Dialogue with OIC Capital: Insights on Impact Investments from a High Net-worth Individual

Interviewee: Dr. Jack Yeung, Founder and CEO of OIC Capital

CASVI: Why did you engage in impact investing?

Jack Yeung: I graduated from the University of Windsor in Canada, with a bachelor's degree of environmental engineering, which was aligned with my interest. After I returned to China, my first job was related to wastewater and waste gas treatment. In 2000, I started to do a job in the family business of plastic molds and other plastic products. I often discussed with various customers and partners how to make plastics sustainable, such as which environmentally friendly materials we should use, what methods should be used for disposal, and how to recycle and reuse plastic products.

After leaving this company, based on my own engineering background, I made technology investments at the beginning and promoted technological advancement through investment. As the chairman and founder of the Hong Kong Startup Council, I also hoped to introduce some advanced technology to mainland companies. During the investment process, I found that many people were only concerned about financial returns. Although I also made money from some technology investments at the beginning, I gradually realized that it was not all I wanted. All my investments yielded good financial returns but the little good impact on society. Thus, I studied B Corp and started to think of how to integrate non-financial elements into my investments.

In fact, when I was managing the enterprise, I realized that the purpose of the enterprise was not only to make money, which was a way to make the enterprise financially sustainable. Another important part was that we wanted to be a "mission-driven enterprise". Therefore, we would pay special attention to non-financial aspects, such as what a company would contribute to society, what it would contribute to mainland China, and how it would make all employees develop, form their own families, and engage in corporate social responsibility. After I left the plastic company, what I had invested in often ignored this mission. So, I have always been looking for some opportunities to integrate social impacts into my investments.

CASVI: How do you understand impact investing?

Jack Yeung: My view on impact investing is somewhat different. I think that funding is only a small part, and what can be invested in a broad “concept”. It includes investing my time, empowering people with potential, and using my social networks. Our investments can be more efficient in this way.

Sometimes, investing in a company is not as effective as investing in a person.

In my opinion, if one can invest and stimulate a person to do a big impact business, he or she can also inspire more people. Such investment will have a catalytic and amplifying function.

For example, when SVHK invests in Green Monday, we have always been supporting the founder David Yeung and thinking with him on how to promote the development of green culture in Hong Kong. The final effect is that basically, all Hong Kong citizens have recognized green culture, which has a great impact on the change of perception of a sustainable society.

I hope that a small number of assets can affect many people. When I invest in high-tech industry or sustainable food products, what I care about is how many people can be affected and how large the scale of beneficiaries is, given that the project is successful.

CASVI: How do you see the differences between investing in social enterprises and impact investing?

Jack Yeung: In the past few years, I realized that many social enterprises were unsuccessful because their starting point was “social responsibility” or “social work”, and they hoped to turn an idea into a business, which was different from the perception of a commercial investor.

As an investor with commercial enterprise background, I value the market-driven model more, such as how a company provides services to meet market demands and at the same time takes social responsibility, which is closer to the concept of impact investing.

In contrast, the founding teams of many traditional social enterprises look at disadvantaged groups and then create jobs for them to serve customers. Because I saw the difference between these two perspectives, I started to promote the innovation of social enterprises, considering that traditional social enterprises could change a lot.

Starting from investing in SVHK, I recently became the chairman and the largest shareholder of Dialogue in Dark Hong Kong, hoping to help the blind and hearing-impaired to use their talents to serve the community. It is part of my job and the best part of my job is to do impact investments. I am thinking about how to impact society from different perspectives, promote the development of impact investing, and educate other investors.

CASVI: How do you seek impact investment projects?

Jack Yeung: My investment focus is related to three Sustainable Development Goals, from poverty to food and to health, which we call "the poverty circle". In the poverty circle, charity accounts for a large proportion, such as helping the blind and farmers. However, some projects of this circle could actually be turned into a business. I also focus on food innovation and healthcare & medical products (diagnostic technology and anti-cancer technology) innovation. The rapid development of this field will bring relatively greater financial returns and social impacts.

I look for investment projects around the world because there are many interesting funds in different regions. In terms of project sources, since I served as the vice-chairman of the Federation of Hong Kong Industries and the chairman of the Hong Kong Startup Council, I have a lot of connections with funds and networks in different regions. I also have an industry background. In addition, my money invested in funds has brought me diverse networks in industries and companies. These could bring many potential projects. I also have some cooperation with the scientific and research community, such as helping universities in Hong Kong to develop and promote high-tech projects. Some of these projects may also become influential start-ups in the future.

CASVI: What are your expectations on the investing method and the financial returns?

Jack Yeung: OIC’s funds are all my personal assets, so I invest mainly in funds as an individual LP. I also participate in some direct investments, but the number is small. Because direct investments always require my deep participation. However, people have limited time and effort. The investment cycle of the funds I invest in is usually about 7 to 9 years. The expected financial return is around 20% IRR. At present, most of the funds I invest in have a return rate of about 30% to 40% IRR, which is relatively high. Mainly because I do more venture capital, where the corresponding risks are also relatively high indeed.

CASVI: How do you promote impact measurement and management as a high net-worth individual?

Jack Yeung: My own method of impact measurement and management is mainly to actively seek the most impactful projects of GPs’ reserve and invested projects. I make impact investments with several big family offices and actively publicize the projects. We also make our investment directions and investment cases public, which will help fund managers in the entire market to learn more about impact investing. Then they will gradually get involved in this field in the future.

In addition, I will also actively influence the GP whom I invest in. Because some of the GPs are investing in a wider range of technology, the main return they are concerned about is only financial return. Then I will slowly encourage these GPs to understand what impact investing is, how to do impact due diligence, and how to do impact reports, which are all learned from SFi. I believe that impact investing is not just about investing in a certain project, but also investing in people who have the potential to spread the ideology of impact investing. These people will stimulate more people’s social responsibility so that those groups can do more impactful things and bring more positive impacts to the society.