Impact Investment Case Study: Xi Xiang Women’s Development Association
Located in southern Shaannxi Province, Xi Xiang Women’s Development Association (西乡县妇女发展协会) is a non-profit organization providing trainings and microfinance to underprivileged women in Xi Xiang County. Since its establishment in 2005, Xi Xiang has set a clear mission to empower local women by changing their mindset towards an independent and respectful life, as well as providing them skill sets and seeding funds to start small businesses. Both Xi Xiang’s product design and customer mix are fully in line with its social objectives.
As one of the five winners of Diageo’s dream fund award under British Council’s Skills for Social Entrepreneurs project, Xi Xiang received one year of incubation services from Venture Avenue in 2012. The key topics include:
Capital structure optimization:
- Similar to many other NGOs in microfinance sector, donation and short-term loans are the major source of fund for Xi Xiang, which is instable with limited supply
- By developing a long-term strategic plan, assessing local resources, and conducting benchmark study, VA has worked with Xi Xiang team to lay out a clear scale-up roadmap through setting up a microfinance company (MFC)
- Xinhu-Yu VP Fund extended RMB1.4 million of loans which are convertible into equity upon set up of MFC
Operational support:
- A number of topics such as KPIs tracking, financial modeling and credit risk management were covered to ensure that Xi Xiang can continue its solid operation during the scale-up process
With another year of efforts and dedication, we’ve seen strong business growth in 2012 as well as encouraging progress in MFC registration:
Social impact
- Accumulated direct beneficiary reached 9.9k, 22% increase from 2011
- Outstanding loan balance reached RMB8.6 million, 36% increase from 2011
- Accumulated lending amount reached RMB41.9 million, 49% increase from 2011
Financial performance
- Revenue increased by 61% and reached RMB1.37 million
- With economies of scale, net profit jumped by 170%
MFC registration
- Received support from local government and Municipal Financial Service Office (金融办), currently in talk with Shaannxi Provincial Financial Service Office
- Xi Xiang is looking for social investors who share the same vision and value; it has received enquiries from 4~5 potential investors