Shuyin shares her unique impact investment strategy of achieving scalability and change in Asia
Unitus Impact is a venture capital firm with a differentiated mission. The firm invests in scalable businesses that improve the livelihoods of the working poor in Asia’s fastest growing economies including India, Indonesia, Vietnam and the Philippines.
As the Principal of Unitus Impact, Shuyin leads the firm’s investing activities, focusing on Vietnam and the Philippines. She hones eight years of professional experience spanning across strategy consulting with Bain and Company, development consulting and impact investing across Australia, India and Southeast Asia.
In 2015, Shuyin was named one of Australia’s “100 Women of Influence” by the Australian Financial Review.
This year, she placed as an Asia 21 Young Leader by the Asia Society.
We understand that Unitus Impact’s investment strategy focuses on scalable ‘livelihood businesses’ in Asia’s emerging economies. Could you elaborate further?
We’re a venture capital firm with the dual mission of increasing incomes and improving the livelihoods of the working poor and generating a market rate of return for our investors. We’ve seen that the kind of companies that most effectively achieve these goals are usually linked to improving supply chains and building innovative distribution platforms. Our investment thesis is centred on reducing market inefficiencies and improving market linkages. This impact tends to be ‘backed in’ to the business model, and scales as the business scales.
As for why we focus on South Asia and Southeast Asia, it’s simply the perfect place to prove our thesis. Our focus countries – India, Indonesia, Vietnam and the Philippines – are all large, fast-growing markets with attractive demographic trends. Beyond this, what’s particularly important for us is that these countries contain a high density of low-income populations with growing purchasing power. Finally, we also see that M&A activity is on the uptick across the region, providing strong opportunities for exit via strategic sales over our fund horizon.
What are some of the biggest challenges Unitus Impact faces in these emerging economies, and how can investors better overcome these challenges?
The impact investing sector is so nascent in the region and thus, it takes a bit of time to help others understand our dual mission and how livelihood impact and top quartile financial return go hand-in-hand. Historically, a lot of funding for social impact organisations have been more philanthropic in nature. Hence, it’s surprising for some to find an impact investor structured and operating like a traditional venture capital firm.
More generally, there’s the challenge of finding companies which have potential beyond Vietnam. For obvious reasons, we prefer multiple country plays and this requires a team with the vision, skill-set and network to achieve that.
Our most recent investment in Vietnam, Topica Edtech Group, is a great example of a company which is fulfilling a market need which doesn’t just exist in Vietnam, but across Southeast Asia.
Unpacking the local business dynamics and regulatory environment is also critical. That’s why being on the ground is really important – which we are – with teams in Vietnam, Indonesia and India. Without that local presence, it’s hard to build the same depth of network or even truly appreciate the pain-points that needs to be solved.
Based on your insights, what are some of the most promising tech-related opportunities in these economies today?
We don’t invest only in tech, but we like tech-enabled businesses as it typically enables much greater scalability and impact. I guess the easy answer here would be to say something like ‘Agtech’ or ‘Edtech’, but what we’re really thinking about is how we can use technology to link fragmented suppliers or distributors. Supply chains and distribution chains are incredibly fragmented in the emerging markets we operate. There’s a significant opportunity to use technology to increase the efficiency and transparency of these.
For example, Ruma, one of our portfolio companies in Indonesia, provides a mobile-based platform to enable small ‘mom and pop’ stores to offer and sell customers high-quality, appropriately-priced goods that are designed for their needs and wants. Another example is Sabonka in India. The informal sector (i.e. small stores, rather than supermarkets) accounts for more than 90% of retail value in India. This trend is observed across the countries we work in. Sabonka has created a mobile platform which optimizes distribution channels between distributors, wholesalers and retailers. This enables retailers to place orders and make payments with multiple channel partners through a single platform, streamlining these transactions considerably. For both Ruma and Sabonka, there’s going to be a significant positive impact on small, low-income retailers, but they’re also targeting markets which are hundreds of billions of dollars in size.
How does Vietnam place in Unitus Impact’s overall vision and strategy?
I’ve been living in Vietnam for the past 4 years now and have been able to witness the growth of the entrepreneurship ecosystem. One might say it’s at a tipping point. You have the generic factors, which you see in all of our focus countries – the attractive macro-economics and demographics – but there are several Vietnam-specific drivers as well.
Firstly, there’s an incredible entrepreneurial spirit, as seen through the sheer grit and determination of most Vietnamese entrepreneurs – whether relatively young or the more seasoned ones. Secondly, it’s also a relatively well-educated population. Vietnam is an outlier on international academic tests, performing far above countries with a similar GDP per capita. While many continue to lament the lack of critical thinking, creativity, and job-readiness of Vietnamese graduates, there’s no doubt that a lot of the basic building blocks are there from a skills perspective. Thirdly, there’s an increasing trend of returnee entrepreneurs and locals who have had experience studying and working abroad, bring an international mindset to local problems, and can navigate both worlds.
Finally, because it’s considered a bit of a ‘black box’ to foreigners or those not living in Vietnam, there are more untapped opportunities here. Those conversations about “are we in a bubble?” don’t even exist here…valuations for the most part are reasonable and if you’re on the ground it’s relatively easy to get access to deals.
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Shuyin is one of the high-profile speakers presenting at Echelon Vietnam 2016 on the 18th – 19th November. Don’t miss your chance to meet Shuyin and other key personalities in the tech ecosystem. Grab your tickets here!
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