Your SlideShare is downloading. ×
0
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Coordinating Impact Capital
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Coordinating Impact Capital

53,446

Published on

The Coordinating Impact Capital report by the Center for Science, Technology, and Society encompasses over 10 months of surveys and analysis with more than 45 investment organizations currently …

The Coordinating Impact Capital report by the Center for Science, Technology, and Society encompasses over 10 months of surveys and analysis with more than 45 investment organizations currently working in the field of impact investing. The intent of this project was to unearth actionable suggestions for the social impact community, and identify market mechanisms that can increase the efficiency of invested capital, resulting in greater liquidity opportunities for investors. The project was generously supported by the Aspen Network of Development Entrepreneurs. The lead authors and guest experts will discuss the landscape of impact investing and a foundation for vetting future social impact investment opportunities.

Published in: Economy & Finance, Business
2 Comments
4 Likes
Statistics
Notes
  • I really like this presentation. Very well said.
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • This is a very well presented slide.
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
No Downloads
Views
Total Views
53,446
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
84
Comments
2
Likes
4
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide
  • CALL CDOs
  • Justina plays in the PRI space. A lot of thinking going on these issues. RF is winding down the impact investing phase of their support but are looking at collaboration between supply side and demand side.
  • Transcript

    • 1.
    • 2. moderator
      John Kohler
      Program Director for Social Capital at the Center for Science, Technology and Society
    • 3. Venture capitalists have it easy…
      Venture investing in the developed world
      • Targets of opportunity are sourced locally
      • 4. Investment syndicate drawn from local venture capital relationships
      • 5. Results of venture capital backed product or service has a global impact
      • 6. Well-defined path of “up-round” investing
      • 7. Ready-made pools of “up-round” capital waiting for winners to emerge from previous financing
      Venture investing in the developing world
      • Targets of opportunity are sourced remotely
      • 8. Investment syndicate drawn from the global impact investing community
      • 9. Results of venture capital backed product or service has a local impact
      • 10. Scarce “up-round” capital available
      3
    • 11. Are there…?
      Headwinds to Efficient impact investing markets
      -Dalberg
    • 12. Horizontal Capital Aggregation Scope
      Previous Reports
      Outcomes of this study
      • Examine the requirements of capital from each source
      • 13. Suggest a model for successful syndication
      • 14. Participants across the ‘life cycle’ of SGB development
      • 15. Terms to guide a successful ‘handoff’
      • 16. Identify funding sources by mission and outcome
      • 17. Provide examples of phased financing (rural electrification)
      • 18. Suggest a template for future syndication
      • 19. Building the case for impact investing
      • 20. Study of the impact investing landscape
      • 21. Larger scope of investing in businesses in the broader developing world – BOP loosely defined
      • 22. Assertion of impact investing as an emerging asset class
      5
    • 23. Direction
      of Capital
      Capital Sources
      Capital Sources
      Geography
      Mission
      Intermediary
      Funding Organization
      Size of Funding
      Type of
      Capital
      Desired Liquidity
      Type of SGB
      SGB Organizational Objectives
      Desired Outcome
      Reporting Requirement
      Expected Time Frame
      Investment
      Outcomes
      Target
      6
    • 24.
      • Primarily foundations and individuals
      • 25. Financial institutions and corporations are largely absent
      • 26. Financial first vs. impact first discussion continues
      Sources of impact capital
    • 27. Emerging use of multiple investing instruments
      • Some funds are creating horizontal aggregation internally
      • 28. Equity is tied to higher IRR targets
    • Progress in addressing the “missing Middle”
      • Capital shift to > $750K
      • 29. Multiple financing instruments used
      • 30. The demotion of equity
    • Direction of Capital
      Segmenting The BOP(Base of Pyramid Market)
      • Investors find more market rate opportunities in urban areas where income levels are higher and talent of entrepreneurs is higher, however, the majority make no preference to urban versus rural
      • 31. When asked, the vast majority of respondents do not measure target income levels of their markets
      10
    • 32. Direction of Capital
      Expected Returns: Rural Vs. Urban Focus
      11
      • Respondents indicated that there is simply not enough development in rural areas to achieve a market rate of return
      • 33. Consequently, investors seeking a market rate return may initially focus on SGBs in urban areas which posses 3x - 5x disposable income versus rural, lower customer acquisition costs and lower service costs
    • Intermediary Use To Deploy Capital
      Direction of Capital
      Expected Returns with Intermediary Use
      Expected Returns WITHOUT Intermediary Use
      • Most investors who use an intermediary invest through debt instruments and need a local bank or partner to help deploy the loan
      • 34. The majority of respondents believed they were best situated to select SGBs when they were operating “in country.” This implies that an arms-length relationship with SGBs reduces return expectations relative to a direct investment relationship
      12
    • 35. Direction of Capital
      Capacity Development Use
      • Few organizations use Capacity Development Organizations (CDOs), also referred to as Technical Assistance organizations
      • 36. “We do not know who they are in the areas where we operate”
      • 37. “They are a big added cost”
      • 38. Many organizations provide their own capacity development services (business mentoring, operational management and consulting as part of their investment)
      • 39. Redefine who CDOs are: Local business leaders, corporations, advisors and consulting firms
      13
    • 40. Monthly contact
      Non-Monthly Contact
      14
      Frequency of contact between investors and SGBs
      • Investors who practiced “high-touch” portfolio management (defined in our study as “monthly contact or greater”) reported significantly higher return expectations
    • Polarization of return expectations
      • Expectations are softening but still the debate rages
      • 41. Sets the stage for syndication
    • Re-calibration of investment duration
      • Vast majority of respondents are adjusting their time horizon
      • 42. 75% are now expecting 5 - 10+ year holding period
      • 43. Time is the enemy of IRR
    • The unintended consequence of IRR targets
      Tight screens are used in assembling impact portfolios
      Equity instruments are assumed
      Creative investment instruments could align with what social enterprise can deliver
    • 44. 18
      Phased Investing Hypothesis
      Phased Investing (baton pass) – Different impact investors contributing capital at each phase of the SGBs’ development cycle. Examples of this may include:
      Grant (capacity building)
      Soft loan (proof of concept)
      Quasi equity / equity investment (scale the business)
      Debt provider (long-term, commercial loan—scale the business
      Co-Investing—Multiple investors pooling capital to make one type of investment.
      Internal Syndication—An organization participates in multiple phases of the same small and growing business investment cycle; i.e., providing capital in the form of a grant that is later followed by an additional investment in the form of debt or equity.
    • 45. Co-investing vs. Phased Investing
      • Although syndication is happening, it is not happening on a regular basis
      • 46. Phased investing is a much more efficient type of syndication and is not happening
      19
    • 47.
    • 48.
    • 49.
    • 50. Recommended Actions
      • Begin treating capital as ‘work in process’ - know your upstream and downstream partners and help prepare your investee for the next ‘round’
      • 51. Increase the use of local capacity development organizations
      • 52. Develop new investment instruments that reward investors from free cash flow, not valuation build-up
      • 53. Establish mechanisms for ‘mezzanine’ financing to reward the early and brave impact investor
      • 54. Work on market mechanisms that earn greater investor confidence
      Diligence and validation
      Mentoring and capacity development
      Metrics that matter
      Financial and regulatory consistency
    • 55. Researchers
      Sol Tran
      Jared Abercrombie
      Krishnan Manjeri
      Contributing Editors
      Greg Dalli
      Rachel Haley
      Project Lead
      Jessica Sawhney
    • 56. Panel discussion
      Susie Lee
      Principal, TBL Capital
      Sean Foote
      Management Team, Labrador Ventures
      Taryn Goodman
      Senior Manager, Impact Investing, RSF Social Finance
    • 57.
    • 58. Global social benefit incubator
    • 59. Download online
      Full Report Available Online
      www.scu.edu/socialbenefit/socialcapital.cfm

    ×