3. Impact investing ecosystem in Vietnam roundtable discussion

The impact investing ecosystem in Vietnam roundtable discussion was organized in 24 June 2019 at Toong@IPH with the participation of key stakeholders in Vietnam’s impact investing ecosystem.

● The demand side includes representatives from social enterprises, tech start-up who are

making social impact, inclusive businesses and non-profit organizations who are having


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business activities within their operation (22 entities).

● For the supply side, the report considers ‘impact investors’ should not only consist of

entities positioning themselves solely in the impact making business. Therefore, the

entities in the list also include angel investors, venture capital funds, the DFIs, banks, etc.

(29 entities).

● The ecosystem enablers consists of incubators/accelerators of both social innovation

and tech start-up themes, international development agencies who are supporting the

social entrepreneurship movement in Vietnam and representatives of government

agencies and research institutions who are actively involved in the impact investing

ecosystem (18 entities).

In the roundtable discussion, participants discussed about the weaknesses in Vietnam’s impact

investing ecosystem. Following points are among the top concerns raised by the key players of

the ecosystem.

● Enterprises are too small for investments

● The enterprises have a lack of experiences working with investors and capabilities to

meet their standards (developing proposals follow due diligence process, financial

reporting and demonstrating profitability, proving social impacts, etc.) and

entrepreneurs are lacking soft-skills (language, presentation skills, negotiating skills,

etc.)

● Gender bias prevent women led SME accessing capital

● The enterprises are lacking of transparency in their operation

● Investors are lacking of understanding about local context and lack of resources for

maintaining local presence and research

● Mismatch between current investment packages and the need of ventures in Vietnam

● Some social enterprises reported that there are differences between their agenda and

the investors’ (choosing between profit or social impact)

● Incubators are insufficiently funded, under-staffed, have a low level of decision

making power and hard to maintain high quality staff.

More details and characteristics of the key stakeholders in Vietnam’s impact investing

ecosystem would be presented in the finding sections of this report.

3.3. Key challenges of impact investing ecosystem in Vietnam

Reviewing across papers on impact investing in Vietnam, as well as the input from key

stakeholders in the roundtable discussion, the research team identified three key challenges

that put an obstacle on the development of Vietnam impact investing ecosystem. These

challenges also align with the three questions raised in the objectives of this report. The

challenges are:

● Lacking of pipeline for impact investment

● Lacking of investments in early stage impact businesses

● Gender lens impact investment


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After a thorough study, the research team formed a hypothesis for the causes of Vietnam’s

impact investing ecosystem’s underdeveloped status, which are:

● Cause 1: Mismatch between current practices of impact investing activities and the

actual capital demands and capability of impact making businesses in Vietnam. This

cause would be unpacked in the finding 1 session of the report.

● Cause 2: The lack of an appropriate and supportive impact investment ecosystem

with active key stakeholders. This cause will be discussed across finding 2, 3, 4 and 5

of this report.

The following parts of the report attempt to provide initial findings to disclose the gaps in the

existing impact investment ecosystem by examining the roles and contributions of the

ecosystem’s key stakeholders.

IV. Findings

4.1. Finding 1: There is a mismatch between current practices of impact investing activities and

the actual capital demands and capability of impact making businesses in Vietnam

Problem analysis

As it has been discussed in the previous session, common definitions of impact investing (as of

GIIN for example) emphasize the importance of intention to generate positive social and

environmental impact, as well as a wide range of return expectations from sub-market rate to

market rate for impact investments. However, it has been proved that impact investments’

portfolios are highly shaped by the interests of investors, who are giving priority to financial

returns rather than social impacts. In the GIIN’s Annual Impact Investor Survey 2019, 64% of

the survey respondents, who are impact investors, answered that achieving financial returns is

very significant, while there is a surprisingly low rate of respondents (30%) considered

addressing SDGs is very significant to their portfolio16.

Moreover, according to OECD (2015)17, the Social Impact Investment Taskforce (SIITF), which

was established under the United Kingdom’s presidency of the G8, mainly focused on

addressing social issues related to developed countries such as aging, unemployment, justice,

children and families, disabilities, etc. Meanwhile, GIIN focused on attracting mainstream

investors; therefore, they tended to categorize targeted areas and investors in more

traditional investment sectors. That posed a great challenge in searching for good investible

deals outside certain conventional sectors like micro finance, housing and energy18.

In Vietnam, social problems spread in a wide range of sectors and themes, and moreover,

most of local impact making businesses still remain relatively new and small. According to

16

“Annual Impact Investor Survey 2019”, GIIN (2019), p. 45 17

“Social Impact Investment: Building the Evidence Base”, OECD (2015), p.62 18

“The Landscape For Impact Investing In Southeast Asia,” Global Impact Investing Network (2018)


20

UNDP and NEU (2018)19, there are approximately 22.000 social impact businesses (SIBs) in

Vietnam, which would form a potential market for impact investing. In terms of category, the

entities of demand side in Vietnam are very diverse. They might be social enterprises, inclusive

businesses, community-based enterprises (cooperatives, household businesses, etc.) or non-

profit organization having business activities. However, these businesses are mostly in micro

and small scale both in term of human resources and revenue (less than 20 paid employees

and USD 130.000 in revenue per year averagely).

Compare the current practices of impact investing in the World and the situation of impact

making business in Vietnam, we can observe a mismatch between the expectation of impact

investors and the demands as well as capacity of enterprises in Vietnam. In the Figure 7 about

spectrum of business model, the majority of Vietnamese impact enterprises are located more

on the left side of the impact investing section in the spectrum. Comparing to the OECD’s

Spectrum of Capital (see Figure 1), those enterprises would need more investments in term of

social investing with lower expectation on financial return.

Figure 7. The business model spectrum revisited

Initial recommendations

From the findings above, there is a need for more comprehensive and inclusive impact

investing practices in the context of Vietnam. From the research team’s point of view, we

suggest the following actions:

19

“Fostering the Growth of the Social Impact Business Sector in Vietnam”, UNDP and NEU (2018)


21

● It is necessary to clearly define different categories of impact investing and its

targeted groups of enterprises. There could be investments that expect return at the

market rate and target a more mature group of enterprises. In addition, investment

packages with lower expected return should also be available for enterprises at grow

up stage. The classification of investments described in OECD’s Spectrum of Capital

could be a good reference.

● For the Vietnamese market, in order to increase the number of deals realized in

impact investment category of the OECD’s spectrum, it is necessary for the investors

operating in the country to disclose the criteria for the selection of investees (e.g.

what are the targeted groups, which financing instrument are offered and what is the

return expected, how impact and financial performance are evaluated, etc.). Based on

those information, intermediary organizations could set up connecting platforms and

conduct mapping of enterprises to meet the requirements of investors.

● In order to serve the capital demand of the majority of impact enterprises who are not

mature enough for impact investments, there should be more financing instruments

with lower expected return (it could fall into the social investing category in the

OECD’s spectrum). Furthermore instruments such as grants, low interest loans, should

also be provided for early stage impact start-up. For this matter, DFIs and

development agencies should take the leading roles since enterprises of this category

are not among the interest of private investors.

4.2. Finding 2: Lack of pipeline for impact investment

Problem analysis

As we mentioned above, there is a number of approximately 22,000 SIBs in Vietnam, not to

mention 19,000 cooperatives, 1,000 international and local NGOs, 6,900 associations, etc.

Those big number of social purpose organizations should form a big market for impact

investing activities. However, the number of impact investing deals realized in the Vietnam

market is very limited and the deal sizes are very modest. Meanwhile, in the same report,

UNDP and NEU (2018) show that shareholders’ equity (in many cases are founder’s equity)

and individual financing are the two most popular sources of funding for SIBs in Vietnam (see

figure 8 below).


22

Figure 8. Source of Capital and Funding

(Source: National Economics University and UNDP, Fostering the Growth of the Social impact business sector in Vietnam, 2018)

Processing inputs from stakeholders in the roundtable discussion, as well as from the current

research, we have identified the following causes for the phenomenon.

● Regarding the capability of enterprises: there has been feedback from both investors

and investees that Vietnam’s impact businesses lack experience working with

investors and are not be able to meet investors’ procedure and standards. Moreover,

entrepreneurs are weak in terms of soft skills such as language, presentation and

negotiation skills as well as in terms of corporate governance. The problems may also

come from enterprises’ business models and plan which are reportedly not investable

and scalable enough from perspectives of investors. Consequently, Vietnamese

companies are often lacking in good track records for impact investments.

● Regarding business sectors: The recent robust economic growth of Vietnam has led

to a disruption of the social fabric and environment which are causing complex social

and environmental issues that need to be addressed. According to a survey result

conducted by Indochina Research in 201920, the top three social concerns among

urban Vietnamese are food safety, air pollution and water pollution. The opinion of

the public on social issues possibly shapes the landscape of social ventures in Vietnam.

Accordingly, the ‘Agriculture, Fishery and Diary’ sector is the top industry for having

operation of SIBs in Vietnam21. However, there are still a few bottom-up social

ventures are addressing environment, pollution and climate change theme, while this

sector is always at the top concerns of the public as well as of impact investors.

● Business size: Most of Vietnamese social impact businesses are in small size and are

not ready for investing. The enterprises in Vietnam are young (40% are under 3 years

20

“Social Concerns in Vietnam”, Indochina Research (2019) 21

“Fostering the Growth of the Social Impact Business Sector in Vietnam”, UNDP and NEU (2018), p.25


23

of operation) and have small business scale (with revenue of USD130,000), while

impact investors would expect to invest from USD 1 to 2 million per deal at the market

rate. A possible reason for this phenomenon may come from the current agriculture

system of Vietnam (fragmented and small portion of land lots), which only allows the

development of micro and small business.

● Expectation of investors: Impact Investors are looking for fast-growth businesses

(with innovative business models, tech-based, huge market…) while most enterprises

would take more time to grow than a normal business because they operate in niche

and underserved markets.

● The absence of a transparent database: while a transparent database including

company profiles, the needs for capital, impact measurements are key inputs for more

risk-tolerant investors such as angel investors, family funds, NGOs, impact venture

funds… to consider investing, it is totally absent in Vietnam. The research team also

found significant difficulties in searching for such information during our work. This

leads to the lack of active impact-focus fund providers in Vietnam.

● Culture: There is a common practice among Vietnamese businesses that they often

rely on personal funding at early stage of business.


Based on the analysis above, the research team would recommend following actions to be

taken by all stakeholders in Vietnam’s impact investing ecosystem:

● There is an urge for diversifying funding sources to better respond to a wide-spectrum

of enterprises’ financial needs especially financing instruments for early stage impact

businesses (grants and mix between grants and loans), which the impact investing

funds often do not offer. Local-based Social Impact Investment Funds would be

needed.

● There should be more research to identify the potential sectors for impact investment

in Vietnam as well as to build a good database of enterprises in the focused sectors.

● It is necessary to develop an impact investment strategy that encourage PIIs to invest

in the focused sectors (tax, incentives, policies, etc.)

● There should be more capacity building for enterprises to have investment readiness.

The roles of incubators/ accelerators, as well as NGOs/ international organizations are

critical in providing those supports collaborating with entities in the supply side.

● Innovative solutions in addressing social environmental issues should be identified and

promoted.

● Transparent framework and data platform on impact investments are critical.

4.3. Finding 3: Lack of investments in early stage impact businesses

Problem analysis


24

The supply entities in the impact investing ecosystem in Vietnam include institutions of all

sectors. Among the stakeholders in the mapping list of this report, there are development

finance institutions, philanthropic foundations, funds dedicated to impact investing, private

equity funds/ asset managers, venture capital funds, angel investors and commercial banks.

The figure below demonstrates the number of stakeholders in each of the above categories.

Figure 9. Number of stakeholders of the supply side based on type of institution

As the figure demonstrates, the key actors in the supply side of impact investing ecosystem in

Vietnam are funds, which are dedicated to impact investing. However, among 17 funds in the

mapping list, there are only 7 funds that are domestic or Vietnam-based. The other 10 are

foreign impact investment funds which are having deals in Vietnam. Venture capital funds and

angel investors share the second position with 8 entities of each category. However, impact

investing is not in the priority of these investors since they mainly focus on tech start-ups.

Besidescomparing to the composition of supply entities in a mature ecosystem, the supply

entities in Vietnam market are much less diverse. It is lacking of family offices, investment

banks, insurance companies, pension funds and sovereign wealth funds as compared to the

list in table 1. Significantly, the government is absent from being in the supply side of the

impact investing market. Reasons may be due to insufficient budgets, political sensitivity

(government’s concerns about investing in businesses) and lack of awareness about impact

investment.

From the supply side, regarding the financing instruments, there is currently a lack of

institutions providing capital for early stage impact enterprises. While most of impact

investors are still looking for enterprises in growing stages that can provide good social and

financial returns, the impact businesses community mostly consists of small and early

enterprises. This phenomenon can be seen in the GIIN’s report about impact investing

landscape in South East Asia, in which the average deal size of impact investments from PIIs


25

are between USD 1-5 million and from DFIs are between 10-50 million. The following points

may explain for this critical challenge in Vietnam’s impact investing ecosystem.

● As mentioned in GIIN, Landscape of Impact Investing in South East Asia (2018) and

also repeatedly mentioned during our consultative roundtable, impact investment

deal making in Vietnam is costly and puts an obstacle for investors to approach the

small impact enterprises. There are two reasons for this situation:

− The lack of specific framework to process impact investments: The government

has issued several guidelines for general investment funds22 and innovative start-

up funds23, however, none specifically address impact investments. As a result,

processing an impact investment follows the same procedure with ordinary

financial investment, making it costly for investors to set-up local representatives

and process deals.

− The absence of local intermediaries: Accelerators/Incubators in impact areas do

not have experiences/skills in supporting impact investment transactions,

especially in sourcing for pipelines, carrying out due diligence, managing and

monitoring the investments. Even the ones with longer establishment (Hatch

Ventures, Vietnam Silicon Valley or CSIP) have limited track-records in supporting

impact investment deals.

● The lack of incentives and a database is a barrier for more risk-tolerant investors to

join the ecosystem:

− The lack of supporting policies (e.g.: tax incentives, special treatments for

financial instruments with impact purpose): there is no such incentive policies to

encourage impact investors to provide investments at below-market rate of

financial returns (7 responses during consultative roundtable).

− The absence of a transparent database: while a transparent database that

includes company profiles, the needs for capital, impact measurements are key

inputs for more risk-tolerant investors such as angel investors, family funds,

NGOs, impact venture funds etc. to consider investing, it is totally absent in

Vietnam. During our consultative roundtable, 6 responses felt under this issue.

The research team also found significant difficulties in searching for such

information during our work. This leads to the lack of active impact-focus fund

providers in Vietnam.

● The missing of dedicated local – based impact investment funds: the low integration

of local private investors (venture funds, start-up funds, angel investors, HNWI, etc.)

results from limited understanding of impact business and the perception that doing

social business is less profitable than for-profit business.

● Limited access to institutional impact investors: high-cost of deal-processing is also

one of the reasons preventing institutional impact investors from sourcing and

22

Securities Law, 2016 and related amendments. 23

Decree No. 38/2018/ ND-CP by the Government on regulations for investments in small and medium

enterprises and.


26

investing in small ticket sizes at early stages. They normally look for deal-sizes of ~ USD

1 million - 3 million to cover for risk-factors and processing costs24.

● Limited access to mainstream fund-providers (banks, equity investment funds): most

local banks have specific loan schedules for SMEs but are barely specialized for early-

stage and start-ups due to limited financial traction and lack of collateral assets.

Financial equity investment funds, at the same time, do not see such entities as

potential for investment given their expectations of market-rate returns and proven

business records.

● Limited access to SMEs & start-up funds: the SME Development Fund was established

by the Government in 2016 with an initial fund of USD 85 million and continued with

USD 4 million in 2017 (for Supporting SMEs in Innovation). However, social

environmental impact (except for waste management) has not been put on focus25.

Many other programs and funds are available given the growth of start-up ecosystems

(Program 844 - Ministry of Science and Technology, Program 1665 - Ministry of

Education and Training, multinational venture funds such as IDG, CyberAgent, local

venture funds such as Mekong Capital, GoldenGate, etc.) Such programs and funds

focus on technology and innovation - which are still weak among the social purpose

business sector and thus capital is not directed to early-stage impact enterprises and

start-ups.


Investing in impact business at early-stage and start-ups implies that the investors take more

risks both in terms of financial and impact aspects. It requires a comprehensive set of enabling

factors (policies, data, intermediaries, financial market development) to encourage investors

to join the market, thus providing “surviving” funds for the demand-side actors.

Initial intervention Done by Further actions

Government must develop strategies to attract impact investors to Vietnam

▪ Strengthen national strategy for impact investing in order to set clear priority for impact investments

▪ Develop supporting policies to encourage financial investors, star-ups funds to provide early stage investments in impact business: tax incentives, easy of regulatory investment procedures

▪ Build strong financial intermediaries (incubators,

accelerators, fund management agencies) as service providers for institutional impact

Government Government Government, Development agencies,

Partnership with international institutions and consultants to study good practices in developing policies Financial supports for intermediaries to pilot and experience

24

CSIP, British Council, Impact Investing in Vietnam, 2013. 25

NEU & UNDP, Fostering the Growth of the Social Impact Business Sector in Viet Nam, 2018, page 12.


27

investors

NGOs, Foundations

investment-service (providing seed-funds, small-ticket loans, equity investment together with capacity building)

Develop innovative financial instruments to meet early stage needs

▪ Develop policy framework for innovative financial instruments (definition, design of instrument, implementing procedure, etc.)

▪ Pilot funding under innovative financing

instruments, considering: blended capitals, pay-for-success instruments, etc.

Government, Development agencies, NGOs, Foundations

Studies of the needs from demand-side as fundamental for design of financing instrument

New dedicated funds for early stage investments with preferential conditions

▪ Provide patient funds in small ticket sizes with preferential conditions in rate of returns, investment term, exist options.

Government, Development agencies, NGOs, Foundations

4.4. Finding 4: Gender lens Impact Investment

Problem analysis

While the impact investment ecosystem in Vietnam is still in infancy. Gender lens Impact

Investment is seen as even newer concept. Most of the audience approached by the research

team did not have a clear understanding for Gender lens Impact Investments or spontaneously

aligned it with women-led business.

Under the definition by GIIN26, Gender lens investments are investments made into

companies, organizations, and funds with the explicit intent to create a positive impact on

gender. As such, the successful investments into enterprises which provide women with

access to critical goods and services account for 30% of total investments from Private Impact

investors.

Awareness and attention for gender issues are arising, given the many initiatives women

empowerment and gender equality, such as: Women Entrepreneurship Supporting Program

for the period 2017-2025 (Government), Investing in Woman (DFAT), National Platform

“Women Business Start-up: Innovation and Connection” (Vietnam Women’s Union and SNV),

etc.

Despite the increasing interest internationally and domestically, the scale of gender lens

investments in Vietnam is still very modest, amounting to ~ USD 3.3 million in 4 deals

26

GIIN, Global Impact Investing Network and Intellecap, 2018.


28

according to GIIN, 2018. The following problems are seen during our research: (i) difficulties in

sourcing investable enterprises under gender lens impact investment (ii) limited sources of

funds under GLI - and the main causes are:

From Demand side:

● The lack of investable enterprises: for gender lens investees, including women-

led/owned enterprises, enterprises serving or engaging women in their value chain…

are facing the same issues of small size, early stages with small amount of capital

needed. Those are the factors that are incompatible with mainstream fund-providers,

as well as large-scale impact investors27.

● The absence of common understanding and a database on gender lens impact

investments:

− Although the integration of women into economic growth is considerably high in

Vietnam with 71% of women participate in the workforce28 and nearly 25% of

enterprises are women-led29, we recorded from the consultative roundtable that

several fund-providers (e.g. Investing in Women or VPBank with their

Empowering women enterprises) still found difficulties in sourcing for qualified

enterprises.

− On the other hand, enterprises like Jupviec - whose mission is to create jobs for

marginalized women, do not realize themselves as gender lens investees.

From Supply side:

● Limited number of fund providers: current fund providers can be named as

Government, International development financial institutions and agencies (World

Bank, IFC, etc., Canada Embassy, Australian Embassy, USAID, etc. The participation

from private investors is still limited, resulting from high-cost of deal-sourcing and low

awareness for Gender lens investment.

● Lack of diversified financing instruments: key international development

organizations are promoting gender lens investment through bank loans, micro

finance products, but yet to fit the need of women-led/own or women-engaging

business which are early-stage funds.

● Awareness barriers resulting from gender bias perception: the social-cultural

perception that women have more difficulties in achieving general education and

skills, leading to lower productivity and capabilities is also contributing to the

reluctance of investors to join the market.

27

GIIN, Global Impact Investing Network and Intellecap, 2018, page 200. 28

Ngan Anh, Việc làm cho nữ giới: Chưa hết những rào cản, 2018,

https://www.nhandan.com.vn/xahoi/item/35357402-viec-lam-cho-nu-gioi-chua-het-nhung-rao-can.html 29

Vu Dau, Gia tăng tỷ lệ nữ làm chủ doanh nghiệp góp phần thúc đẩy bình đẳng giới,

http://laodongxahoi.net/gia-tang-ty-le-nu-lam-chu-doanh-nghiep-gop-phan-thuc-day-binh-dang-gioi-1311022.html

https://www.nhandan.com.vn/xahoi/item/35357402-viec-lam-cho-nu-gioi-chua-het-nhung-rao-can.html




29

Initial recommendation

We suggested that for gender lens investment, there is indeed potential for growth and

impact at scale, however, interventions are needed to raise awareness, build willingness and

connect various stakeholders.

Initial intervention Done by Further actions

Awareness raising to remove the barriers to join the market

▪ Continue to promote policies to address gender-bias social norms (education, awareness raising campaign, knowledge hubs,…)

▪ Develop framework to define a clear agenda on

gender lens investment including target groups, gender- based issues to be addressed in the local context, investment measurements, gender responsive monitoring and evaluation

Government, Development agencies, NGOs

Developing financial instruments meeting the need of both supply and demand side

▪ Mapping capital needs from demand side to design appropriate financial instruments

▪ Developing incentives policies to encourage investments under gender lens

Government, Development agencies. Government

Research on the target groups of gender len impact investment, including mapping key stakeholders, studying funding demands, challenges and needs of women-led/owned businesses or enterprises which engaging women or serving women.

4.5. Finding 5: Lack of key players among ecosystem enablers to form a well-functioning

impact investing ecosystem

Problem analysis

Among the ecosystem enablers in the mapping list of impact investing ecosystem in Vietnam,

the majority belongs to capacity building organizations of all types (incubators/accelerators,

NGOs/international organizations, network & platforms, etc.). There are 27/36 organizations

that belong to this category. For the rest of the list, there are 4 research institutions, 3 entities

belong to policy makers group and only 2 are financial intermediaries. The figure below

demonstrates the composition of ecosystem enablers group in Vietnam impact investing

ecosystem.


30

Figure 5. Composition of ecosystem enablers group

From the composition, we can observe the imbalance in the group of ecosystem enablers in

Vietnam: there are many capacity building organizations in the field while the financial

intermediary, which is another critical group in the ecosystem, has just a few actors involved.

Among the capacity building organizations, there is a significant role of NGOs (mostly

international NGOs) and international organizations in providing technical assistance and seed

funding for social ventures in Vietnam. The incubators and accelerators, which are mostly local

organizations, are reported to be insufficiently funded, under-staffed with high turn-over rate

(insight from the roundtable discussion). Last but not least, in the group of ‘networks and

platforms’, the platforms such as AVPN, Toniic and Twenty, which are dedicated in the social

impact investment, are international platforms and only have occasional activities in Vietnam.

The rest of ecosystem enablers are groups of policy makers and research institutions. The two

most significant agencies of policy makers in the ecosystem are Department of Enterprise

Development – Ministry of Planning and Investment and National Agency for Technology

Entrepreneurship and Commercialization Development – Ministry of Science and Technology.

However, these agencies are more familiar with tech start-up and lack of awareness about

impact investing. For academic and research institutions group, the two most influenced local

institutions in the ecosystem are Central Institute for Economics Management - Ministry of

Planning and Investment and the Center for Social Innovation and Entrepreneurship (CSIE) –

National Economics University. Besides there are also other organizations and platforms

provide research about impact investment in Vietnam. However, the information and

knowledge about the market are still limited.

In order to facilitate better connection between the demand and supply side and to result in

deals being realized, it is critical that the ecosystem enablers must be able to provide a

favorable environment for the impact investing activities. Among the ecosystem enablers, the


31

local incubators and accelerators are playing an active role in support entities of the demand

side to build capacity to be more investment ready as well as provide seed funds for early

stage businesses. However, the incubators and accelerators for impact businesses are still

facing challenges in sustaining their operation both in terms of finance and human resources.

Furthermore the fact that most of networks and platforms on impact investing are

international based would also prevent local enterprises to approach the information and

resources about impact investing, as well as put a barrier to the communication and

collaboration among 3 groups of key players in the ecosystem.

Another gap among ecosystem enablers in Vietnam is the missing of financial intermediaries

to connect investors and investees. It could take the root from immature state of Vietnam’s

financial market as well as from a lack of supporting policy from the government. In fact,

impact investing is still a new term to the policy makers in Vietnam and the awareness on this

topic is also vague in the public. Besides, while the gender lens impact investment is becoming

more and more popular in the impact investing ecosystems throughout the World, the topic

remains still unfamiliar in Vietnam.

Initial recommendation

In order to foster the development of Vietnam’s impact investing ecosystem into a more

mature state, it is necessary to support the establishment of key players among the ecosystem

enablers. In a well-developed ecosystem, the government should play a key role. However,

since awareness about impact investing in Vietnam is still vague even among policy makers,

development agencies could actively support Vietnamese government in the development of

impact investing ecosystem. Following are some initial recommendations from the research

team on this matter.

● Local incubators/ accelerators should be invested to scale up and build up capacity. It

is critical for the ecosystem to have role models of well-functioned incubators and

accelerators for social innovations.

● The government should encourage the establishment of financial intermediaries for

impact investing. It requires policy makers to review current legal documents on

financial investments and proposed favorable changes to encourage a more open and

transparent financial market, not only for impact investing activities.

● There should be more institutions (especially sector focused researches and gender

themed research) to conduct research on the theme, as well as to deliver promotion

campaign for impact investing. The purpose of these activities is to raise awareness of

the public audience as well as of potential key stakeholders about impact investment

and gender lens investing.


32

V. Recommendations for Development Agencies

5.1. Roles of Development Agencies in the impact investment ecosystem:

Based on the experiences of more mature impact investing ecosystems in the region (e.g.

Korea, Singapore, Thailand, etc.), it is critical to have an entity to coordinate the development

of ecosystem and provide necessary interventions. As it has been discussed in the finding 5, in

common practices, the government would fulfill this role. However, in Vietnam, the

coordinating position is still missing since the government is not yet actively involved in impact

investing activities. Therefore, development agencies could actively support the Vietnamese

government in this matter.

Back the fundamental framework to address social impact investment by OECD30 and suggest

different roles of Development agencies in the investment ecosystem by their influence on or

participation in each segment of the ecosystem. The below diagram represents suggested

roles and functions of Development agencies:

Social, Environmental and Economic needs: Development agencies contribute to

address social, environmental and Economic needs to development market for impact

business.

Demand sides: Development agencies support to build capacity and prepare Demand-

side actors for impact investment readiness.

Supply sides: Development agencies join as fund-providers with higher risk-tolerance,

and also provide support to direct capital to the impact sector.

Intermediaries: Development agencies support to build capacity in order for

intermediaries to provide services and connecting Demand - Supply.

Enabling Environment: Development agencies support in developing general

framework and jointly participate in creating financial market development.

30

OECD, Social Impact Investment 2019, 2019

Demand side Intermediari

es Supply side

Social, Environmental and Economic needs

Enabling Environment

Supporting/Enabli

ng

Participating

Developme

nt Agencies


33

5.2. Recommendations

By incorporating the recommendations to solve for each of the 3 key challenges and the roles of

Development agencies in Vietnam’s impact investment ecosystems, we suggest the following

areas for interventions:

POLICY: support in establishing policies to address Social, Environmental and Economic needs

and construct enabling environment:

● Providing consultative opinions for policy development with focus on impact

investment, gender lens investment, including but not limited to: policy initiatives for

both supply and demand side, collaboration framework to facilitate co-operation

between stakeholders, regulatory procedures for impact investment/gender lens

investments, impact measurement framework.

● Implementing awareness raising activities and programs towards social,

environmental and economic challenges to help foster market for impact business.

● Providing financial and non-financial support for intermediaries to strengthen their

service-providing capacities to implement impact investments, gender lens

investments.

FINANCE: provide funds and support to cover the financing gaps, especially at early stage

impact investments:

● Participating with the Government and other actors in the development of innovative

financial instruments, especially tailor-made instruments for Vietnam’s context such

as pay-for-success instruments, blended financing structure (mix of grants and loans,

equity capital), seed-funding incorporated by capacity building package.

● Providing seed-funding or early-stage investment at concessional rate of returns

(directly or through financial intermediaries).

INNOVATION/SOCIAL PURPOSE ORGANISATIONS AND IMPACT BUSINESSES: provide funds and

supports promote innovations in impact business sectors:

● Participating with Government and other actors, especially international development

partners to exploit and showcase innovative initiatives from other markets.

● Supporting intermediaries to build capacity in facilitating innovative solutions among

impact enterprises and start-ups.

● Proving funds for piloting innovative solutions (directly or through financial

intermediaries).

DATA: provide funds and support in constructing of transparent data infrastructure

● Participating with the Government and other actors to build transparent data

infrastructure

● Supporting in constructing impact measurement framework and database.


34

5.3. Further actions:

It should be noted that stakeholders represented in this report are just a sample of the whole

ecosystem. Input provided by them in this report would reflect some issues of the impact

investing landscape in Vietnam but could not provide a comprehensive view of the whole

ecosystem. Therefore, a more thorough survey should be conducted in the future for better

understanding of needs and expectations of actors in the impact investing ecosystem. Given

the proposed areas for interventions from Development Agencies like Canada Embassy, we

suggest the consecutive actions following this initial research:

● Deeper studies to further capture the roles, the challenges, the needs of all

stakeholders in Vietnam’s impact investment ecosystem.

● Results from such studies will be used for designing the framework for interventions in

each of the four suggested areas with consultation from impact investment experts.


35

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National Economics University and UNDP. (2018). Fostering the Growth of the Social Impact Business

Sector in Viet Nam.

OECD. (2015). Social Impact Investment: Building the Evidence Base.

OECD. (2019). Social Impact Investment 2019: The Impact Imperative for Sustainable Development.

UK National Advisory Board on Impact Investing. (2017). The Rise of Impact.


36

ANNEX 1

LIST OF STAKEHOLDERS IN THE IMPACT INVESTMENT ECOSYSTEM

Types Name

DEMAND

1 Social enterprises (SE) Nghi Luc Song Joint Stock Company (Imagtor)

2 Social enterprises (SE) Tòhe Joint Stock Company

3 Social enterprises (SE) Sapa O'Chau Limited Company

4 Inclusive business (IB) Vexere Joint Stock Company

5 Inclusive business (IB) Tafood Limited Company

6 Inclusive business (IB) DACE Limited Company

7 Inclusive business (IB) Hagimex Joint Stock Company

8 Inclusive business (IB) VBPO Joint Stock Company

9 Inclusive business (IB) Vinasamex Joint Stock Company

10 Inclusive business (IB) Dichung Joint Stock Company

11 Inclusive business (IB) HCM Joint Stock Company (Jupviec.vn)

12 Inclusive business (IB) Dai Thuan Thien Limited Company

13 Inclusive business (IB) Bac Tom Limited Company

14 Inclusive business (IB) Vinh Ha Joint Stock Company

15 Inclusive business (IB) Far Green Joint Stock Company

16 Non-profit organizations (NPOs) Institute of Public Health Development - LIGHT

17 Non-profit organizations (NPOs) Live&Learn

18 Non-profit organizations (NPOs) VECO

19 Non-profit organizations (NPOs) Rikolto Vietnam

SUPPLY

20 Development Finance Institutions (DFIs) IFC

21 Development Finance Institutions (DFIs) Worldbank

22 Development Finance Institutions (DFIs) ADB

23 Development Finance Institutions (DFIs) DFAT (Investing in Women , GREAT)


37

24 Development Finance Institutions (DFIs) USAID

25 Philanthropic foundations NIPPON foundation

26 Philanthropic foundations C&A Foundation

27 Philanthropic foundations AirAsia Foundation

28 Dedicated impact investing funds Thriive

29 Dedicated impact investing funds Patamar Capital

30 Dedicated impact investing funds Yellow Dog

31 Dedicated impact investing funds Sopoong

32 Dedicated impact investing funds MYSC

33 Dedicated impact investing funds Crevisse

34 Dedicated impact investing funds Brightlight

35 Dedicated impact investing funds Circulate Capital

36 Dedicated impact investing funds Evergreen Lab

37 Dedicated impact investing funds Phitrust

38 Dedicated impact investing funds Vietnam Investor Network Development - VIND

39 Dedicated impact investing funds Impact Vietnam

40 Dedicated impact investing funds Lotus impact

41 Dedicated impact investing funds CLF

42 Dedicated impact investing funds Mekong Brahmaputra Clean Development Fund L.P.

43 Dedicated impact investing funds Uberis

44 Dedicated impact investing funds

The Green Start-up Fund (alliance of Vietnam Cooperative Allicance, Institute for Organic Agriculture Economics, Van Tinh Phat Group and Saigon Peninsula)

45 Private equity funds/ asset managers Dragon Capital

46 Private equity funds/ asset managers Viet Nam Holding Asset Management Ltd

47 Private equity funds/ asset managers Capria

48 Private equity funds/ asset managers SEAF

49 Venture capital funds TOPICA

50 Venture capital funds 5Desire


38

51 Venture capital funds Startup Vietnam Foundation

52 Venture capital funds Vietnam Silicon Valley

53 Venture capital funds FPT Ventures

54 Venture capital funds VIC Partners

55 Venture capital funds Alley 51 Ventures

56 Venture capital funds Vintech fund

57 Angel Investors VNG Group

58 Angel Investors Up Coworking space

59 Angel Investors Angel Investors Network

60 Angel Investors OCD

61 Angel Investors Alpha Books

62 Angel Investors Angel 4 Us

63 Angel Investors VAIC (Vietnam Angel Investors Circle)

64 Angel Investors Mekong Angel Investors Network - MAIN

65 Commercial banks VP Bank (Women Enterprises)

ECOSYSTEM ENABLERS

66 Incubators/Accelerators Vietnam Silicon Valley

67 Incubators/Accelerators CSIP

68 Incubators/Accelerators KisStartup

69 Incubators/Accelerators Hatch ventures

70 Incubators/Accelerators LIN

71 Incubators/Accelerators SPARK

72 Incubators/Accelerators Reterra (Japan)

73 Incubators/Accelerators Innovation Hub

74 Incubators/Accelerators CIRCO coworking

75 Incubators/Accelerators HABATAKU

76 Incubators/Accelerators BUSINESS START-UP SUPPORT CENTER (BSSC)

77 Incubators/Accelerators Syngenta Foundation


39

78 NGOs/ International Organizations The British Council

79 NGOs/ International Organizations WISE - Mekong Business Initiatives

80 NGOs/ International Organizations WECREATE

81 NGOs/ International Organizations CARE

82 NGOs/ International Organizations Oxfam

83 NGOs/ International Organizations PATH

84 NGOs/ International Organizations HAGER international

85 NGOs/ International Organizations SPLASH

86 NGOs/ International Organizations DFAT

87 NGOs/ International Organizations Asian foundation

88 NGOs/ International Organizations UNDP

89 NGOs/ International Organizations Swiss EP

90 Network & platforms AVPN

91 Network & platforms Family Business Network Asia

92 Network & platforms Vietnam Business Council for Sustainable Development

93 Network & platforms Toniic

94 Network & platforms Twenty

95 Research institutions WISE Philanthropy Advisors

96 Research institutions Mekong Economics

97 Research institutions Center for Social Innovation and Entrepreneurship (CSIE) – National Economics University

98 Research institutions Central Institute for Economics Management

99 Policy makers Department of Enterprise Development – Ministry of Planning and Investment

100 Policy makers NATEC – Ministry of Science and Technology

101 Policy makers The 844 Plan - Ministry of Science and Technology

102 Financial intermediary KIVA

103 Financial intermediary Simply giving

ANNEX 2


40

KEY STAKEHOLDERS INVITED TO THE ROUNDTABLE DISCUSSION

THE DEMAND SIDE

Name Sector Problems/Solutions Products/Services Beneficiaries

Recent

investment

received

1 Imagtor Services

(tech)

Employment for

PWD, financial

supports to Will To

Live Center

Image editing services

(photo, video)

People with

disabilities,

physical

challenges

Seed-fund

from REMAKE

City program

(2018)

2 Tòhe Services

(arts)

Art activities to

encourage creativity,

playfulness and

social competencies

of disadvantaged

children

Lifestyle products with

children drawing

texture (clothes,

accessories, toys, etc.)

Children with

disadvantages

Start-up

funding from

CSIP (2009),

LGT Venture

Philanthropy

convertible

loan of USD 40,000 to

open a new

shop and

recruit key

personnel

(sales manager

and

production

manager)

3 Sapa O'Chau

Travel Services

(tourism)

Livelihood

improvement for

local communities

(jobs, training,

access to tourism

market,…)

Boarding facility, hotel, café, handicraft

store, trekking tours

Local minor

ethnic

communities

(trekking guides,

homestay

owners, high

school students,

vocational

students,

craftswomen and

volunteer)

4 Vexere Services

(transportati

on)

Improve and

upgrade people's

lives through the

ability to innovate

and apply

technology, meeting

all needs in travel

Smart ticket booking

platform, management

software (BMS - Bus

Management System)

and sales management

software (AMS- Agent

Bus/coach

passengers, bus

owners, agencies

CyberAgent

Ventures

(Japan) and Pix

Vine Capital

(Singapore)

(2015)


41

and transportation

sectors

Management System).

7 Tafood Agriculture Livelihood

improvement for

tea-farming

households and local

minor ethnic

communities (jobs,

technical support

and training, buying

contracts)

Vietnamese ancient

tea products from Ta

Xua (Son La), mostly

for domestic market

Local farming

households,

minor ethnic

people at

material areas

8 DACE Agriculture Livelihood

improvement for

farming households

and local minor

ethnic communities

(jobs, technical

support and training,

buying contracts)

High quality organic

spices (chili, garlic,

turmeric, ginger) and

related products

(power, syrup), mostly

for exports

Local farming

households,

minor ethnic

people at

material areas

10 Hagimex Agriculture Livelihood

improvement for

farming households

(jobs, technical


buying contracts)

High quality canned

fruits, vegetables and

spices (exported to

Japan, Korea, EU,…),

mostly for exports

Local farming

households at

material areas

11 VBPO Services

(business

supports)

Employment for

PWD and the poor

Business process

outsourcing services

and technology

solutions in finance &

accounting, human

resource, analytics,

banking services,

contact center and

etc...

People with

disabilities,

physical

challenges and

the poor

12 Vinasamex Agriculture Livelihood

improvement for

farming households

and local minor

ethnic communities

(jobs, technical


buying contracts)

Organic anistar and

cinnamon products, for

both domestic market

and exports

Local farming

households at

material areas


42

13 Di Chung Services

(transportati

on)

Reduce environment

pollution and social

expenses by vehicle-

sharing solution

Online platform for

carpooling, car rental

Community,

especially people

with commuting

needs

14 Jupviec Services Employment for

women

Cleaning and

housekeeping services

across major cities

(Hanoi, HCM, Da Nang,

Nha Trang, Hai Phong,

etc.)

Women Patamar

Capital (2018)

15 Dai Thuan

Thien

Agriculture Livelihood

improvement for

farming households

(jobs, technical


buying contracts)

Clean agricultural

products (fruits,

vegetables, rice,…), for

both domestic market

and exports

Local farming

households at

material areas

16 Bac Tom Agriculture Livelihood

improvement for

farming households

(jobs, technical


buying contracts)

Clean agricultural

product retailer

Local farming

households at

material areas

17 Vinh Ha Agriculture Livelihood

improvement for

farming households

(jobs, technical


buying contracts)

Clean vegetables, fruits

for collective kitchens,

especially kitchens at

schools

Local farming

households at

material areas

18 FarGreen Agriculture Building prosperous

and sustainable

farming communities

in rural Vietnam by

reducing

environmental

damaging practices

like open burning of

straw exist, utilizing

all agricultural

production waste

Clean mushroom

produced within an

eco-friendly closed-

production loop

Farming

households (as

producers) and

community

19 Chatbot

Vietnam .JSC

Technology PWD are lack of

effective supporting

equipment in the

Supporting equipment

for PWD

People with

disability


43

daily life

20 LIGHT Healthcare Health improvement

by supporting

development

programs and

providing healthcare

services

Healthcare clinic with a

focus on reproductive

health; beauty clinic

and natural herbal

healthcare product

distribution

Community

21 Live&Learn Education Awareness changes

towards sustainable

education, climate

change and

sustainable energy.

Education, training on

sustainable education,

climate change and

sustainable energy for

young generation

Community,

especially the

youth

22 Rikolto

Vietnam

Business

supports

Assist and empower

small farmers in rural

poverty reduction

and contribute to

sustainable food

supply

Training, coaching to

build capacity in

sustainable

production, business

management,

fairtrade; connecting

farmers with buyers

Farmers


44

THE SUPPLY SIDE

Types Name Investment

purpose

Sector of focus

(if defined)

Beneficiaries

(if defined)

Instruments Average ticket

size (US$)

1 Donors,

NGOs

Thriive Impact Manufacturing,

agriculture

SMEs serving

vulnerable

communities

Loan Up to 10,000

(Thriive Capital)

and up to

50,000 (next

level financing)

2 Donors,

NGOs

Australian

Department

of Foreign

Affairs and

Trade

Impact Agriculture,

tourism

GREAT: Improve

social and

economic status

of women living

in north-west

Vietnam.

Objective:

Women living in

Sơn La and Lào

Cai beneficially

engage in the

agriculture and

tourism sectors at

all levels.

Investing in

women:

workplace gender

equality, impact

investment for

women SMEs,

influence gender

norms

Loan,

Convertible

Grant, Grant

500,000 -

1million

3 Donors,

NGOs

Investing in

Women

Impact INVESTING IN

WOMEN:

Investing in

women-led

enterprises +++

200,000-

500,000

4 Donors,

NGOs

CARE

Internationa

l in Vietnam

Impact Agriculture Remote ethnic

minority women,

socially

marginalized

people in urban

settings, disaster

affected

communities


45

5 Donors,

NGOs

Oxfam

Vietnam

Impact Agriculture vulnerable groups

in value chain

300,000 -

1million

6 Donors,

NGOs

USAID Impact PACE program

partnership with

Villgro and Lotus

Impact to set up

an incubation and

investment

program

alongside new

local angel

investor networks

7 Donors,

NGOs

PATH Impact Healthcare Vulnerable

groups

8 Private

Investment

Investors

Patamar

Capital

(Vietnam)

Impact Affordable

Housing,

Agriculture,

Education,

Employability,

Health,

Livelihood and

poverty

alleviation

People in poverty,

People without

employment,

Women and girls

Convertible

Debt, Equity

9 Private

Investment

Investors

Alley 51 Impact Inclusive

business for low

income and

PWD; Financial

service

The low income

and PWD

Convertible

Debt, Equity

10 Private

Investment

Investors

Dragon

Capital

(Mekong

Brahmaputr

a Clean

Developmen

t Fund L.P)

Startup Renewable

Energy, Energy

Efficiency and

Conservation

Equity 1 – 7 million

11 Private

Investment

Investors

Impact

Vietnam

Impact

12 Private

Investment

Investors

Evergreen

Lab

Impact Create and

support

inclusive

businesses that

drive lasting

growth,

Children and

youths, Ethnic

minorities, Flora

and fauna, People

in poverty, People

without


46

development

and long-term

benefits for

future

generations.

employment

13 Private

Investment

Investors

WISE -

Mekong

Business

Initiatives

Impact Women

14 Private

Investment

Investors

Community

Livelihood

Fund

Impact Education Youth

15 Private

Investment

Investors

Startup

Vietnam

Foundation

Startup

16 Private

Investment

Investors

WECREATE Impact Women

entrepreneurs

17 Private

Investment

Investors

MITfive Startup and

Impact

18 Private

Investment

Investors

Vietnam

Climate

Change

Innovation

Fund (WB)

Impact Climate change grant

19 Private

Investment

Investors

Viet

Accelerator

Startup

20 Private

Investment

Investors

VIISA Startup

21 Private

Investment

Investors

BK Holding Startup

22 Private

Investment

Investors

PhiTRUST Impact


47

23 Private

Investment

Investors

Green Edu Impact Agriculture Student, rural

youth, retired

workers, young

entrepreneurs

grant Up to 8 million

24 Corporates Up

Coworking

space

Startup Technology

25 Corporates Vintech

Fund

Startup Technology Up to 440,000

26 Corporates SME -

VPBank

Impact Women

entrepreneurs

loan

27 Angel

Investors

Angel

Investors

Network

Startup

28 Angel

Investors

Kids Online Startup

29 Angel

Investors

VAIC

(Vietnam

Angel

Investors

Circle)

Startup

THE ECOSYSTEM ENABLERS

Types Name Targets What type of supports

1 Incubators/Accelerators Centre for Social

Initiatives

Promotion (CSIP)

Social enterprises

Impact business

Grassroot SEs

CSOs

Conducting capacity building programs,

networking activities for targeted

enterprises and organizations

Conducting promotion campaign for

social entrepreneurship and policy

advocacy activities


48

2 Incubators/Accelerators Spark Social enterprises Delivering programs on supporting social

enterprises, especially in agricultural

sector

3 Incubators/Accelerators UNDP Young social

entrepreneurs

Delivering Youth Co:lab – a platform and

network across the region to facilitate the

development of social entrepreneurship

among young people

4 Incubators/Accelerators Vietnam Silicon

Valley (VSV)

Startups and

Investors

For start-up: business development

programs, seed-funding

For investors: access to startup-database,

networking, training,

5 Incubators/Accelerators KisStartup Startups, SMEs,

Trainers/Coaches,

investors

For start-up, SMEs: training, coaching,

mentoring program on starting up,

business development, innovation;

networking and business matching events

For future trainer/coach: training to build

capacity for future professional coach,

trainers

Investors: networking among investors

and between investors & startups

6 Incubators/Accelerators Hatch ventures Startups, Impact

business

Community building for startup-

ecosystem, co-working spaces,

acceleration programs for startups and

impact business (including seed-funding)

7 Incubators/Accelerators Syngenta

Foundation

(Vietnam)

Farmers Providing solutions for sustainable

agriculture cultivation

8 Incubators/Accelerators Innovation Hub

(Hanoi)

Companies in

agricultural

supply chains &

energy sectors.

Provide capital, incubation program, co-

working space and networking

opportunities for companies in targeted

sectors

9 Incubators/Accelerators Spring

10 Policy makers Central Institute

for Economic

Management

(CIEM)

Research and proposing the mechanisms,

policies of economic management

and business environment development;

providing public services in the field of

scientific research, training and fostering

cadres in economic management, and

carrying out consultancy activities in

accordance with the laws.


49

11 Policy makers Department of

Enterprise

Development –

Ministry of

Planning and

Investment

Support Government in formulating

policies and regulations related to SME

and SME supporting programs

12 Policy makers NATEC – Ministry

of Science and

Technology

Support Government in formulating

policies and supporting programs for

enterprises in science and technology

13 Policy makers Office of 844

plan – Ministry

of Science and

Technology

Provide funding for intermediary

organizations that perform activities for

innovative startup ecosystem, including 3

areas: research/propose legal framework,

train and develop the capabilities of

player in the ecosystem, communicate

and connect stakeholders

14 Policy makers Vietnam

Chamber of

Commerce and

Industry (VCCI)

Facilitates and promotes the sharing of

experience, solutions and good practices

on sustainable development, and

strengthens dialogues and close

coordination among business community,

the Government and civil organizations

on this domain.

15 NGOs/ International

Organizations

The British

Council

Delivering programs in partnership with

local and international organizations in

areas such as youth and social

entrepreneurship, equal opportunity and

diversity, migration, social inclusion and

engagement, and active citizenship.

16 NGOs/ International

Organizations

Swiss EP

17 Research institutions Center for Social

Innovation and

Entrepreneurship

(CSIE) – National

Economics

University

Students and

early social

enterprises

Conducting researches on social impact

businesses and support the development

of social entrepreneurship among

university students

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