Social Entrepreneurship Ecosystem Report in Mongolia

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SOCIAL ENTREPRENEURSHIP, INNOVATION,
AND OPPORTUNITY
A Case study of the New Mongolian Entrepreneurship Landscape
By Molly McKeon
November, 2016

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This study would not have been possible without the incredible institutional support
provided by the Executive Excellence International Business Center in Ulaanbaatar under
Orgodol Sanjaasuren and with the guidance of Dr. Saha Meyanathan. Special thanks to
Dulguun Bayartsaikhan for unfaltering friendship, impromptu interpretation, and her
incredible generousity in helping me manage the basics. I would also like to acknowledge
the support of Enkhmaa Baatar and Oyundari Ganbaatar in providng interpretation and
logistical support as well as Enkhjargal Tsendjav for the inspired flashes of insight.
Thank you to the team at the Middlebury Institute for International Studies’ Center for
Social Impact Learning including Mike Ipson, Gerald Hildebrand, and Dorjnamjin Lhaajav
for your feedback, guidance and support throughout this process. A special thank you to
Annie Makela for being the soul of this project and to Erina McWilliams-Lopez for her
consistent grounding influence.
Within the entrepreneurship world, special thanks to four game changing contacts for
taking the time to help me uncover the disparate pieces of social entrepreneurship in
Mongolia and breathing fresh inspiration into the project. Thank you Enkhbolor Gantulga
for acting as the gatekeeper to a dynamic community of entrepreneurs and innovators
working with the World Bank Projects. Thanks to Badruun Gardi for helping me tap into an
alternative community of young entrepreneurs with very fresh ideas and to Bat-Orshikh
Erdenbat for helping me to understand the role of ODA in building this community. Most of
all, a special thank you to Delgermurun Khankhuu for her passion and for inviting me to
temporarily be a part of her dynamic world at Mongol Makers.
Thank you to all those who made time to speak with me, especially the 30 entrepreneurs
willing to walk me through their businesses.
A special personal thanks to Tushinzaya Orgodol for the crash course in Ulaanbaatar living
and her constant positivity.
Finally, thank you to my unwaveringly generous cohort of colleagues, advisors, and friends
from the Middlebury Institute including marketing and design guru Angelina Skworonski,
entrepreneurship specialist Nenneya Shields and business plan advisor Mario Romero. This
project would not be half of what it is now without you.
ACKNOWLEDGEMENTS

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What is Social Entrepreneurship?
Traditionally, business is thought of as a
way to generate financial profits. The
provision of social services is relegated to
charities, NGOs and the government. The
social entrepreneurship movement,
however, seeks to reposition business as
a force for transformative social and
environmental good. Social entrepreneurs
combine the best of the power of business
with a commitment to addressing the
world’s most pressing social issues. Social
enterprises are businesses, or hybrid
NGOs with revenue streams, that define
success by their ability to create social
impact in a financially sustainable way.
The precise definition of social
entrepreneurship continues to be hotly
debated in the field, but the following
three criteria are largely accepted, if
overly broad: A business or organization
that 1) includes social or environmental
impact as a primary goal; 2) generates a
new sustained equilibrium in a sector
where there had previously been market
failure; 3) pursues large-scale
transformational benefit for society at
large or a large underserved population1.
1Martin, Roger & Sally Osberg, “Social Entrepreneurship:
The Case for Definition,” Stanford Social Innovation
Review, Spring 2017.
What is the Purpose of this Study?
This study was commisioned by the
Center for Social Impact Learning out of
the Middlebury Institute of International
Studies at Monterey. It is an effort to shed
light on the emerging social
entrepreneurship scene in Mongolia to
better identify opportunities for further
research, collaborations, programs, or
investment by partner organizations. In
addition, it hopes to contribute to the
growing field of literature on social
entrepreneurship in Post-Soviet and
mining dependent economies.
Why Mongolia?
As an economy recently transitioning out
of a socialist command system, Mongolia
remains a question mark for many
involved in international business. Recent
economic volatility has increased investor
concerns with many pulling out of the
country altogether. As the light at the end
of the recession tunnel approaches, it
seems now may be the optimal moment
to lay the foundations and build
awareness for future social enterprises.
With the promise of an enormous mining
project to ignite a new boom cycle loom,
now is the time to explore possibilities to
profit and grow more sustainably
together.
https://ssir.org/articles/entry/social_entrepreneurship
_the_case_for_definition
ABOUT THIS STUDY

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Why Now?
The year 2012 marked a high point for Mongolian growth; the country recorded the fastest
growing economy in the world and was poised to offer promising future returns. The
recession crashed the economy, but some commentators now credit this setback with
inspiring a new movement among young entrepreneurs disillusioned and seeking
diversification. In the last two years, startup culture is taking on new proportions and
energizing the ambitions of this new generation. Businesses sophistication and innovation
are on the rise as this new culture emerges. Many of these next-gen entrepreneurs are
driven by more than profits and the survival instincts that characterized the Mongolian
entrepreneurs of the 1990’s. This shift is beginning to create a new opportunity for impact
driven disruption among businesses.
Scope of Study?
This landscape was assembled over the course of 3 months by a single researcher. The
study is a first attempt to shed light on the foundations of startup culture, small and
medium enterprise support networks, and the social and environmental issues with the
power to catalyze social enterprises. In this sense the study is incomplete, but seeks to
build connections and create awareness in the nascent sector, as well as provide insights
into opportunities for collaboration and regional comparisons.
The report relies on knowledge gained from substantial background research, due
diligence, investment conferences, and personal interviews with candidates selected
through a snowball strategy. In addition to active participation in the Business Council of
Mongolia and attending the 2016 Invest Mongolia Conference, the researcher consulted:
30 18 9 6
Entrepreneurs NGOs Investors
10 4
Foreign Governments,
Aid & INGOs
Banks, MFIs &
Credit Unions
Researchers & Media

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Limitations
The study has 3 primary limitations.
1) Limited knowledge of Mongolian language required the use of impromptu
interpreters which may have affected the answers and candidness of
respondents. The researcher possessed only basic language proficiency.
2) The entire study was limited to a single researcher over a three month period.
3) The concept of social entrepreneurship is only in a nascent stage in Mongolia. As
a result, the featured companies and networks were selected at the discretion of
the researcher rather than self-identified as social enterprises.
Key Challenges
Free Market Competitiveness
Mongolia is a post-soviet transition economy
isolated from global markets by geography
until only recently
Perceived Profitability
Businesses are increasingly supporting parallel
NGOs, however, engraining a social or
environmental mission into the business is
seen as jeopardizing business success
Government Involvement
Despite frequent political turnovers, the
government is active in regulating business
policy, making government relations a difficult
area to navigate for foreign interests and
export-oriented enterprises
Market Size
The population of Mongolia is just under 3
million with one of the lowest population
densities in the world2, so country-specific
products lack scaling potential
Opportunities for Collaboration, Intervention and Disruption
 Promote incubation and acceleration through technical and professional mentorships
 Create awareness of competitive and targeted funding and training opportunities
 Demonstrate potential for growth of social enterprises through a successful case
 Strengthen business education and entrepreneurship programs in higher education
Direct Implications for the Center for Social Impact Learning
 Further potential for more targeted academic research
 Lack of business skills means opportunities for impactful MBA student placements
 Potential to participate in or organize business accelerators with local partners
 Ability to contribute through research for local groups such as the Business Council of Mongolia
2 World Bank. http://data.worldbank.org/country/mongolia Accessed on 11/2016

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ACKNOWLEDGEMENTS 2
ABOUT THIS STUDY 3-5
TABLE OF CONTENTS 6
DEFINITION OF TERMS 7
CONTEXT 8-10
I. Historical Context
II. Macro-Economic Situation
III. Global Comparisons
ENTREPRENEURS 11-15
THE SOCIAL ENTREPRENEURSHIP ECOSYSTEM 16-27
I. Community
II. Spaces
III. Finance
IV. Information Networks
V. Foreign Actors and Involvement
FINDINGS 28-29
I. Sectors of Social Entrepreneurship
II. Obstacles to Social Entrepreneurship
III. Parallel Entrepreneurship
IMPLICATIONS 30-31
CONCLUSION 32
ANNEX 1: List of Named Programs 33
I. Links to Case Study Businesses
II. Links to Other Programs/Groups/Businesses
TABLE OF CONENTS

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MONGOLIAN TERMS
Aimag – The Mongolian equivalent of provinces, the country is divided into 21 Aimags and
Ulaanbaatar municipality. Each Aimag also has an aimag center which generally refers to the largest
town or city and the administrative center.
Dzud – A particularly harsh winter that results in the death of livestock
Ger – The traditional home of Mongolians, often known outside Mongolia as a yurt
Ger District – Unplanned urban areas typically on the fringes of cities filled with gers
Soum – The Soum designation is below aimag. It refers to established towns anywhere across the
country. Soum is the smallest level of local governance.
Tugrik (MNT) – Mongolian National Currency
ACROYNMS
ADB – Asian Development Bank
DS – Development Solutions
EEIBC – Executive Excellence International
Business Center
GIZ – German International Development
Agency
GDP – Gross Domestic Product
IDA – International Development Association
IFC – International Finance Corporation
IRIM – International Research Institute of
Mongolia
JICA – Japanese International Cooperation
Agency
KOICA – Korean International Cooperation
Agency
MACU – Mongolian Artisan Cheesemakers
Union
MIT – Massachusetts Institute of Technology
NBFI – Non-Bank Financial Institution
NPL – Non-Performing Loan
SDC – Swiss Development Corporation
SIT – School for International Training
SME – Small and Medium Enterprise
UNDP – United Nations Development
Program
USAID – United States Agency for
International Development
USDA – United States Department of
Agriculture
WEM – Women Entrepreneurs of Mongolia
DEFINITION OF TERMS

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I. HISTORICAL CONTEXT
The name Mongolia conjures images of nomads mounted on horseback or
camel, living off the land in the minimalistic tradition of their ancestors.
While the nomadic way of life persists in the countryside, a modern
Mongolia influenced by global trends is emerging. Forces of urbanization,
globalization, and the ongoing transition to a free-market democracy are
rapidly reshaping the modern, yet soviet style, capital Ulaanbaatar.
Although a large country measured in kilometers, Mongolia is landlocked
between the powerful and competing Russia and China. Despite a total
population of less than 3 million people, Mongolia is culturally and
historically distinct from either of these neighbors. Mongolians use their
own language, similar to the one used in the 13th century by Genghis Khan.
While Mongolian is now most often written in Cyrillic, the traditional script
is taught in school and remains popular. After several decades of religious
suppression, Buddhism and Shamanism are now experiencing cultural
resurgences, particularly among the older generations.
After the culturally defining conquests of Genghis Khan, Mongolia returned
to a state of independent roving families and tribes, eventually falling under
Chinese influence: an unpopular period. With the fall of the dynastic system
in China, Mongolia fought for and won independence in 1921. The country
quickly aligned itself with its northern neighbors and opted to join the
Soviet Union. Mongolia remained a part of the USSR, until its dissolution in
the early nineties. A new independent government, buoyed by protest
against the socialist state, then ratified the current free-market democratic
constitution. As a beacon of democracy in an otherwise autocratic region,
Mongolia has become a strategically important partner for the United States.
In the past 25 years, Mongolia has experienced a period of rapid change.
Rural-to-urban migration, driven by economic opportunism and dramatic
climate change, is accelerating. Extreme winters, known as “Dzuds” are
increasing in frequency, decimating herds, and forcing desolate rural
families to move into the fringe areas of the cities and aimag centers,
creating chronically underserved, haphazardly planned, “ger districts”.
Ulaanbaatar is now home to almost half the country’s population. On the
other side of the spectrum, mining boom gains inflated disposable incomes
and triggered new luxury spending. International trade is expanding and
Mongolian businesses are competing in a global market.
*Panel data extracted from the World Bank database and the 2016 Doing Business Report.
CONTEXT

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II. MACRO-ECONOMIC SITUATION
In 2012, Mongolia was recognized as the fastest growing economy in the world as construction
began on phase 1 of the expansive Oyu Tolgoi copper and gold deposit in the South Gobi. Foreign
interests flocked to invest in mining and real estate as estimates emerged of over $3 trillion USD of
natural resource wealth buried throughout the country. However, an inconsistent regulatory
environment and unfavorable attitudes to foreign investors profiting from the common heritage of
Mongolia, combined with a drop in the demand for coking coal, Mongolia’s largest export, and an
economic slow-down in China, Mongolia’s nearly monopolistic trading partner, sent the overly-
optimistic Mongolian economy into another prolonged recession that continues today. The Gross
Domestic Product (GDP) is dependent upon mining and although not victim to the resource curse,
the economic history of Mongolia reflects the cyclical boom-bust of many primary economies.
As of October 2016, Mongolia is in the process of applying for its sixth IMF bailout3. Their last
bailout was in 2009. The impending debt requirements of the Genghis Khan bonds, issued in 2012
at the height of the mining boom, are forcing the government to weigh the implications of another
bailout against the threat of default or rapprochement with China, both generally unpopular
prospects. The dollar based Genghis Khan bonds were spent predominately on national road
building projects to connect the major aimags to Ulaanbaatar. Before the project, road conditions
were extremely poor with many of the aimag capitals serviced only by unpaved roads. While the
projects are considered a success in improving transportation, they failed to generate the size of
economic return necessary to repay the loans. Accusations of government corruption fueling
frivolous spending and excess abound.
For small businesses, these developments have several serious implications. Most alarmingly, the
Mongolian currency is in a free-fall, depreciating quickly against the US dollar and by extension the
Chinese yuan. Mongolia’s businesses are dependent on inputs, machines, and technology from
outside the country and are feeling a tight crunch on domestic sales margins. Medium and large
companies are feeling the sting as they struggle to pay off dollar based loans. The falling Tugrik
compounds lack of confidence among foreign investors, thus slowing any re-ignition of interest in
Mongolian investments. In an effort to protect the currency, the government raised interest rates in
August to 15%. As interest rates climb, enterprises feel new financial stresses, making it difficult or
impossible to finance expansion. The currency and interest rate pressures also affect the general
population, increasing food costs (much is imported) and causing job losses.
This year marked a political pivot for parliament. The Mongolian People’s Party replaced the
Democratic People’s Party as the majority in the Grand Khural, the Mongolian parliament. This shift
presents an opportunity for changes in both policy and attitude. However, it is too early and beyond
the scope of this research to comment. Historically, the government has dabbled in several schemes
to protect or support made-in-Mongolia products, but as they experiment, some business owners
find it difficult to navigate the changing systems. There are calls for changes to the investment,
taxation, and export laws to support Mongolian businesses4. In addition, the government is
considering offering incentives to designated priority sectors such as technology. There is currently
some hope that this new government will work to re-attract foreign investors in order to kickstart
another economic growth cycle. Persistent corruption, however, remains a roadblock to progress.
3 After the term of the research an agreement was reached with the IMF, the ADB, and China that is, as of
press, subject to parliamentary approval.
4 According to a the “First Annual Summit Proceedings” published by the Business Council of Mongolia
available at https://bcmongolia.org/knowledge-base/reports/bcm-summit-proceedings

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III. GLOBAL COMPARISONS
As a post-communist economy dependent on primary commodities, but without the technical
expertise to exploit them, Mongolia offers parallels to several other economies around the world.
Chile and Estonia provide examples of economies able to leverage entrepreneurship to successfully
drive the diversification process, while other Central Asian nations such as Krygzstan, Kazakhstan,
and Tajikistan, may be able to learn and experiment together with Mongolia on programs
supporting entrepreneurial driven economic diversification and social entrepreneurship.
In Chile, efforts to promote innovation and entrepreneurship were led by the Fundacion Chile, a
partnership vehicle uniting investors, universities, and relevant government entities to foster
synergy in key export oriented industries. In Estonia, the country leveraged a comparative
advantage in technology to develop a high tech services hub. Both of these examples offer
important lessons to Mongolia as the country seeks to find its own niche. Lessons on appropriate
government involvement, transparent private sector engagement, and education reform may prove
to be of particular relevance to Mongolia.
In turn, lessons from Mongolia’s entrepreneurial development could have implications on the
development of entrepreneurial ecosystems across Central Asia. Although Kazakhstan and
Kyrgyzstan, currently have higher GDP per capita than Mongolia, these numbers speak to the
relatively more developed trade connections and mining industries, oil and gold respectively, of
those countries. Mongolia’s experience in diversification, innovation, and entrepreneurship may
present some important parallels for these countries if they seek to pursue diversification and
avoid the resource trap. The social pain points and market failures inspiring social entrepreneurs
may demonstrate common themes, given the similar demographic, economic, and political contexts.
The lesser developed, more remote Central Asian countries such as Tajikistan, may also find
commonalities to leverage from the Mongolian playbook.
For interested investors and social entrepreneurship supporters engagement in Mongolia could
prove to be a launching board into other post-soviet primary resource driven economies. Although
the Mongolian culture is highly distinct from both its East Asian and Central Asian neighbors, more
influenced by Soviet cultural cues, it could provide an arena to field test approaches or build a
regional hub in a relatively more stable environment.

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The idea of what it means to be an entrepreneur is changing quickly in Mongolia. After the
transition from Soviet satellite state to free market democracy, the country lacked even basic
economic infrastructure. The retreating Russians took everything with them. At that time, in the
early 90’s, life was difficult in Mongolia. There was little domestic industry and overland trade was
practically non-existent. With so little competition, a supply driven economy began to emerge: if
you could make it in Mongolia or bring it to Mongolia, you could sell it.
For most established business people there is a similar story. They began their careers as traders
bringing goods from one place to another, sourcing cheap goods over the border from China and
then selling them in Mongolia. As the profits rose, ambitious traders took out short-term bank loans
to pay for inventories, and thus established strong credit records. When the state-owned assets
went up for sale it was these traders that dominated. With such a small population and limited
export capacity, these ambitious traders and business people soon saturated their core markets.
Hungry for further profits, many expanded their businesses horizontally creating mini business
empires of often seemingly unrelated endeavors.
Small and Medium Enterprises (SMEs) – defined by the Mongolian government as any company
with less than 200 people – account for 95% of businesses in Mongolia and 25% of GDP5. Within
that, a third of those businesses are traders6. However, within the last 2 to 5 years, a new culture of
entrepreneurship is emerging. A younger generation of globally educated Mongolians is returning
to the country with new ideas about business, technology, and management that are changing the
marketplace from the bottom up.
As the business landscape evolves and becomes ever more influenced by and intertwined with
global markets, the players are also becoming ever more sophisticated. The English word
“entrepreneur” was transcribed directly into Mongolian as “ентрепренер”. It is a new term and a
new idea for Mongolians. As such, the first step of this research was to explore how that term is
evolving in this new context. Before any interventions or opportunities can be identified, programs
designed, or finance mobilized, a critical step is to explore the people, ideas, and motivations
pushing this new thinking forward.
This study conducted 30 interviews with entrepreneurs across sectors of different ages,
backgrounds, and genders. The interviews spanned 15 questions. They last from 11 to 92 minutes
and yielded a wealth of individual experiences while also unearthing a number of common themes.
Below are relevant highlights extracted from those conversations and grouped around what it
means to be an entrepreneur, what skills are needed to succeed, what motivates people to pursue
this path, and what obstacles entrepreneurs continue to face.
5 According to a joint Performance Report from Oxfam and Symbiotics on the Small Enterprise Impact
Investing Fund in Mongolia, available at https://issuu.com/pearlworks1/docs/seiif_spreads_web
6 According to a Private Sector Assessment for the Asian Development Bank completed in 2009
ENTREPRENEURS

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What Does Being an Entrepreneur Mean in
Mongolia?
*Pictures are illustrative only and do not feature interview respondents

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QUESTION: Do you consider yourself to be an entrepreneur? How would you define the term
entrepreneur to somone who had never heard it before?
Even among the group of entrepreneurs selected for this study through a snowballing method of
recommendations, a number of respondents reported never having heard the term. The culture
behind entrepreneurship only gained traction in Mongolia within the last two to five years. Perhaps
as a result, perspectives on the term range from treating it as a fad invented by overly privileged
youth to regarding it as a mantle of respect worthy only of the business elite: those achieving
impact, creating jobs, and igniting innovation. Somewhere between contempt and aspirational
reverence, some respondents painted the nomadic Mongolians as natural-born entrepreneurs:
Most respondents, however, insisted that entrepreneurs are defined by their uniqueness:
Of the respondents, foreigners were quickest to claim the mantle, while those in the emerging
entrepreneurship community tended to prescribe a more weighty definition and claim the term
with more trepidation. Business owners outside of tech and finance, particularly those not educated
outside of Mongolia, were the least likely to be familiar with the term. Despite some claims that
Mongolians have a natural aptitude for entrepreneurial activity, it is also clear that a certain degree
of stigma continues to be attached to that term. As one more experienced entrepreneur put it:
QUESTION: What skills or qualities are most important for entrepreneurs in Mongolia?
Given that the entrepreneurial playing field in Mongolia does not simply replicate the western
construct, the skills required in that space also differ. The topic of teamwork and human resources
regularly incited culturally unique discussions on how nomadic heritage may influence present
leadership styles. According to some, the same nomadic self-sufficiency exalted for promoting
minimal waste systems, open-mindedness, and independent thinking, may also taint the ability to
trust or collaborate. Mongolians all want to be the boss, was a popular refrain. In an entrepreneurial
context, this challenge manifests as a barrier to scaling a team, which can lead to shallow individual
capabilities and thin organizational capacities. Despite those comments, a minority of respondents
were working successfully in teams and cited their colleagues as a cornerstone of their success. A
strong capacity for human resource development, finding and keeping the right people, was
regularly cited as a challenge, while conversely successful development of corporate culture was
regarded as a marker of success, or aspiration.
“It’s not the brightest who make good entrepreneurs, they end up in more
established positions. It takes a combination of guts and belief.”
“Entrepreneurs are very active people; they are open minded. But to describe
it that way, all Mongolians are entrepreneurs.”
“Why do I have to explain that word? I don’t even understand it.”
“Not imitating
others”
“Seeing opportunity
where others don’t”
“Persistently turning ideas into
work that has societal benefit”

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While the value of some more traditional skills such as persistence, courage, and a dash of business
savvy were acknowledged, success in the Mongolian business climate, reportedly requires a couple
of additional skills as well:
The two comments above speak to common struggles entrepreneurs in Mongolia face just to stay
alive. One respondent told a story about a corrupt competitor lobbying government contacts for
protectionist import policies to promote sales of their own “made in Mongolia” products. The newly
protected product was an input for other Mongolian producers, and the increased cost of using that
Mongolian product, as opposed to the cheaper Russia ones favored before the import policy,
resulted in pushing several larger Mongolian companies into bankruptcy. It was commonly
reported that if one hoped to grow beyond a small business, smart government relations
management and a degree of political luck were key.
QUESTION: What motivates you to be an entrepreneur?
In post-transition Mongolia there was so little economy and connection to the global market, that
bringing anything into the country could prove lucrative and impactful. Food importers, ger
makers, and bakers filled voids in the market that improved people’s lives. As the business climate
continues to evolve, many entrepreneurs are pursuing increasingly grandiose targets for personal
wealth. The idea of getting rich first, and giving back later is gaining traction. In the context of the
current recession, many are questioning where the place for social goals lies in this new economy.
The majority of respondents cited some sense of duty to serve or improve Mongolian society. For
some, their impact was building a successful business. For others, it meant building parallel
Corporate Social Responsibility (CSR) projects or starting NGOs. For a few it meant building a
business that provided a needed service or product to their community. Despite reporting values
similar to those of the global social entrepreneurship movement, many of the entrepreneurs in that
latter category had never heard of social entrepreurship: the values were directly embedded in
entrepreneurship in their minds.
“Corruption is essential if you want
to grow”
“It’s all about patience in an uneven
and chaotic market”
“I have access to the world to change
people’s minds and that motivates
me.”
“I am just motivated to serve and to
fill a gap, to do what others are not
yet doing.”
“Just creating a business is not enough, what is enough? To make a
revolutionary product.”
“Being able to empower others is
really important to me.”
“The most important thing is we are
contributing to society”

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QUESTION: What are the greatest obstacles for entrepreneurs?
The largest complaint among respondents was about
access to finance and funding opportunties. According
to respondents: interest rates are too high; banks
demand too much collateral; equity investors are non-
existent, too inexperienced or only interested in
takeovers; and angel investors are needed. Over 20 of
the 30 respondents reported getting their seed
funding from family and friends. A number of
entrepreneurs pursuing more proven businesses such
as textiles and small scale manufacturing were able to
access second round funding through targeted SME
promotion funds from the government and other
international donors. A select few even reported then
being able to borrow from banks based off the credit
rating they had secured through the SME promotion
loans. On the other side of the spectrum, a small
number of entrepreneurs with substantial international ties reported tapping into international
financing networks based on personal connections and networks.
Other obstacles faced by entrepreneurs included lack of business knowledge, poor human
resources, macro instability and corruption, and a small market size: depicted to the left according
to the frequency which they were cited by the respondents.
Lack of mentors or success cases was a commonly cited obstacle. According to many, there are no
successful case studies to guide them and correspondingly few mentors that can realistically speak
to the experience of overcoming the current obstacles facing entrepreneurs and more specifically
social entrepreneurs. Respondents claimed a successful entrepreneurship expanding out of
Mongolia could act as the confidence inspiring flagship to truly invigorate the field.
Business
Management
Funding
Human
Resources
Small
Market
Stability &
Corruption
Mentoring

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The following section outlines existing platforms that the social entrepreneurship movement may
be able to leverage. The idea of business as a force for good in the community is new in Mongolia.
The social entrepreneurship movement is even less clear. Without demonstrated value to declaring
businesses as social enterprises, many leaders see no impetus to distinguish themselves from a
purely commercial enterprise. However, foundations for future growth of social entrepreneurship
are beginning to emerge. This section features entrepreneurial case studies, the communities
bringing them together, the spaces where they gather, the available finance options, the relevant
information networks they reference and the international partners supporting them. As the
culture begins to form here, where are opportunities to support productive market disruption?
SOCIAL ENTREPRENEURSHIP ECOSYSTEM
Startup icons Bill Gates and Steve Jobs glamorized dropping out of
university to found tech businesses; for the founder of New Media Group,
however, the choice felt anything but glamorous. His grandparents broke
into tears when he told them.
After completing his undergrad studies in Mongolia, Mend-Orshikh decided to pursue his masters in the
states. Beginning in California and later moving east, he was surprised to discover an age gap with his more
experienced MBA cohort. While they had started companies, what had he done? To bridge this gap, he
dropped out to jump directly into starting his own company in Mongolia. From those peers he retained
lessons about the value of hard-work, dedication to giving back, and that business could be a force for good.
Returning to Mongolia in 2010, he saw the untapped potential of social media to connect Mongolian
businesses to new customers. Starting with $50 out of his own pocket he founded New Media Group. He built
the business one account at a time: for every three paid accounts, the fourth project was pro-bono to support
an NGO through the New Media Foundation. Breaking ground as a first-mover in Mongolia, the company grew
quickly, their clientele creating a unique community of entrepreneurs.
With growth, New Media Group deepened their commitment to social good by pursuing the rigorous B-corps
certification. The founder heard about the B-corps movement in the United States and always knew it was the
direction he wanted his company to go. Throughout a registration process that spanned over 6 months, his
team worked tirelessly to complete their application. They were one of the first three companies to get the
certification in Asia and continue to be the only certified B-corps company in Mongolia.
B-corps is a collection of over 1,600 businesses spread over 42 countries that are seeking to redefine business
success. In order to receive the B-corps certification each business must undergo a rigorous audit of social and
environmental performance, accountability and transparency. It is often described as “fair-trade for
businesses”. As an early adopter, New Media Group became a founding member of a global cohort of
companies that is now championing the call for business to do more than serve shareholders.
Facebook has since become the favored marketing tool of Mongolia, New Media Group continued to adapt
and, as of writing, has 12 subsidiary companies with 10 products and over 70 employees.
CASE STUDY 1: A B-Corps Founding Member

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I. COMMUNITY
An increasing number of community building and networking NGOs are seeking to support
entrepreneurs, such as Startup Mongolia and its sister group Women Entrepreneurs of Mongolia
(WEM). These organizations are supported indirectly by the Techstars Accelerator program based
out of Colorado. Their main strength is engaging youth in entrepreneurial communities through
creative and design-based thinking workshops and networking events. Both organizations are
currently without physical working spaces, lack deep reserves of technical expertise, and do not
possess the ability to fund promising ventures.
In terms of social entrepreneurship, with World Bank supported programs such as Code4GreenUB
and the Green Nation Challenge, Startup Mongolia is beginning to make overtones towards
supporting environmental entrepreneurship. WEM recently spun-off an organization called the
Momtrenpeurs Union of Mongolia which focuses on supporting mothers starting businesses.
Addressing more technical skills is an NGO called Development Solutions (DS). They provide
business training, consulting, and support programs for strengthening market linkages, such as the
USAID funded REACH program and the 2003 to 2008 Growing Entrepreneurship Rapidly Initiative.
DS is a popular partner among the international aid groups. Their programs extend beyond helping
entrepreneurs and include support programs for SMEs to access funding, connect to markets, and
grow. The DS model shows some characteristics of an NGO Hybrid Social Enterprise. By focusing on
supporting businesses and startups in relatively underserved areas, they ensure that their impact is
felt long beyond the term of their project. As businesses phase out of philanthropic support, DS
offers their services at reasonable costs. In addition, DS built an online database of business guides
translated into Mongolian, composed a list of finance options and application guidelines for SMEs,
and runs the women’s business center. They also engage with youth as the local implementer the
Mongolian chapter of Youth Business International. This year their organization will sponsor an
employee development course focused on social entrepreneurship.

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II. SPACES
Physical space to work and gather is an important enabling feature of an entrepreneurial
ecosystem, particularly in Ulaanbaatar where real estate and offices run sky high rents. The
government dabbled in providing space for entrepreneurs by building incubators around the city.
Poorly managed and offering mismatched incentives, most of these original incubators went under
or lost funding in the recent government transition. The Information and Technology Park (IT Park)
in the city center is an exception to that. The IT Park is home to Startup Mongolia and a host of
other tech and consulting startups. Though not a true incubator, the IT Park provides discounted
and shared spaces along with access to technology and training for tech startups.
This year, seeking to support a new productive niche, the City Government of Ulaanbaatar launched
the Women’s Business Center (WBC). The WBC is run in conjuction with the Asia Foundation and
with funding provided by the Korean Aid Agency (KOIKA). The WBC is administered jointly by DS,
Golumt Bank and the Mongolian Chamber of Commerce. It is a shared space with computers and
basic tools where women can come work or attend business trainings for free. In an effort to cater
to working moms, the space also includes a kids corner with toys. The majority of businesses in this
space are small handicraft, sewing, or educational toy oriented. A couple of women, however, are
leveraging the resources to launch web-based marketplace apps. Beyond that, the WBC will offer
grant funding to support the 25 most promising ventures.
In the private sector, two additional kinds of co-working spaces emerged. On the more formal, high-
end side of the spectrum is the Executive Excellence International Business Center (EEIBC). On the
less costly, more youth oriented side is CLUB Co-Working. Though not social enterprises, these
shared spaces allow businesses to collaborate in new ways for the benefit of the overall community.
At EEIBC members are working together to support forums on Innovation and Entrepreneurship,
as well as to launch a think tank supporting entreprepenurial developments. The collaboration at
CLUB Co-working shows concerted efforts to provide for young leaders exploring the intersection
of business and philanthrophy by housing groups such as Tomujin Academy, TOM Inc, the Nomadic
School of Business and GerHub (See Case Study 2 below). Tomujin Academy is an education NGO
with diversified revenue streams looking to expand opportunities, social conciousness and the

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spirit of volunteerism for Mongolian high school students. The Nomadic School of Business is a
leadership consultant seeking to incorporate aspects of nomadic thinking into the business world.
TOM Inc is a budding incubator seeking to create a community for emerging entrepreneurs to
practice collaboration in order to develop stronger business plans.
Startup Mongolia is planning to open a similar, though larger co-working space, targeting tech
companies. Startup Mongolia hopes that by implementing a new kind of financial structure for
office/space leasing they can move closer to an accelerator and eventually an incubator model.
An organization called Mongol Makers is supporting the development of collaborative Makers’
Spaces throughout the city. In theory, these makers’ spaces provide builders, engineers, artists, and
prototypers with the tools and space they need to create more innovative physical products
through iterative and collaborative processes. By bringing these previously disconnected
communities together, it engenders transdisciplinary collaboration. Mongol Makers may prove to
an interesting entry point or partner for social entrepreneurs in the future, particularly if they can
overcome cultural reluctance to collaborate and connect their creativity with business basics.
The cultural and historical legacy of Mongolia is long and colorful, but
moving into a modern globalized market, how can Mongolia preserve its
past while embracing a competitive future?
The ger, or yurt as it is known in English, is a treasured symbol of that heritage. Gers were designed for a
nomadic lifestyle, to be packed and carried as the season changes. They consist simply of a set of wooden
beams, a felt cover with a waterproof canvas shell, tethering cords, and a stove. A ger can be fully assembled
in less than an hour. Though undeniably practical, this all season shelter was not designed for urban living.
As urbanization gains speed, recent rural-to-urban migrants crowd the fringe districts of the cities with
their gers. These ger districts lack basic infrastructure, particularly water, heat, and sanitation.
The founder of GerHub, a not-for-profit social enterprise, saw this as a challenge worth solving. In what
ways could the ger be incrementally and cost effectively modified to alleviate some of these burdens?
His first project is the development of a ger “plug-in”, an attachment to the ger to improve access to
sanitation and provide an efficient heating system. In an effort to champion a whole new type of ger he
networked heavily with the foreign education sector to bring in fresh perspectives and innovative designs
from schools like the University of Hong Kong and Stanford University. His ambitions, however, don’t stop
there. After noticing disconnects between the many projects, foundations, and aid organizations operating
in the ger districts, he envisions turning his initiative into a hub of activity and information to promote
collaboration and to maximize the synergy and sustainability of ger district oriented programs.
Not a donor-funded and commissioned project, but also not a totally self-sustaining enterprise, GerHub is
an example of the hybrid NGO model of social entrepreneurship. Gerhub itself is a registered NGO, but
rather than focus solely on securing external funding, they plan to combine earned and donated revenues to
maximize their ability to do good within the ger districts. Despite lingering mutual skepticism between
businesses and NGOs, earned revenue streams are becoming an increasingly popular element of NGOs
seeking to minimize funding volatility while bolstering their ability to ignite sustained social and
environmental progress in their target communities.
Improving the quality of life in the ger districts is as central to the success of GerHub as eventually covering
financial outlays. This approach is characteristic of the global social entrepreneurship movement that uses
a double or even triple bottom line to do business while prioritizing the creation of social benefits. The
founder of GerHub is leading a growing pack of entrepreneurs asking more of businesses in Mongolia.
CASE STUDY 2: Modernizing Mongolia

20
While some of these spaces include or plan to include various financing options for resident
entrepreneurs, they lack the full-blown culture of business guidance, technical support and venture
capital critical to developing true incubators. While there are efforts to move towards that type of
business culture, most start-ups lack the internal capacity to pitch, plan or project with the
sophistication required to attract venture capital.
III. FINANCE
The most common complaint of entrepreneurs is a lack of affordable financing at the seed stage.
Contrary to these complaints, Mongolia is a relatively heavily “banked” country and shows signs of
a rapidly developing financial system including emerging private equity. The banking sector,
however, is limited by the size of the population and cumulative domestic wealth. Overall, the
sector remains relatively small and vulnerable to the demands and interventions of the
international financial sector, particularly to the large Chinese banks south of the Mongolian
border. In order to protect their sovereignty, and keep their non-performing loan portfolios under
targets, the majority of the banks have adopted conservative collateral based lending practices. This
is challenging in the Mongolian context where land ownership is limited, particularly outside cities.
Some banks and other financial institutions have developed schemes to accept mobile assets such
Sitting at a desk covered in bank statements and sketches, in an office full of diagrams
taped haphazardly to the wall, the CEO and founder of Natural Essence LLC and the
Lhamour brand strikes the classic image of an entrepreneur. Her story of boot-strapping
from brewing bath balms in her parents’ kitchen, to the first organic skincare company
in Mongolia with a staff of over 30 makes her a poster-child for entrepreneurship in
Mongolia. Beyond commercial success, her commitment to crafting environmentally
sustainable products in Mongolia makes her company unique.
The founder of Lhamour isn’t an entrepreneur by trade: she studied renewable energy systems. When she
came back to Mongolia after her studies she wanted to do something for the economy and the country.
Recognizing the potential for organic products in Mongolia, she quickly founded Natural Essences LLC.
While deciding what direction to take within organics, the harsh Mongolian winter brought inspiration:
average skincare products proved no match. Hours of slaving away over the stove in her parents’ kitchen
and prototyping her first product led to the launch of the Lhamour brand.
She brought three new things to the Mongolian market: she used all Mongolian ingredients and kept the
production local; she certified her products organic from the beginning and committed to zero-waste; and
she paid attention to packaging. These specific areas of focus set her product apart from others, but also
exposed her business to new challenges, namely in relation to a lack of ability to transport her products and
a nascent organic infrastructure limiting consumer awareness and input compliance.
The vast majority of the 73 million heads of livestock in Mongolia are grass-fed on the steppe, making their
meat and dairy prime for organic certification. Domestically, the demand for organic products is growing.
The organic certification process, however, is new to Mongolia. No certifiers licensed to the USDA standards
for exporting organics to the United States currently operate in Mongolia. At the moment, the Mongolian
Chamber of Commerce handles certification checks. The certification process comprised a site visit, a fee,
and a certificate. Khulan and Lhamour are leading the charge for a stronger movement.
After 3 years in business, the company is still in startup mode, but the giants are taking note. The small
niche success she built for herself has sent ripples through some of the big Mongolian soap companies.
Since her emergence on the scene these companies have begun paying far more attention to packaging than
they used to. It’s a prime example of how even small players can led to productive disruption and
innovation in markets. For the founder of Natural Essences LLC, however, her real hope is that these
companies will follow suite with her environmental practices as well.
CASE STUDY 3: From Kitchen Soap-Maker to Challenging Giants

21
as livestock, appliances, or other goods as collateral. The disconnect between financiers and
entrepreneurs is in part due to a lack of experience around business plan based funding, both in
how to prepare a pitch and evaluate it.
Private Equity: Despite some claims by entrepreneurs and non-banking financial institutions
(NBFIs) that private equity does not exist in Mongolia, a number of companies are actively working
to change that. The two firms at the forefront of this revolution locally are Schulze Global and the
Mongol Opportunities Fund. Both firms are actively seeking investments in Mongolian companies.
Schulze is considered an impact investing firm and includes socially conscious metrics in their
investment criteria. While the investment profile for Schulze Global requires companies to present
a proven concept and detailed growth plan, they are willing to work closely with promising
enterprises to build the necessary capacity. A number of other international investment firms are
active in Mongolia’s finance sector: MCE Social Capital, Microvest, Blue Orchard, Symbiotics, and
others. This second group of investors is primarily active through investments at Xac Bank and in a
select group of NBFIs including Transcapital and BID.
The largest barrier for entrepreneurs seeking to access this type of funding is a lack of
understanding of what private equity is and how it works. Most companies are unable to provide
financials with the scope and specificity required for this investment class. As business plans and
pitches are not part of the banking system, most entrepreneurs also lack experience presenting
their companies and ideas in that format.

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Banks: In 2000, Mongolia remained a relatively underbanked country with only 300 depositors
among every 1000 people in the country. Since then, the financial sector has exploded reaching
3,629 depositors per 1000 people. There is now an average of 71.7 commercial bank branches per
100,000 people and 3185.15 bank accounts per 1000 people, indicating multiple bank accounts per
person and a number of joint or shared accounts.7 Part of this growth is the formation of new banks,
with 13 now active in Mongolia. The other part of that growth involved outreach initiatives by
banks to rural communities. The most famous example is that of Xac Bank which evolved from a
NBFI grown out of a UNDP program offering merit-based microloans earned through the
completion of financial trainings. Xac Bank is built on the premise of People, Planet, Profits. Though
currently focused on diversifying a microfinance heavy portfolio, Xac Bank remains a strong
presence in microfinance, a popular choice among western investors, such as MicroVest, and the
leading choice for financial aid program implementation, such as the Social Entrepreneurship
Impact Investing Fund (SEIIF)8 in partnership with Oxfam and Symbiotics. Khan Bank is one of the
top three banks in the country and possesses the largest network of rural retail bank branches
making it able to provide better services and opportunities outside of cities. Banks are also
beginning to embrace the idea of corporate social responsibility. One of the smaller banks, Arig
Bank leads the pack in investing in needed community initiatives, reaching not only into the ger
district, but also supporting numerous environmental initiatives and businesses.
Environmentally responsible banking and finance, particularly for projects targeting reductions in
carbon emissions, are growing quickly in Mongolia. Xac Bank is leading the progression in this field
as well. Their Eco-Banking department partnered with MicroEnergy Credits in 2008 to act as the
sustainable financial distribution channel for small scale carbon reduction projects. Through
various international partnerships, Eco-Banking at Xac Bank is now able to support carbon
reduction projects of all sizes. They are one of the few accredited entities able to disperse funds
through the World Bank Green Climate Fund. For SMEs and entrepreneurs interested in pursuing
7 ADB, Framework of Inclusive Growth Indicators 2014.
https://www.adb.org/sites/default/files/publication/42813/figi2014-mon.pdf Accessed 11/2016
8 Performance Report from Oxfam and Symbiotics on the Small Enterprise Impact Investing Fund in Mongolia,
available at https://issuu.com/pearlworks1/docs/seiif_spreads_web

23
environmental bottom lines in their business, this is great news. In theory, these funds could
provide an impactful complement to the green startup programs run by the World Bank.
Despite this marked growth in the banking sector, many small entrepreneurs still lack the collateral
necessary to secure a loan. Even when credit guarantees are offered to promote lending to SMEs the
banks are reticent to extend loan offers without collateral, as failure to pay, even if it doesn’t hurt
their bottom line, smears their record on NPLs. Particularly in the recession, Mongolian banks are
under a lot of pressure to keep their NPLs down, thus contributing to a highly risk averse approach.
Non-Bank Financial Institutions and Microfinance: To fill the gap between what banks can offer
and what smaller borrowers need, a robust micro-finance sector has emerged. As of October 2016,
509 NBFIs were registered with the Mongolian government. Since the recession began in 2012
things have been difficult for NBFIs, but that hasn’t stopped new players from entering the field.
While a small number of these NBFIs operate with social aims to extend the financial system and
empower borrowers, most are motivated by purely financial gains. Two areas identified as high
impact for concessionary lending were for single-mothers and ger district residents.
Typically, these NBFIs offer rates of 2.5% to 5% a month on loans, unless they have a source of
concessionary funds. As the banks see the microfinance sector as carrying increasingly large
operational costs and risk, they are moving out and leaving greater space for the NBFIs, Given their
proliferation, however, the government recently increased the capital requirement to qualify as an
NBFI. It is rumored this new policy will put up to one half of the existing NBFIs out of business.
Credit Unions: Credit Unions are another popular choice in Mongolia, with over 250 currently
active. Credit Unions tend to be a more committed choice than doing business with an NBFI, as they
usually require some type of membership. However, in return they offer substantial community
building programs and favorable lending.
Government Support: The Mongolian government, as well as a number of international
governments, have sought to provide financial aid to struggling SMEs in the form of grants and
concessionary loans through the existing financial structure as a way to promote economic
diversification away from a resource-based mining dependent economy and kickstart activity out of
the recession. These funds are typically channeled through existing financial infrastructure such as
banks or NBFIs, but come with differing application processes. The complexity, variance, and
intermittence of these funds are the greatest barriers to access for small business owners as each
funding cycle or project comes with its own process and requirements which can be confusing
particularly for small business owners. To date, none of the funds provided were earmarked
specifically for social entrepreneurship. A common non-financial target, however, was job creation
and the USAID Growing Entrepreneurship Rapidly project was cited by a small handful of project
implementers as a seed for social entrepreneurship thinking.
IV. INFORMATION NETWORKS
Mongolia is a nascent democracy with respect for the principle of free media. There are a wide
variety of new outlets, both foreign and domestic, within the country. The influence of money,
however, remains strong on what content is published and in what light it is portrayed. Many news
outlets rely on publishing paid content to remain financially solvent as there is not a strong market
for advertising. Many consumers complain that the prevalence of paid content is destroying media
objectivity. Unsurprisingly, many lack confidence in the news.
When it comes to entrepreneur specific news and updates on business trends, technology, or
startup culture, there are few reliable outlets. While present in the Mongolian market, franchises of

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Bloomberg, Forbes and the Economist have all adopted paid content models in response to tough
economic realities. Unread.today is an up and coming blog-turned-news site challenging that norm.
Founded by three entrepreneurs frustrated at the lack of reliable information and news in the
Mongolian language about entrepreneurship, they saw an opportunity for disruptive innovation
and launched Unread.today. Their model features seven types of original daily content totally
unique from any other competitor offerings, including features on startup of the week. They hope
the site will allow and inspire more Mongolians to understand and engage with the
entrepreneurship community. As their audience grows, they hope to take advantage of access to
new advertising revenues to move out of paid content and provide truly objective content.
A commonly cited obstacle for entrepreneurs in Mongolia is the lack of a success case. Many
entrepreneurs reported feeling that if they could see just one successful case of innovation and
entrepreneurship in Mongolia leading to a regional or global scale company or technology, it would
invigorate the entire community. Through their local updates and entrepreneur spotlights,
Unread.Today aspires to provide that spark of encouragement to invigorate entrepreneurs.
The Dakar Rally is widely considered one of the toughest endurance motorcycle races
in the world. Competitors push themselves over 5,600 km through the deserts and
mountains of South America. The founder of Nomad Invest, an amateur rider with only
two months of experience under his belt, found himself staring up an impossibly high
sand dune. Pro riders zoomed past him making it to the top in under half an hour. After
six hours of exertion, at times pushing his bike, he arrived exhausted and dehydrated at
the ridge only to realize with a sinking heart that hundreds of dunes still lay ahead. Over the course of three
sleepless days he passed many accomplished riders throwing in the towel and calling rescue helicopters. He
kept going. He wanted to see the race through to the end. Ten excruciating days later, he finished the race.
When asked about his biggest obstacles in business, he responds that if he kept going in the desert those three
days, nothing can stop him now. Much like riding up a dune in South America, as the first financial technology
(fin-tech) company in Mongolia Nomad Invest is facing an uphill battle on shifting sands in foreign territory.
The company is uniting mathematicians, coders, and the financially savvy to innovate an algorithm leveraging
smart phone data to judge credit worthiness and disperse loans in a matter of hours. If successful, his program
would revolutionize inclusive finance across emerging markets.
It’s an ambitious plan, but dreaming big is at the foundation of his team. He hopes to make the company a
success story for other young Mongolians looking to build businesses competitive at the global level. The
business isn’t just about turning profits, it is about changing the way people think. Lending in Mongolia is
almost entirely linked to collateral. What if instead, lending were linked to responsible behaviors? What if
borrowers could quickly build up their credit record by starting with small high interest loans and move
incrementally to loans at rates even lower than what the banks could offer? If viable, this technology is capable
of scaling rapidly and creating widespread social benefits.
Innovating in fin-tech is the definition of a high-risk, high-reward business. In order to get the data needed to
inform their algorithm they must grow quickly, relentlessly pushing their business even at the risk of assuming
many small non-performing loans. It is a new model for Mongolia where non-performing loans have long
plagued the banks. Domestic support for the idea is tepid at best. For the founder of this team, however, this
isn’t the first time he has overcome disbelief. Despite never finishing college, at 23 he built a mobile network
that challenges the two giant service providers, started a leading game development company in Mongolia, and
believes firmly that since unlocking his potential in the desert, he and his team are capable of much more.
CASE STUDY 4: Overcoming 100 Sand Dunes to Build a Case for Success

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V. FOREIGN ACTORS AND INVOLVEMENT
OFFICIAL DEVELOPMENT ASSISTANCE
Mongolia is a beneficiary of aid from around the world. The Japanese Aid Agency (JICA) and KOIKA
are the largest donors. Switzerland, Germany, Australia, the US and the International Development
Association of the World Bank were also active contributors to the $379 Million USD in official
development assistance or $108 per capita received by Mongolia in 20149. Most of these agencies
are supporting some type of income generation or SME support program, sometimes with a second
environmental bottom line. The chart below highlights some examples:
In 2014 the World Bank elevated Mongolia to an upper-middle income country based on growth
projections from the boom period. Given this, USAID, Millennium Challenge Corporation and others
were forced to reconsider their involvement in the country. The World Bank since reversed this
decision, reclassifying Mongolia as a lower-middle income country. However, USAID operations
remain scheduled to close with two final projects, one through long-time partner Development
Solutions supporting business linkages and consulting for SMEs. MCC is planning to restart
programming in the water sector in 2018. The plans of other government aid agencies are similarly
complicated in terms of how to balance aid between growth and development goals.
The SDC took on a challenging 13 year project to develop sustainable artisanal mining in Mongolia.
Their project is particularly noteworthy in the context of social entrepreneurship for two
accomplishments. First, they succeeded in transforming an occupation that was initially regarded
as a nuisance into a value-adding sector of the economy. Second, they created a new market in
9 According to the latest data accessed 10/30/2016 from the OECD on Development Finance Data at
http://www.oecd.org/dac/financing-sustainable-development/development-finance-data/

26
Mongolia, and beyond, for high quality Fairmined10 Eco-Gold11, a product that had previously never
been produced in Mongolia despite their large gold wealth.
INTERNATIONAL CHARITIES AND NON-GOVERNMENTAL ORGANIZATIONS
In addition, there is a large community of INGOs active in Mongolia. Entrepreneurship, income
generation projects, new business development, and rural or ger district business linkages have
proven popular projects among the INGOs. Mercy Corps, Global Communities, the Asia Foundation
and UNICEF stand out as examples of organizations employing best practices in that sector.
Mercy Corps cultivated a unique relationship as a founding member of Xac Bank and has built a
strong reputation for supporting rural businesses through the Mongolia office. They are currently
in the process of launching new projects including a hub and spoke model of rural business centers.
The idea of this project is to improve processing, consistency, and marketing of rurally produced
products and agricultural raw materials to increase the exportability of products such as leather,
dairy, meat, etc.
10 “Fairmined is an assurance label that certifies gold from empowered responsible artisanal and small-scale
mining organizations” – For more information: http://www.fairmined.org/what-is-fairmined/
11 Gold that is processed through a certified mercury-free cycle.

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In the countryside, many Mongolians still practice the traditional nomadic herding
lifestyle. Each season families pack up their gers and move the flock to greener pastures.
Livestock is central to the Mongolian way of life, immortalized by the five snouts: Horses,
Cows, Goats, Sheep and Camels. The Mongolian diet consists of meat and dairy. Dairy is
eaten primarily in four forms: milk, milk soup, fermented alcoholic milk (Arik), or dried
milk curds (Arol). Despite the dependence on milk, much still goes to waste in the
countryside during the high yield summer months. Meanwhile, supermarkets and milk
companies import their raw dairy from Russia as local producers fail to meet consistent
quality and sanitary standards. Due to weak rural market linkages, domestic dairy even
fails to compete on price. Faced with this market mismatch, dairy would seem an
untapped business opportunity. The challenge, however, lies in scope. Increasing rural
market participation means working with small nomadic units. Living off the grid, gers
are rarely situated with convenient road access, and mostly depend on small solar panels
for electricity, if they have any. Small-batch raw dairy isn’t cost effective. Given these
circumstances, what are viable products to promote rural income generation?
In 1994, the Dutch Development Agency commissioned a project to teach cheesemaking to herders. Beyond
income generation, the project aspired to promote conservation of grasslands for the endangered Przewalski
horse by providing an alternative to herding. Confronted with slim demand and substantial market barriers,
most of these cheesemakers went out of business. One did not.
Over two decades, this cheesemaker developed a unique Mongolian Gouda. His business provided enough for
him until a financial hiccup left him desperate for a new investor: enter the Mongolian Artisan Cheesemaker
Union (MACU). Recognizing the individual nature of nomads, MACU allows each cheesemaker to maintain
financial independence while pursuing their own craft cheese. MACU supports them with consulting,
training, branding, and a unified front to champion the Mongolian cheese market.
Each cheesemaker specializes in making their high quality cheese which are delivered to Ulaanbaatar for
ageing, storing, and packaging under the MACU brand. MACU offers distinctive cheeses such as pepper
pecorino, yak milk cheddar, Bactrian Camel cheese, as well as classics such as brie, camembert and gruyere.
By having each cheesemaker focus on their distinct variety, it diffuses competition and allows space for
cooperation as MACU strives to build the overarching brand. A single reliable brand with such varied small-
batch cheeses, MACU positioned itself to cater to high scale events and for venues such as the international
luxury hotel Shangri-La: contracts small scale herders would be hard-pressed to secure on their own.
A businessman, not a cheesemaker, is behind the formation of MACU. This year he will complete construction
on a model cheese factory he hopes will provide an example of how to work up to code. Looking forward, he
sees opportunities for Mongolian cheese in the export market if it can meet phytosanitary requirements and
establish a legal precedent. If they can hit those benchmarks, MACU looks to scale rapidly. Having tested their
decentralized Mongolia-specific model with 7 cheesemakers across the country, MACU hopes to ramp
training and to bring on 100 more cheesemakers in rural areas by the end of 2017.
CASE STUDY 5: Picking Up Where Aid Left Off

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I. SECTORS OF SOCIAL ENTREPRENEURSHIP
There is currently no established network or community in Mongolia for encouraging, growing, or
financing social enterprises. The majority of respondents were unfamiliar with the idea of
social entrepreneurship, but many expressed interest for its implications in Mongolia. Some
entrepreneurs and program managers organically identified their project’s aims and motivations
with the major principles of the social entrepreneurship movement without even realizing they
were speaking to a larger movement. Without the larger community, however, there is
currently no particular advantage to identifying as a social enterprise rather than a purely
commercial one. Despite this, some businesses are beginning to address certain gaps in the social
sector. Overall, the four major market failures garnering the attention of businesses were:
1) Ger District Income Generation and Service Provision: newly arrived rural-to-urban
migrants often relocate to areas along the fringes of Ulaanbaatar known as the “ger
districts” where they can set up their ger. Growing spontaneously without the benefit of
urban planning, these districts lack basic urban services such as public transportation,
roads, street lamps, or health facilities. Designed for nomads, gers are not efficient for
such close living: they lack sanitation and running water. Traditionally, gers are heated
by stoves fueled with dung, but in this new urban environment, households quickly
become dependent on coal, rubber, and trash. Opportunities may exist to leverage this
new relatively dense population to provide much needed employment and services.
2) Rural Service Provision: the most vulnerable sub-sections of the Mongolian
population are rural families living in isolation from service provision. While the
nomadic lifestyle is a celebrated piece of Mongolian heritage, environmental
degradation of the steppe, due to climate change and overgrazing, is making flocks, and
thereby families, more vulnerable to the increasingly severe winters brought on by
climate change, known as dzuds. Winters so bitterly cold that they kill the livestock,
leave families destitute and without the resources to survive the winter. Though
Mongolia maintains a tradition of high literacy and school attendance even in these
rural areas, there are few economic opportunities outside urban centers. Establishing
rural linkages to promote sustainable growth, is becoming an important growth issue.
3) Environmental Intervention: although the Mongolian steppe was celebrated for
remaining environmentally pristine, mining is introducing significant new toxic
pollutants. In addition, Ulaanbaatar is considered to be one of the most polluted cities in
the world for its poor air, water and soil quality. Social entrepreneurs are beginning to
innovate on more efficient heating, pollution monitoring, and other green technologies.
4) Services for Single Parents: The divorce rate is climbing quickly in Mongolia. In
addition, there are persistent social struggles with domestic violence and alcoholism.
These factors combined with higher female tertiary graduation rates increasingly cast
women in both the roles of primary caregiver and breadwinner. Groups are beginning
to respond by offering targeted services for single and working mothers.
FINDINGS

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II. OBSTACLES TO SOCIAL ENTREPRENEURSHIP
While areas for promising interventions exist, there are also barriers to the growth of the sector. As
discussed above, the Mongolian marketplace presents some unique challenges in that it is unique,
relatively small, and new to free-market capitalism. These characteristics may potentially
complicate the growth of social entrepreneurship in the four following ways:
1) Free Market Competitiveness: the entrepreneurial and free-market business
ecosystems are still developing. As a result, many business owners demonstrated
limited levels of comfort with business plans, financial projections, and regular
reporting. This view was collaborated by financial institutions regularly reviewing
funding proposals.
2) Perceived Profitability: the economy is characterized by high levels of volatility. To
combat this volatility, many business owners and entrepreneurs are hesitant to engage
in a single slow growth project. Businesses prioritizing social or environmental
outcomes are often still perceived as doing so at the expense of financial profits.
3) Government Involvement: perhaps a holdover from their socialist legacy, many
businesses still seek to partner with the government, particularly those businesses with
social or environmental goals. Government connections, critical for certain types of
funding and export support, can quickly become detrimental given a change of party.
4) Market Size: The relatively small population combined with the high level of
geographic population dispersion limits the size a business can achieve. Globally, many
social enterprises use high volume sales to offset small margins in order to offer
affordable goods or services. This is not a viable approach in Mongolia. Scaling a
business beyond Mongolian borders is particularly difficult given the linguistic and
cultural dissimilarity of neighboring countries. This problem, however, can be overcome
by businesses willing to integrate internationally oriented models and operate to
international standards.
Additionally, several respondents cited lack of teamwork capacity and heightened suspicion as
barriers to collaboration in business. Some connected this to the nomadic culture of fiercely
independent living, others to the culture of trade secrets and takeovers of the post-transition
market. Many organizations, however, are working to change this through an emphasis on shared
physical spaces for collaboration, a prioritization of developing a consulting and mentoring
community, and vigorous efforts to promote networking.
III. PARALLEL ENTREPRENEURSHIP
In the American model of entrepreneurship, it is common to think of the deep-dive single business
approach where entrepreneurs pour themselves fully into starting and growing their business. An
entrepreneur who goes through the cycle of starting, growing, and getting acquired a number of
times becomes a serial entrepreneur. In Mongolia however, there are parallel entrepreneurs. These
are entrepreneurs starting multiple businesses at the same time across sectors. Instead of starting
one business, they may be starting several, switching between fields to hedge their bets in case one
goes under; building an empire right from the start. In speaking to entrepreneurs it was not
uncommon to discover they were starting two business and an NGO while also holding down a full-
time job. When asked, many cited nomadic survival instincts as a driver for parallel ventures.

30
There are opportunities to support this emerging class of socially engaged entrepreneurs and
business minded organizers. As discussed in the section on entrepreneurs, many Mongolians
already identify strongly with the values of social entrepreneurship, what is lacking is connection to
preferential financing and specialized networks to help these entrepreneurs maximize their social
impact. Below is a snapshot of the social enterprise growth cycle with existing support structures
on the left and opportunities to the right with a star. The interview data, SE landscapes in other
countries, and investor strengths informed these recommendations.
There are countless possible interventions to promote growth, below are four illustrative examples:
1. Strengthen Entrepreneurial Education by improving the quality of education in hard
business skills and by promoting Social Entrepreneurship through traditional education.
a. The Massachusetts Institute of Technology committed to 3 years of innovative
entrepreneurial skills education through an agreement with the Mongolian Ministry
of Education. Already their team has begun offering app development training and
working with both educators and policymakers.
2. As a relatively stable and sophisticated Central Asian hub, as well as a neutral English
speaking center point between Russia and China, Mongolia has potential for a for-profit
regional Social Enterprise incubator. Potential partners would have to bring substantial
IMPLICATIONS

31
technical expertise and be willing to relocate in country at least short-term. Additionally,
given the underlying resistance to deep collaboration and skepticism of peers’ intentions,
any incubator model will need to integrate a cultural comfort component as well.
3. As accelerators thrive off their network of mentors and financiers, Mongolia may not have
the talent yet to host one, but interested partners could work on outreach, awareness, and
inspiration by advertising their accelerators through outlets such as Unread.today or
working with their fellows to expand sponsored programs and initiatives to Mongolia. One
example of such a success is the expansion into Mongolia of Source International, a hybrid
NGO whose founder is a Fellow with both Ashoka and Unreasonable.
4. Schulze Global works closely with each of its investment companies to ensure solid business
protocols and growth plans, however there is room beneath their fund for investors willing
to accept more risk with smaller initial investment sizes requiring more coaching.

32
As a new arrival to Ulaanbaatar, I was firmly told that there was no social entrepreneurship in
Mongolia, it was hard enough to just make money as a business in the recession. Through three
months of research and relentless networking, I discovered quite the contrary. There is a vibrant,
predominately but not entirely, young movement of entrepreneurs pursuing social targets.
The Mongolian economy demonstrates a halting mix of free market, transitional, and socialist
characteristics. The mining boom brought in unprecedented wealth to fuel a heavily urbanized and
metropolitan capital hungry for an increasingly lavish lifestyle: black Toyota Land Cruisers and
designer brands are now coveted signs of urban status. As the country evolves, new types of social
and environmental challenges emerge. Though small and largely without support, a new generation
of entrepreneurs is setting their sights on tackling those issues through market-based innovation.
Awareness of the benefits of joining the social entrepreneurship movement would be well received
and potentially highly impactful as the country pursues diversification.
To continue to promote this nascent cohort of social entrepreneurs there are opportunities for
technical assistance, mentoring, networking, and small scale investment through incubators or
private debt and equity investments. The entrepreneurs I encountered proved to be among the
most adaptable and open minded individuals I have had the pleasure to work with. The Mongolian
ecosystem benefits from deep wells of ideas and creativity. Finance is available, but not structured
to adequately meet the demands of the current ecosystem. In order to foster a more enabling
environment, both Mongolian and International partners will need to compromise in order to
maximize future returns: social, environmental, and financial. For their part, International investors
and partners should be prepared to offer technical assistance to increase business acumen over a
longer term. Models such as the World Bank’s involvement with Startup Mongolia could be
replicated with more experienced regional incubators and consultants to create bridges to
international markets and promote business concepts capable of growing beyond Mongolian
borders. On the Mongolian side, in addition to stabilizing the macroeconomic forecast, policy
measures must be put in place to protect international investors with increased consistency. Since
the recession, Mongolia is a country competing for investment, not competed over by investors.
As a researcher and young professional, this report was a time of immense growth both personally
and professionally. I was fortunate to encounter mentors and peers who challenged me to push my
work to the next level. As my first effort at putting together such a report, I openly acknowledge
persistent gaps. For instance, the scope of my research was far too general: each section of this
ecosystem report could be an area of further research. In particular, I would encourage future
researchers to explore how education impacts entrepreneurship
In conclusion, when it comes to social entrepreneurship, Mongolia is ripe for engagement.
Enthusiasm for socially and environmentally driven business is high, but may wane without further
support in terms of capacity and capital.
CONCLUSION

33
ANNEX 1 : Programs
CASE STUDIES
1. New Media Group: http://thenewmediagroup.co/
2. GerHub: http://gerhub.org/
3. Lhamour: https://lhamour.mn/
4. Nomad Finance: https://www.facebook.com/LendMN/
5. MACU: https://mongoliancheesemakers.com/
OTHER PROGRAMS (Listed by Order of Mention)
 Business Council of Mongolia: https://bcmongolia.org/
 Startup Mongolia: https://startupmongolia.com/
 Women Entrepreneurs of Mongolia: https://www.facebook.com/womenmongolia/
 Techstars: http://www.techstars.com/
 Development Solutions: http://www.dsmongolia.org
 IT Park: http://itpark.mn/eng/
 Women’s Business Center: http://asiafoundation.org/video/mongolia-womens-business-
center/
 Golumt Bank: https://en.golomtbank.com/
 Mongolian Chamber of Commerce: http://www.mongolchamber.mn/
 Executive Excellence International Business Center: https://www.facebook.com/EEIBC/
 CLUB Co-Working: http://www.theclub.mn/
 Mongol Makers: https://www.facebook.com/mongolmakers/
 Tomujin Academy: http://www.tomujin.org/
 Tom INC: No current Website
 Nomadic School of Business: https://www.nomadicschoolofbusiness.com/
 Schulze Global Investments: http://schulzeglobal.com/
 Mongol Opportunities Fund: http://www.mongolfund.com/
 MongolJin: http://mongoljin.com/frontierprivateequity.html
 MCE Social Capital: http://www.mcesocap.org/
 Microvest: http://microvestfund.com/
 Blue Orchard: http://www.blueorchard.com
 Symbiotics: https://symbioticsgroup.com/asset-management/
 Transcapital: http://www.transcapital.mn/en/
 BID: http://www.bid-finance.mn/eng/
 Xac Bank: https://www.xacbank.mn/
 Khan Bank: https://www.khanbank.com/
 Arig Bank: https://www.arigbank.mn/Home/mn
 Unread.today: http://www.unread.today/ (Mongolian Language Only)
 Source International: http://www.source-international.org/
 School for International Training (SIT) Study Abroad Mongolia:
http://studyabroad.sit.edu/programs/semester/fall-2017/mfr/
 Independent Research Institute of Mongolia (IRIM): http://www.irim.mn/

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