Entrepreneur

9 Observations At MaGIC's SE Track That Show The State Of Social Enterprises In M'sia

Let’s face it. The social ills of a country cannot be fixed by one body alone.

It requires a concerted effort from various parties who have to work together to address such issues. One way of addressing this dilemma in a strategic manner is by engaging social enterprises (SEs).

By their very definition of sustainable businesses with a social focus, they help to drive economic growth while also solving social issues without relying on handouts or charity.

Malaysian Global Innovation and Creativity Centre (MaGIC) organises the MaGIC Accelerator Program Social Enterprise Track for the purpose of building up social enterprises and equipping them to make a change.

MaGIC’s main goal is to build the next wave of social entrepreneurs who will create an impact in the country that’s more meaningful and efficient in terms of funds. At the same time, they’re also building a community to address the social issues.

According to the CEO of MaGIC, Dato’ Ashran, there has been some shift in recognition of the value that social enterprises carry in Malaysia.

“One of the positive things we’ve been seeing in the ecosystem is that corporate players are starting to come forward. Their willingness to work with us and social entrepreneurs is pretty amazing. We naturally look for like-minded people first to move that momentum,” said Dato’ Ashran at a press conference for the event.

But what does this mean for the social enterprise scene as a whole?

After attending the Demo Day for the MAP SE Track Cohort 03 on November 24, we made nine observations of this cohort compared to the previous two and about social enterprises in general.

1) There has been a steady growth in revenue. 

Every cohort saw a rise in not only revenue but growth as a whole.

To put it into perspective, Cohort 01 saw a generated revenue of RM1.4 million while also receiving RM1.3 million in investments and their calculated impact on society amounts to about 18,000 people.

Cohort 02 upped the ante. Earlier in the year, they managed to generate RM200,000 in revenue but now they have grown to over RM2.14 million.

Cohort 03 has just finished the programme but  Dato’ Ashran shared that they’re hoping to see an increase in statistics from this cohort.

2) Impact investing is now a thing.

Dato' Ashran and Ehon Chan
Dato’ Ashran Dato’ Ghazi and Ehon Chan.

One of the latest trends in terms of investors is impact investing, which is quickly gaining traction in Malaysia.

There have been numerous debates on the technicalities behind the definition of what impact investing actually is.

However Dato’ Ashran urged everyone to focus more on the intent first because the end goal is to get active investors to want to make any form of impact.

“Once we bring in the people that’re putting in the money and maturing the process, then we can go and refine the technicalities of the definition. Or else we’ll be locked down with the nitty-gritties and the larger goal of the impact would not have been achieved,” said Dato’ Ashran.

3) Entrepreneurial spirit outside of the Klang Valley needs further development.

For Cohort 03, MaGIC found that they had applications from every state except for Perlis. However, they also noticed that Cohort 02 had more applications from outside states compared to Cohort 03.

This round, their SEs’ impact were concentrated in the Klang Valley and were only operating in 5 states. This is a very marked difference from Cohort 2 which had SEs operating in every state.

But in the end, region does not play a role in the selection process as MaGIC does not practice taking in applications based on a quota per state.

Instead, what they look for is whether they fit the qualifying criteria set. The criteria include having impact potential, business opportunity and value proposition.

Ehon Chan, the Executive Director of Social Entrepreneurship at MaGIC tried to explain the imbalance. “We’re wondering that since we run two cohorts a year, is it too many—given that the population outside of Klang Valley isn’t that large anyway. So to expect more ideas to come in every cohort twice a year might be too much as well.”

Currently, MaGIC runs outreaches, roadshows and the pre-accelerator outreach programmes to educate budding entrepreneurs on how to do the applications to get into the programme.

They theorised that Klang Valley has the most applicants because of A) location, where the accelerator is a 4 month programme that requires the entrepreneurs to be physically present at MaGIC and B) awareness and maturity in terms of understanding entrepreneurial concepts.

They aren’t planning on just leaving things as they are.

Ehon shared, “There’s a few things we’re thinking about. Do we change it to only one cohort, and do more pre-accelerators programmes leading up to the accelerator? Do we do more roadshows? Do we start targeting NGOs to help them become more sustainable or do we tap into the private sector to get them to be more socially responsible?”

4) There are more women in social enterprises.

Nur Aziatty from Rocka Atelier.
Nur Aziatty from Rocka Atelier.

Out of the 40 participants in Cohort 03, 53% of them are females, which tally with the previous statistics from Cohort 02 where 54% out of 48 participants were female.

This is a worldwide trend, and there’re ongoing debates as to why this is so.

Ehon said, “If you look at our national survey, when you compare it to the private sector, women in leadership positions in the social sector or social enterprises is definitely higher.

When you enter social entrepreneurship, you go in with good intentions. It’s about equality, being ethical and sustainability. Maybe it’s also the natural attribute of women to be more caring. But I think ultimately, it’s about finding that balance as well.”

5) It’s not about ideas anymore, it’s about execution.

We’re starting to see different iterations of similar ideas, and that’s not a bad thing. It’s all about identifying gaps in target markets and tweaking ideas to see what fits.

To put it another way, the pie is still big enough to sustain a lot more.

For example, take The Picha Project from Cohort 02 and Deliccia from Cohort 03. Both of them practice the same business model which is inclusive capitalism. Both of them generate revenue by selling food products prepared by a certain beneficiary through catering services.

The main difference between them would be their beneficiary market. Deliccia focuses on helping urban poor families while The Picha Project works with refugees. The F&B industry is large enough to accommodate both comfortably.

Other examples include Coffee For Good from Cohort 03 being similar to Agak-Agak from Cohort 02 where both help underprivileged youth by providing them with proper training in F&B.

6) Prime industries are dominating the Malaysian market.

For Cohort 3, 26% of the SEs are F&B and the Education industry respectively with 22% in Arts/Fashion. In Cohort 2, 30% were in Energy/Environment and Education, 26% F&B.

But similar to the locations, MaGIC also doesn’t select teams based on an industry quota, so these numbers are more indicative of the trends and issues that social enterprises are focusing on.

F&B in particular should not be much of a surprise. If there is anything Malaysians can be linked to, it’s food.

Education is also consistently one of the top 4 areas that Malaysia is keen on developing, so having SEs focused on it isn’t surprising either.

An example for Cohort 03 would be Telebort Telecommunications who plans to bring virtual reality technology into schools which is a step forward in terms of innovation.

According to MaGIC, the increase of SEs in the Arts/Fashion sector for this round is one of the upswings of the trend at the moment, which does happen once in a while.

7) Corporate mentors remain important. 

Cohort 03 made sure to keep with the theme of having a diverse range of mentors.

Out of the 25 mentors made available during this SE track, 46% were from the corporate field and this was a calculated decision made by MaGIC as they believed that this would benefit not only the participants but the mentors themselves.

As Ehon explained, “Most of them the social enterprises come in with only ideas. The people who are the best at organising the mess of ideas into action are the corporates.”

This is where corporate mentors play a key role as they no one understands the ins-and-outs of how to properly run a successful business like they do.

But MaGIC wants this to be a mutual benefit for both sides.

Not only will the corporate mentors be able to find partnerships with teams that may interest them, MaGIC also hopes to educate them on what social enterprises are actually about as well as how they are moving on to change the world while also maintaining sustainability.

Bringing corporate mentors in also translates into possible business opportunities and collaborations for the social enterprises who may be engaged by the mentors themselves to carry out projects together.

8) Partnerships between social enterprises are increasing.

We’ve also noticed a rise in collaborations between social enterprises, both within the cohort and even with the past alumni.

For example, Diaper.my from Cohort 03 have partnered with Blu Bear from Cohort 01 to manufacture eco-friendly washable diapers. Kayu Besi from Cohort 02 are providing wooden stalls for Coffeezone from Cohort 3 to use.

Within Cohort 03, Grow With Goose, Music & Me, Junior Nutri Chef and Telebort are also working together to grow the education sector.

Social enterprises are becoming more aware of the need to leverage off each other in the field of social entrepreneurship, instead of only focusing on the competition.

9) The general public still lacks proper education about social enterprises.

There’s not much point in highlighting these changes or growth if the general public who will be the consumers of the products have not changed their perception of social enterprises.

In fact, we’re painfully aware that not many people even know what social enterprises are and what they do.

From our personal observations, there are even people who should know better—such as members of the media—who have shown themselves to be ignorant of what exactly is a social enterprise. Thus, we can hardly expect the public to be more educated.

To sum it all up, we do feel that the growth of social enterprises in terms of numbers and revenue is very encouraging in Malaysia.

Increased corporate interest and involvement is another big step forward. However, the general population still has a long way to go when it comes to knowing about social enterprises and being involved with them, be it as consumers or as potential entrepreneurs.

 

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