Real Leaders

The True Cost of Capital: People

On a visit to rural Vietnam a few years ago Don Lam met with a mother who had just lost her 8-year old daughter to a heart condition because she didn’t have the money for surgery. When he discovered that it would only have cost $3,000 to save her, Lam decided to act. As the founding partner of Vina Capital, one of Vietnam’s leading asset management groups, he adopted an attitude of giving back to the communities in which they worked.

He has taken mainstream financial regulatory requirements of ethics, transparency and fairness, and applied this to a social business model that promotes good. “If we’re going to invest in the community then we should start giving back to the community,” says Lam.

Their latest venture, the Lotus Impact Fund started in 2013, is effectively an impact investment fund. Lotus Impact actively invests in private enterprises that help solve social and environmental problems. Projects that produce catering graduates, business graduates for rural economic growth and clean water projects are funded through a process that merges local market knowledge with financial and social analysis.

“We focus on high social intent, but not necessarily a high return,” explains Lam.  “The measure of social impact is more important to us.” Vina Capital’s investor base is mainly in Europe, where investors admire the positive developments Lam has introduced.  “Many of our investors visit us and say they want to become involved,” says Lam. “They tell me that if they’re looking at two funds, both being equal, they’d choose us because of our social impact.” “The key in business is to lead by example because then staff will look up to you and follow what you do.

You can talk as much as you want but if you don’t actually do it yourself then it won’t have any effect,” says Lam. With a succession of global financial crises behind us, Lam has sage advice for how we should view money. “You should see money as a tool to create stability in whatever you do,” he explains. “The money we generate should be looked at from a wider investment perspective. Not following traditional trends in finance and focusing beyond short-term profits can result in better profits down the line,” he says.

Don’s Investment Check List:

  1. The first thing Vina Capital does is look at the people they’re investing it, not the industry. What they manufacture is less important than the people managing the business.
  2. The people who manage the business might run a fantastic operation but if they’re not ethical it will go sideways very quickly
  3. Vina Capital looks at how the company treats the community around them. It’s important in the long-term that these businesses have a sense of social responsibility.
  4. They don’t invest in a business that is making a lot of money by cutting corners. An example would be in Bangladesh or Pakistan, where factories collapse and kill workers. You’ll make money in the short-term, but rather focus on a long-term return for your investment.

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