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News

June 5, 2017

IDB-JICA Joint Seminar "Empathy Driven Funding: New Frontier of Financing Small Businesses"

Overview

photo Mr. Narita (MIF Specialist)

Name: IDB-JICA Joint Seminar "Empathy Driven Funding: New Frontier of Financing Small Businesses"
Date: June 1, 2, and 5, 2017
Organized by: Inter-American Development Bank (IDB), Japan International Cooperation Agency (JICA)
Supported by:
[Sendai Seminar] Miyagi Prefecture, Iwate Prefecture, Fukushima Prefecture, Sendai City, Kahoku Shimpo Publishing Co.
[Osaka Seminar] Osaka Prefecture, Hyogo Prefecture, Nara Prefecture
Location: Tokyo, Sendai, Osaka

Moderators and panelists

photoMr. Hatada (Chairman, Abaco Credit Union)

Mr. Ichiro Oishi (Representative, IDB Office in Asia)
Mr. Keisuke Nakamura (Special Advisor, Multilateral Investment Fund (MIF) )
Mr. Tetsuro Narita (Specialist, MIF)
Mr. Toshitaka Takeuchi (Senior Director, Latin America and Caribbean Department, JICA)
Mr. Miguel Hatada Endo (Chairman, Abaco Credit Union)
Mr. German Matzumura Simabukuro (Deputy CEO, Abaco Credit Union)
Mr. Masami Komatsu (President/CEO, Music Securities, Inc.)

Tokyo Seminar
Mr. Hajime Takeuchi (Director General, Latin America and Caribbean Department, JICA)
Mr. Kentaro Maruyama (President, MARUYAMA COFFEE Co., Ltd.)
Mr. Izumi Yamashita (Individual Investor)

Sendai Seminar
Mr. Taisuke Sakurai (Director General, Planning & Coordination Department, Fukushima Prefectural Government)
Ms. Mana Iwasaki (Executive Member, Kanbai Shuzo)

Osaka Seminar
Mr. Takashi Chikazawa (New Industry Creation Group Leader, New Industry Division, Industry Promotion Bureau, Industry Labor Department, Hyogo Prefectural Government)
Mr. Toshiharu Shimomura (Corporate Promotion Group Director, Sales Administration Department, The Shiga Bank, Ltd.)
Mr. Kazuhiro Tashiro (CEO, Tashiro Coffee Co., Ltd.)

Primary objectives and outcomes

photoMr. Matzumura (Deputy CEO, Abaco Credit Union)

JICA, in coordination with the Multilateral Investment Fund (MIF) of the Inter-American Development Bank (IDB), conducted a study on the potential of micro investment crowdfunding to support local micro, small and medium businesses in Latin America and the Caribbean region. Micro investment crowdfunding is a mechanism of innovative financing through investment, in which individual investors can finance small amounts directly to a specific business operator via an internet platform. In Japan, micro investment crowdfunding is being promoted by the Cabinet Office as part of the "FURUSATO Investment" initiative, and is becoming widely used as a new financial approach. Shortly after the joint study report "Empathy Driven Funding: New Frontier of Financing Small Businesses" was completed, these joint seminars were held with a focus on the possibility of utilizing micro investment crowdfunding to promote sustainable development in the region, and the possibility of Japanese small and medium enterprises utilizing micro investment crowdfunding when trying to develop business in the region.

Content of the discussions

photo[Tokyo Seminar] (from the left) Mr. Nakamura, Mr. Komatsu, Mr. Yamashita, Mr. Maruyama
photo[Osaka Seminar] (from the right) Mr. Matzumura, Mr. Tashiro, Mr. Shimomura, Mr. Chikazawa, Mr. Komatsu, Mr. Nakamura

One of the key features of micro investment crowdfunding is that individual investors can easily finance small amounts for the specific businesses they wish to support. This type of investment is motivated not by economic returns, but rather by an emotional attachment to the business operator, the business impact, and/or the area where the business will make a difference etc. As for the business operators, the money mobilized via the micro investment crowdfunding platform can be regarded as funds with a high degree of freedom. In some cases, the platform will enable business operators having difficulty in procuring the necessary funds with conventional financial products, which require collateral or credit. While financial access is still an issue in the region, with the expansion of the middle class and improved internet access, there now seems to be a foundation to launch these new financial channels driven by empathy.
In the seminars, Mr. Narita, an MIF specialist, explained that there are a growing number of financial institutions utilizing these new financial approaches, complementing the conventional financial institutions in order to finance micro, small and medium-sized enterprises, which is one of the major development agendas in the region. During the panel session, there was a lively discussion on the potential of micro investment crowdfunding among the distinguished panelists which included crowdfunding platform operators, businesses with experience in raising funds via the platform, local governments, financial institutions, and individual investors.

In order to meet the vast financial demands of sustainable development in developing countries, expectations for private sector participation are increasing, in addition to the direct support provided by ODA. New mechanisms of private finance such as micro investment crowdfunding are envisioned to play a more important role in this regard.

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