Columbia capital markets presentation oct 2010

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Prof Bugg-Levine's presentation on capital markets.

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Columbia capital markets presentation oct 2010

  1. 1. Innovations in financing development solutions Antony Bugg-Levine Business Innovations in International Development October 2010
  2. 2. How will I find capital to grow my development- focused business? How can I assess the capital raising strategy of a business plan? How can I make investments that support business innovations for development? How can I build a business solving these problems for others?
  3. 3. • Retail investors • HNWI • Private bank clients • Family offices • Private foundations • Institutional investors • Sovereign wealth funds • Development finance institutions • Government
  4. 4. Supply (Buy-side) Demand (sell-side) Intermediation
  5. 5. Supply (Buy-side) Demand (sell-side) Intermediation • Retail investors • HNWI • Private clients (UHNWI) • Family offices • Private foundations • Pensions • Taxes • Commercial banks • Trading platforms • Wealth advisors • Private banks • Investment funds • Institutional asset managers • Development finance institutions • Treasury department • Sovereign wealth funds • For-profit businesses • NGOs (e.g. Scojo) • Suppliers (e.g., smallholder farmers)
  6. 6. Where is the money? Retail bank High net worth Private bank Family office Insurance fund Pension fund DFI Foundation endowment ODA Corporate investment Government support 28 23 17 30 20 0.21 (flow) 0.6 0.12 (flow) US$TR
  7. 7. Retail savings High net worth assets SWF Insurance funds Pension funds Foundations (US) Private giving (US) DFIs ODA
  8. 8. 1. Retail investors 2. HNWI 3. Private bank clients 4. Family offices 5. Private foundations 6. Sovereign wealth funds 7. Development finance institutions 8. Institutional investors 9. Government Potentialinvestmentsize Impact investment appetite/ independence 9 2 6 7 8 4 5 3 1
  9. 9. Where is the money? Retail bank High net worth Private bank Family office Insurance fund Pension fund Capital/account Investor discretion
  10. 10. The Scott Budde Problem… ERISA Make impact investments… $700MM commitments At scale
  11. 11. • Retail investors • HNWI • Private bank clients • Family offices • Private foundations • Institutional investors • Sovereign wealth funds • Development finance institutions • Government • CCI note invested in community housing • Grameen loan guarantee • Syndicate microfinance loan • School finance fund • Charter school guarantee • CDFI cash deposits • China investments in Africa • Loan for new roads • Electric car company loan
  12. 12. Social enterprise Social enterprises stuck in the middle when trying to raise funds Social return Charity/ non-profit ~20% For-profit business 0% Risk- adjusted financial return -120%
  13. 13. ~20% Impact investing industry emerging to fund social enterprise Social return -120% 0% Risk- adjusted financial return Examples:
  14. 14. ~20% Impact investing industry emerging to fund social enterprise Social return -120% 0% Risk- adjusted financial return Examples: Double-bottom line trade-off
  15. 15. ~20% Market-rate impact investing Risk- adjusted financial return Social return -120% 0%
  16. 16. ~20% Market-beating impact investing Risk- adjusted financial return Social return -120% 0% Examples: generation__
  17. 17. ~20% Can impact investing become a stable equilibrium? Social return -120% 0% Risk- adjusted financial return Examples: Business discipline Social metrics
  18. 18. Opportunities for entrepreneurs Investment firms • Structure deals • Make investments NGOs • Raise capital • Fund management • Advisory Start-up firms • Asset management • Investment banking • Advisory
  19. 19. Capital raising examples • Private foundations • Family offices $20MM • Private foundations • Family offices • (U)HNWI • Corporate customers $50MM • Private foundations • Family offices • HNWI • DFIs $102MM $16MM $1.5 Billion • Venture capital (Sequoia) • Angel investor • Family office • Commercial bank

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