The Trailblazers in Impact Interview Series celebrates some of the partners we’ve worked with over the years in creating positive social and environmental impact.
In this edition, we speak with Founder and Executive Director of Damson Capital, Leon Toh. In 2015, Leon Toh and Dr Amir Amiruddin founded Damson Capital, an impact investing and advisory firm based in Singapore. The firm develops impact enterprises in Asia with the potential for impact on their communities and sustained financial returns.
In addition to founding Damson Capital, Leon also served on the board of directors for Biomass Group, a renewable energy company in Sri Lanka. Prior to this, he was a strategy analyst at Accenture. Leon also co-founded Eden + Elie, a socially conscious jewelry brand in Singapore.
Enjoy the read!
- Tell us about yourself and how you came to join Damson Capital.
Prior to Damson Capital, I worked on an Australian aid-funded project in Timor L’este with Monash Private Capital. One of the things I realized was that some very complex problems can sometimes have simple solutions. Realizing that we have a number of solutions already available in the world was very impactful to me.
I started focusing on impact investing a little more than 3 years ago. At that time, I saw many social enterprises with unique propositions but often lacking access to capital, which I believe is at the heart of what hinders social entrepreneurship from flourishing. It was clear to me that many good social enterprises need to have their true potential unlocked with capital.
- What is your investment thesis and which sectors/markets are you looking at closely?
Damson Capital is sector agnostic in that we don’t specialize in a specific industry, but I believe we also recognize that there are areas where we do not function properly or where we do not have the expertise.
So far, we have done well with agriculture, renewable energies, logistics, technology. We are currently expanding to a number of areas such as food.
- What do you look for when deciding to invest in an impact enterprise? What are your key growth metrics?
First, we would generally start with the social enterprise’s Theory of Change. What are their long-term goals? What problems do they want to solve and how do they plan to solve it? We need to understand if the solution and the challenge are things that need to be solved in order to advance in addressing the Sustainable Development Goals (SDGs). Hence, we study the challenge and how big it is.
Second, we assess what makes the challenge difficult to solve and seek to understand if other people are already tackling it, have attempted to do so, or if not, understand why no one has tried to tackle it so far.
Finally, we think about what else Damson Capital can bring to the enterprise—from financial support to operational know-how.
- What does your post-investment strategy entail?
For us, the post-investment strategy is still about impact measurement and metrics. Most importantly, we look at two things:
The first is: Have they done what they claim they were supposed to do in tackling an environmental and/or social challenge?
The second is: Have they achieved a certain level of self-sustainability or support from their ecosystem?
- What would you advise new investors in navigating the impact investing space?
The key is for investors to be open to exploring new ways of working with social enterprises. Impact investors should never forget that they are investing in an impact solution that comes in the form of a scalable company.
We see many problems in the financial sector because the sector normally does not quantify social and environmental outcomes. Impact Investors need to be clear that they are in the impact investing space—and change this trend by quantifying and measuring impact.
- What would you advise impact enterprises when they are raising capital?
I would impact enterprises to go back to the core of what the business is trying to achieve: solving a problem. If no one is buying the solution to the problem, chances are that you are not tackling the problem.
Impact enterprises should really focus on understanding the problem before they set out to build the solution. We see a lot of people with good intentions tackling certain problems, but they are sometimes not allocating the money in the right solution.
Just because you have a solution for market access does not mean that you will solve everybody’s market access problems.
- What was it like working with IIX? I have a deep appreciation for the work that IIX does. I think a lot of people undervalue the amount of ecosystem building that IIX has done. We get to talk about impact investment with people understanding what it means because of the ground work that players such as IIX have done. IIX has put a lot of depth in bringing its impact assessments to the market for people to understand what impact means.