Music Securities: Making an impact through crowdfunding

• Main Authors: LIANG, Hao, KAPOOR, Anant, HUANG, Bihong
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2020
• Subjects: crowdfunding; impact investing; social investment; social return on investment; disaster relief funds; empathy-based investment; Finance and Financial Management
• Online Access: https://ink.library.smu.edu.sg/cases_coll_all/286; https://smu.sharepoint.com/sites/admin/CMP/cases/SMU-19-BATCH%20%5BPDF-Pic%5D/SMU-19-0042%20%5BMusic%20Securities%5D/SMU-19-0042%20%5BMusic%20Securities%5D.pdf
• Institution: Singapore Management University

This case is set in October 2019. Masami Komatsu, CEO of Music Securities (MS), had received a request from Toyomi Electric Co. Ltd. Toyomi Electric had suffered damages to its factory and workforce in the 2011 earthquake that had struck Japan, and needed urgent financing to rebuild its production capacity. It sought help from MS to raise funds on its online crowdfunding platform, Securite. Securite was an investment crowdfunding platform with a focus on empathy-based financial inclusion. Among the several hundred funds it managed, Securite had previously set up disaster relief funds aimed at providing financial aid to businesses destroyed by natural disasters. As a victim of the 2011 earthquake, Toyomi Electric would qualify as a potential recipient of this financial aid. However, Toyomi Electric had a reputation for generating negative social impact by releasing pollutants into the air and water, harming the well-being of neighbouring populations and environment. Investment decisions in Securite were guided by three criteria: social returns, strength of the business model and expected investment returns. Before deciding to raise funds for Toyomi Electric, MS must evaluate the potential impact of its decision and the alignment with the MS’ objectives. Students will be able to 1) identify key stakeholders and an organisation’s relationships with them, 2) observe how unique schemes integrate both profit-driven and philanthropic objectives, 3) explore how organisations influence stakeholders to achieve sustainability and how their actions impact stakeholder interests, 4) consider various measures of social costs and benefits, and 5) understand a new way of market entry for small investors, that is, impact investing through crowdfunding.