Posted on: October 17, 2019
Posted in: Business & Management,
90% of start-ups don’t succeed. For new social ventures aiming to marry financial profitability with positive social impact, the chances of failure are even higher. With the right strategy and enough passion, however, social entrepreneurs can and do prosper. Self-defence school, Kapap Academy Singapore, is one such story.
The Kapap Story
For Master Teo Yew Chye, what became a social movement of thousands, began as a deeply personal tragedy. It became Teo’s mission to ‘defend the young, the weak and the old from the brutalities that they may otherwise be subjected to’. Primarily, through training in defensive martial arts.
Since 2007, the self-defence school has trained over 50,000 vulnerable people across multiple locations, armouring them with an arsenal of ‘realistic personal protection skills’. As Master Teo and co-founder Yunquan Qin were acutely aware, however, their outreach work could not continue without the profit to sustain it.
Success in Singapore
Kapap Academy were able to establish themselves in their home region by developing a strong corporate client list, alongside property investments, to help diversify the academy’s income. This allowed them to focus on their social mission through subsidized self-defence training across their Singapore locations, whilst also remaining a viable business.
Self-defence classes for Corporates constituted a significant contribution to profits, with training revenue supplemented by investments in property to generate passive income. Qin estimated the annual revenue from these investments was expected to double within the next five years.
These diversified revenue streams provided stability and sustainability within their own region, meaning the Kapap Academy could turn their attention to a new challenge – taking their social enterprise to the vulnerable in India.
Expanding into the Indian Subcontinent
Qin felt passionately that India was where Kapap Academy could ‘have the greatest impact on society’. Much like in Singapore, domestic violence in India is typically suffered by women. India’s Ministry of Health and Family Welfare survey (2005) estimated one in every three women having been victims. Galvanised by these shocking realities, it was Qin’s ambition to train more than 100,000 disadvantaged women and children over an initial period, for free. But how could she finance such a vast project as it scaled?
The ‘Hub and Spoke’ Approach
Entering new markets was not new territory for Qin, who had previously forged overseas partnerships both in Sri Lanka and China.
Forming partnerships was an idea informed by the ‘hub and spoke’ approach – a method allowing Kapap Academy to establish a presence in new communities with low overheads, commitments and funds. A straightforward system, their approach could be distilled to three simple steps: 1) seeding potential partners to form hubs in local communities, 2) understanding local markets, and 3) selling licenses to personal trainers to act as spokespeople and advocates for Kapap Academy.
As a recipient of the Queen’s Young Leaders Award in 2017, Qin had access to a qualified network of more than 240 people within the Commonwealth. Before long, she had established relations with two committed partners in the Indian market, who believed in Kapap Academy’s mission and were eager to help.
With partnerships established, Kapap Academy needed to consider rebuilding brand awareness, as well as their wider marketing. Without a marketing budget, they would be solely reliant on the goodwill of brand advocates and evangelists. This process would be slow, and ultimately limited in impact.
Qin responded to the challenge fast, opting to fund this phase through a loan and building awareness-spreading collaborations with local partners and social enterprises. Kapap Academy used the loan to establish a market presence through publicity events, and print and media coverage. Though this opened them to the risk of an insufficient cash flow to repay the loan, it also ensured Kapap Academy could remain entirely independent.
To be self-sustaining was hugely important to Qin and Teo, who shared the belief that relying exclusively on handouts was a dangerous game. They were reluctant to develop a dependence on charitable fundraising, only seeking the formal recognition required to partake in it in June 2018. By this time, part-financing the Indian venture via fundraising was an option, but not a necessity.
External investment: using angel investors
Most crucial for Qin was to ensure that any external funding they did receive came from sources motivated by the same social causes that drove Kapap Academy.
Despite their ambitions to become a self-sustaining enterprise, Qin considered the possibility of raising capital through investors. Investors would contribute funding to the initiative in exchange for a stake in the company. Beneficially for the academy, any funds raised in this manner would be considered equity rather than debt. For Qin, however, involving profit-motivated investors would be equal to a damaging loss of autonomy.
With this in mind, Qin favoured working with angel investors. Angel investors generally invest from a philanthropic perspective, motivated by a shared belief in the recipient enterprise’s social mission. They are rarely profit motivated, and therefore often less particular about the terms of investment. Working with investors of this kind allowed Qin to fund the expansion of Kapap Academy, without having to surrender autonomy to profit-motivated external stakeholders.
Kapap Academy’s first foray into the Indian subcontinent was a gargantuan task, but Qin was steadfast in her resolve: “Of course, we have to go there– it is where we can have the greatest impact on society”.
Read more case studies of social entrepreneurs in ‘Social Innovation: Asian Case Studies for Innovating for the Common Good’.
Follow the Kapap story at: kapapsingapore.com.