The theme of social impact is taking over the centre stage in the Southeast Asian (SEA) tech startup ecosystem this year, with social enterprises being in the spotlight, but challenges remain for companies that are working in the sector.

While some of the challenges that they are facing are relevant to startups in any vertical, there are some specific problems that they face that require a tailored approach.

To uncover the issue and its possible solutions, e27 reaches out to some of the startups that have participated in the first cohort of Sustainable Impact Accelerator, a programme jointly organised by the Singapore Centre for Social Enterprise (raiSE) and venture capital firm Quest Ventures.

These three startups –SoundEye, The Posture Lab, and ACKTEC Technologies– reveal the challenges that they are going through and how taking part in the programme can help them tackle them.

The two most pressing issues

When asked by e27, the three companies agree that balancing social impact and generating revenue remains the top challenges they face as social impact startups.

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SoundEye –a social enterprise that provides a range of innovative and smart safety solutions that seek to protect, secure, and monitor– stresses that it is especially hard during the pandemic when the company must find ways to survive.

To address this, SoundEye finds ways to reduce the cost of goods sold. The easiest way is to innovate and use affordable components – and we are not referring to using an inferior product. For example, we use a single microprocessor to perform sound recognition and vision analytics instead of two. Doing so reduces the hardware cost and better organises how our back-end system works. We also removed the need for gateways, servers, expensive networks, and cloud computing that leads to cost reduction for our customers,” says Dr Tan Yeow Kee, Founder of SoundEye.

“By doing all these, we can keep our solution affordable and generate social impact without burning a big hole in our customers’ wallets. SoundEye is always finding ways how we can achieve more with less,” Dr Tan stresses.

A similar approach was done by ACKTEC Technologies, an edutech company focused on creating an immersive learning environment that is affordable and accessible to low-income students in Southeast Asia.

“Balancing impact creation while at the same time ensuring a profit is one of the greatest challenges. We believe in making quality education affordable and accessible to all, which is a key differentiating factor between our competitors and us,” says Rayvan Ho, Founder and CEO of ACKTEC Technologies.

“Hence, even though there are short-term costs involved in impact creation (i.e. keeping the product affordable to students from low-income backgrounds), we are here for the long term. As such, we are strategic in our spending decisions and social impact creation to create more value in the long run.”

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For Posture Lab, which runs an in-studio and posture training for diverse users, including persons with disability, revenue and impact are something that is inseparable.

“Oftentimes, others place their focus on revenue and impact separately. However, in our case we want to create impact seamlessly together with revenue generation. Though it may sound impossible, technology makes it more accessible and easier to work with demographics that may not have access to these services,” explains Emile Dumont, Founder-CEO of Posture Lab.

“In today’s economic situation, we focus strongly on a B2B model and run initiatives where customers will be part of the impact loop. Apart from ensuring that our training and app offers are inclusive for people with diverse needs, we are also planning to provide subsidised services for persons from low-income backgrounds when we launch our app.”

What investors can do

Quest Ventures shares its insights on the biggest challenges faced by startups in the social impact sector.

“Startups will face the challenge of balancing impact creation and business growth, aligning expectations of stakeholders and business partners, and getting their investors to better understand how impact can translate into enterprise value,” says James Tan, Managing Partner at Quest Ventures.

“With sustainability coming into focus in these few years, the challenge may be slowly mitigating, but investors should put teeth in their commitment to sustainability and impact by actually investing in and supporting the growth of impact-driven startups … Together with our local and international partners in the startup investment ecosystems and social sectors, we are able to support the startups in expanding beyond the local market and pulling together resources to replicate and scale.”

Also Read: Startups should work with corporates to achieve balance between social impact, sustainability: Arcadis

Its collaboration with raiSE is an example of the initiative that it set up to support startups in the social impact sector.

Founded in 2015, raiSE aims to develop the social enterprise sector in Singapore by providing financing options, capacity building, and mentorship to startups in the relevant sector.

Since 2022, it has partnered with Quest Ventures to launch the Sustainable Impact Accelerator which is described as Asia’s first venture capital-backed accelerator programme for social enterprises.

Alfie Othman, CEO of Singapore Centre for Social Enterprise, raiSE, explains the challenges that social impact companies are facing: “According to a study on The State of Social Enterprise in Singapore that raiSE conducted in partnership with the British Council in 2021, the top three challenges faced by social enterprises are customer acquisition and market development, access to financial support, and building internal capabilities.”

The accelerator aims to help social impact companies by providing startups with funding of up to S$50,000, access to mentors from world-class partners and investors, and valuable insights on business and social topics from industry experts.

The ten-week programme has recently opened applications for the second cohort of its programme.

“We continue to partner with Quest Ventures to provide promising, socially impactful startups with the support they need to improve their competencies and access regional and global markets for the second cohort of the accelerator this year. The Sustainable Impact Accelerator’s first cohort has proven successful – with companies pitching to over 2,000 investors, corporates, and government organisations within the programme’s first three months. We are always heartened to see participants benefit from the programme, whether it be scaling their business, growing their impact, or gaining footholds in new markets,” says Othman.

Also Read: Startups should work with corporates to achieve balance between social impact, sustainability: Arcadis

“Together with our partners and the Quest ecosystem, we look to identify and support regional champions with purpose and profit as their core engines of growth. We invite international social impact startups looking to pilot in Singapore and leverage it as a launchpad to Southeast Asia to join us in their next phase of growth,” Tan closes.

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Image Credit: Quest Ventures

 

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