Sydney-based social purpose organisation Good Return has launched fundraising for a $10 million impact fund which will guarantee loans to small businesses, mostly female-led, in Asia-Pacific countries.
Good Return Impact Investment Fund 2 is scheduled to follow on from the organisation’s first impact fund that raised its hard cap of $1 million in 2020.
Working in partnership with three local financial service providers, Good Return’s first fund guaranteed loans totaling $5.05 million to more than 600 small business ventures in Indonesia and Cambodia, 90% operated by women.
Investors in the fund included Macquarie Group, investing through the Macquarie Group Foundation, but most investors were wholesale and sophisticated investors.
The fund met its financial return target of equaling cash deposit rates from Australian banks.
Under the guarantee program, Cambodia’s Wing Bank provided an $8,000 loan to Voucheang Loa, a small-scale farmer, to build two growing enclosures and invest in seed and materials. The loan enabled Loa to expand her operation from a single annual rice crop to three fields of Chinese curly cabbage and six crop cycles a year.
In total, Wing Bank used the fund’s guarantee to de-risk loans worth $77,145 to 13 small business operators who did not have adequate collateral to secure loans.
The new fund, which will have an evergreen structure, will initially extend the guarantee program − once again targeting female-led businesses − to Fiji, Nepal, Indonesia and Papua-New Guinea. Investment in the fund is open to wholesale and sophisticated investors with a minimum investment of $20,000.
Peter McMullin, AM, a lawyer and co-founder of Good Business Foundation, another organisation that supports small to medium (SME) businesses in emerging markets, was an investor in the Good Return Impact Fund 1.
He said backing women business owners has a positive ripple effect.
“Entrepreneurs and SMEs don’t lack talent, only opportunity,” he said. “When given the right support and environment the women entrepreneurs I have met in our region have shown how they can grow businesses that are environmentally sustainable, economically resilient and create meaningful employment for their families and local people.”
Good Return’s head of Asia and impact investments Diana Tjoeng said the new fund will help address gender bias in the financial sector and extend its engagement with small businesses.
“Small businesses in the Asia Pacific form the backbone of developing economies and single mothers and other individual women entrepreneurs play a vital role. By empowering women, whether they lead family enterprises or operate independently, to access loans and use capital to grow their businesses, we can make a difference to economies more broadly,” she said.
The fund was an ideal opportunity for socially minded investors to trial impact investing, Tjoeng said.
“Your money technically stays within Australia but has a positive butterfly effect across the region. And, while the risk is minimal, the potential for positive change is enormous,” she added.
Image: Loan recipient Voucheang Loa tending her Chinese curly cabbage crop.