Singapore’s Social Enterprise Stock Exchange to Launch Soon
For impact investors and social enterprises looking for ways to link up, the ultimate dream is to have a stock exchange aimed solely at mission-driven companies.
That’s a difficult feat to pull off, to put it mildly. You need a critical mass of investors and stock-exchange ready companies, not to mention the wherewithal to meet all manner of red tape and regulatory hurdles, as well as establish the technology capable of supporting the venture.
But such an exchange is well underway in Singapore.
It’s the brainchild of Durreen Shahnaz, a former social entrepreneur and banker. About a year ago, she launched Impact Partners, a private marketplace that connects accredited investors with social enterprises making $5 million or less in revenues looking to raise $1 million to $7 million; the median is $2 million. The venture has raised about $70 million of capital, lists about a dozen companies, and has about 140 investors, with four or five more signing up every week, according to Shahnaz.
Impact Partners, however, was part of a larger plan to form a public stock exchange for social enterprises called Impact Investment Exchange Asia, or IIXA. And Shahnaz says she plans to launch it officially at a forum to be held June 25 to 26 in Singapore called Igniting Capital Markets for Social Good. That, in itself, is an ambitious event, with Jonathan Greenblatt, head of the Obama administration’s Office of Social Innovation, as the key note speaker.
Because Singapore regulators insist that the exchange not be open to retail, it will be for accredited investors only, at least initially. But companies will have to meet social, as well as financial, parameters, with general listing criteria such as having a social and/or environmental goal as their main focus and regularly publishing assessments of their social impact. Trading will take place online through a partnership with PhillipCapital Group , the largest brokerage firm in Southeast Asia, according to Shahnaz. As she puts it: “We’re taking their existing platform and white labeling it into our own exchange.”
Still, don’t expect this to be up and running July 1. The launch is more an announcement that the IIX will be open for business soon. For example, there aren’t any companies actually listed yet, although Shahnaz expects some of the investors involved in Impact Partners will migrate to IIX. “This is about opening IIX up to the world,” says Shahnaz.
In the meantime, Impact Partners will continue to provide fuel for IIX. According to Shahnaz, many of the social enterprises that want to participate in the private marketplace need a lot of help before they’re ready for prime time. Many are firmly founded on admirable ideals, with less grounding in financial rigor. So, there’s a lot of work on financials and business plans.
More important, Shahnaz is developing a pipeline, of sorts. Recently, she teamed up with a former Silicon Valley entrepreneur who, after selling his company, moved to Singapore and is looking to give back. Now, she regularly pitches companies–mostly technology startups with, say, systems for water purification or for providing energy to rural areas that are off the grid– to him to receive seed funding. Then, once those companies are ready for their next rounds of funding, Shahnaz hopes they can move to the private marketplace and, after that, perhaps the public stock exchange.
“In the U.S., there’s this whole ecosystem where there’s venture capital funding and a system through which organizations can grow,” she says. “That’s what we’re trying to do here.”
IIX and Impact Partners aren’t the only marketplaces out there aimed at social enterprise. For example, there’s Social Venture Exchange in Ontario, which links accredited investors with companies making $100,00 to $25 million in revenues. Founder Adam Spence hopes to turn that into a public exchange eventually. Similarly, Mission Markets in New York aims to build a hub linking stock exchanges globally. And there’s been an effort underway in London for several years to build a regular, retail social stock exchange.
Still, IIX seems to be the furthest along. And, for Shahnaz, even if there’s still a ways to go in getting the exchange up and running, just making it this far means a lot for the future of impact investing and social enterprise. “It has done a tremendous amount for creating a social capital marketplace,” she says.