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5 Lessons on Building Social Enterprises in the Philippines

5 Lessons on Building Social Enterprises in the Philippines

Social entrepreneurship is gaining ground in the Philippines. According to one estimate, social enterprises already benefit 4.7 million people per year. I’ve been working to develop programs that support social entrepreneurship in the Philippines for about fifteen months now. It’s been an amazing journey so far learning about the economy, people, and culture. As I continue my work with our partner, the University of San Carlos, and we prepare to launch our second iteration of these programs, it seems like the right time to reflect on what I’ve learned so far. 

Here are my 5 lessons on supporting social entrepreneurship in the Philippines:

1. Island geography matters. The Philippine archipelago is comprised of 7,600 islands. Among those only 2,000 are inhabitable, but that is still a huge number. The island geography reinforces strong local communities and regional identities, with social entrepreneurs targeting familiar local problems. Living in these communities, entrepreneurs are well-equipped to understand and create solutions to address local challenges. On the other hand, entrepreneurs deeply embedded in local communities may face challenges thinking about and preparing for scale, which is necessary to increase their impact. The unique geography also lends itself to agriculture, fishing, tourism, and natural disasters (among other things), that suggest unmistakable opportunities for those looking to make a positive impact.


2. Social entrepreneurs need to think bigger.  There is no shortage of talent, ideas, or passion to improve people’s lives in the Philippines. Everywhere I’ve been, entrepreneurs are there, tackling important and challenging problems. What’s harder to find are those who are willing to think big. There’s no Silicon Valley ethos within the Philippine’s (yet), so big ideas and risk taking aren’t typical features of the culture. Though that is definitely changing. More higher education institutions are instilling entrepreneurial thinking in students, more accelerators are supporting startups, the economy is growing at over 6% per year, and younger socially-minded entrepreneurs are realizing the opportunity to reach beyond their local communities.

3. Most social enterprises are not “investment ready.” This isn’t unique to the Philippines. Practically every entrepreneur I’ve worked with insists they need funding, and many do. Yet most aren’t prepared to receive funding. What’s needed? A realistic growth plan, a financial forecast, an understanding of the types of capital and best uses for each type, an understanding of what returns an investor expects and the ability to articulate what returns your investors will receive, and clarity about how the capital will be used. At Miller Center we refer to this as the “Justifiable Ask,” and developing one is a critical step before raising capital. Even with a compelling justifiable ask, many social enterprises are just too small to effectively absorb the available capital, which currently trends toward larger deal sizes.

4. Impact investors don’t (yet) support early-stage social enterprises. There is so much hype around impact investing that you’d expect investors to be pouring capital into the ecosystem to support fledgling social enterprises. That’s not exactly the reality. While large amounts of investment capital are flowing into the Philippines, the vast majority of it comes from Development Finance Institutions (DFIs) and is focused on large-scale microfinance, infrastructure, and energy projects -with average deal sizes over $50 million (see the Landscape for Impact Investing in Southeast Asia report). Private impact investors deployed $107 million over 54 deals between 2010-2017, with a trend toward larger ticket sizes. This has left a gap in funding, often referred to as “the missing middle.” More local angel investors and philanthropic organizations are needed to provide risk-tolerant grants and capital in deal sizes ranging from $50,000 and $500,000.

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5. We need more local champions.  The promise of social enterprises across the Philippines can be seen in the stories of Hapinoy, Rags2Riches, Fishers and Changemakers, Regenesys BPO, Gawad Kalinga, ANTHILL, Coffee for Peace, Bagosphere, Human Nature, and Mad Travel (four of which are GSBI alumni). These pioneering enterprises are visible examples of what is possible, and they are an inspiration for the next generation of entrepreneurs. But we need more of them. We need more local success stories which become the aspirational role models for budding entrepreneurs and build buzz and confidence among investors.

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Social enterprises in the Philippines are growing, and a supportive ecosystem is developing to help fledgling social enterprises thrive. It’s amazing to be part of it.  If you are a part of this community of entrepreneurs, investors, mentors, NGOs, and educators -or would like to join it- please contact me. We can get farther, faster together. 



Miller Center for Social Entrepreneurship and the University of San Carlos in Cebu are launching the next GSBI accelerator programs in September 2019. Find out more about the upcoming USC GSBI accelerator or apply now.


About the Author

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Jeff is Program Manager, Growth and Innovation for Miller Center for Social Entrepreneurship at Santa Clara University. He is also Founder and Chief Strategist at iEnso Consulting, a boutique consultancy which helps purpose-driven businesses and entrepreneurs to bring new products and services to market. Prior to joining Miller Center, he was the Managing Director at Inkomoko, a business accelerator supporting the growth of high-potential entrepreneurs in Rwanda. His previous experience includes work as Venture Manager at Kaiser Permanente Ventures and Director of Product Marketing for Shaklee Corporation -a $500 million global consumer products company. He has also held positions with numerous startups including: Burn Manufacturing, Gazoontite.com, Syndero, Wikimedia Foundation, and GameChanger Products. Jeff earned his MBA from the University of Washington, Foster School of Business.



Miller Center and University of San Carlos Kickoff GSBI® Accelerator in the Philippines

Miller Center and University of San Carlos Kickoff GSBI® Accelerator in the Philippines

Twenty-eight local mentors gathered in Cebu City, Philippines to learn the methodology, skills, and best practices to provide effective mentorship to the inaugural accelerator cohorts of Philippine-based social enterprises. Andy Lieberman, Senior Director Growth and Innovation, Jeff Pilisuk, Manager, Growth and Innovation, and Michael Wray, a Senior Mentor with Miller Center’s Global Social Benefit Institute (GSBI), were there to kick off the launch of two accelerator programs in partnership with the new Center for Social Entrepreneurship at the University of San Carlos (USC).

The Philippines consists of over 7,000 islands and has a population of more than 100 million people. Over half of the residents live in rural areas and, though poverty levels have declined in recent years,  about one-fifth of the population still live below the national poverty line.

In February, Miller Center for Social Entrepreneurship, the University of San Carlos, and sponsoring partner, the Ramon Aboitiz Foundation Inc, formalized an ambitious 3-year partnership focused on building three key pillars of the local social enterprise ecosystem in the Philippines:

  1. University of San Carlos (USC) Center for Social Entrepreneurship: a center of excellence in Social Entrepreneurship that will develop courses and academic programs, facilitate field-based action research projects for faculty and students, and offer direct acceleration services to promising social entrepreneurs. A knowledge resource center for students, industry professionals, and entrepreneurs.

  2. Accelerating Local Social Enterprises:  a set of programs offering direct training and mentorship for promising social entrepreneurs, as well as the ability to proactively replicate/translate proven social enterprise operational models from around the globe into the Philippine island context.

  3. Locally-based Impact Investor Network: identify, engage, and educate current and potential impact investors and catalyze the local impact investor network.

Local Cebu mentors prepare to meet their mentees.

Local Cebu mentors prepare to meet their mentees.

Through collaborative partnerships such as this, Miller Center can share the Global Social Benefit Institute (GSBI) Methodology for Social Entrepreneurship, build the capacity of partner organizations, and greatly expand our reach and impact well beyond what we can achieve on our own.

On Tuesday, the second day of our trip, 27 social enterprises gathered for the start of the Boost accelerator, a 4-month program based on an extended version of our GSBI Boost curriculum. This group of entrepreneurs was made up of small and micro businesses, including bakers, tailors, weavers, furniture makers, soap makers, retail shop owners, food and agriculture producers, and a nonprofit providing housing to underserved populations. It was an incredibly diverse group yet all demonstrated a commitment to begin the journey to strengthen their business and increase their social impact.

Entrepreneur (left) and mentor getting to know each other.

Entrepreneur (left) and mentor getting to know each other.

The following day, nine entrepreneurs, representing seven social enterprises, gathered in Cebu for the start of the six-month GSBI Online accelerator. This impressive group of mostly women-led enterprises included: Orgunique (organic food and teas), Kinamot Nga Buhat (handmade jewelry and crafts), Fishers & Changemakers (sustainable seafood products), LoudBasstard (passive speakers), Que Alegre (organic products and farming), Pestales Agriculture Cooperative (organic products and farming), and Green Enviro Management Systems (mango flour and other mango byproducts). You could literally feel the enthusiasm and energy in the room as these entrepreneurs sat together with their mentors and began digging into the fundamentals of their social impact and business models.

By the week’s end our visiting team, together with the local team from USC, had completed two mentor workshops and launched our first two cohorts of social enterprises in the Philippines. We met with local impact investor Rico Gonzalez, Managing Director of Xchange.com, who shared his experience and perspective on the social enterprise ecosystem in the Philippines. We visited with leaders from Justice, Peace, and Integrity of Creation (JPIC), a social ministry that has built new housing for scavengers living near waste disposal sites.  It was a busy and fulfilling week, punctuated by new friendships, food, and hard work. And this is only the beginning.

 

ABOUT THE AUTHOR

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Jeff Pilisuk has more than 20 years experience developing new products and marketing programs, incubating new businesses, and advising and mentoring SMEs and entrepreneurs. Jeff currently manages Growth and Innovation programs at Miller Center for Social Entrepreneurship.