Crowdfunding with Music Securities: A New Approach to Impact Investing

A 2019 study by the Global Impact Investing Network (GIIN) estimated that there are over 1,300 organizations managing over $502 billion in impact investing assets globally. The GIIN’s annual impact investor survey observed that assets allocated to Asia, specifically South Asia, East Asia, and Southeast Asia, have increased considerably among its 4-year repeat respondents (GIIN 2019). Of the $37.1 billion managed by these correspondents in 2014, $5.9 billion was allocated to Asia. The figure grew at a compound annual growth rate (CAGR) of 21.6%, reaching $12.9 billion in 2018. This growth was significantly faster than the 16.5% CAGR experienced by the total assets under management (AUM) by the survey correspondents, and second only to the Middle East and North Africa region. Other optimistic signals, aside from the growth in AUM, point to the narrowing of the knowledge gap between capital providers and impact investors, and a growing proportion of capital deployed through private impact investors instead of development finance institutions.

Key points

• Impact investing activity in Asia has grown quickly, but it will be a challenge to maintain the pace of scaling due to the complex and widely heterogeneous landscape of the region.
• Crowdfunding has been identified as a potential solution to match the demands and risk appetite of investors to the needs of operators. A case study on Music Securities is used to highlight the key benefits and risks of such an impact investing model.
• Formulating appropriate and efficient policies and increasing awareness among investors will also be crucial in promoting impact investing activity.

Policy Brief No: 2020-1