Impact investment hub lunch 240511


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Impact investment hub lunch 240511

  1. 1. Impact Investment: A New Asset Class? Thats what JP Morgan calls itSocial Finance, Impact Investment, and Finance for Social Enterprise A Conversation Hub Lunch @ Islington 24 May 2011
  2. 2. Vancity Community Capital (“VCC”)● Born out of a division of Vancity, Canadas largest credit union, provides growth capital to high impact enterprises● Vancitys objectives explicitly include improving community well-being, supporting high social and environmental impact businesses, and redefining wealth – has over Cdn$15 billion of assets under management● VCC manages a portfolio of subordinated and structured loans of around Cdn$45 million – with a further Cdn$25 million available to lend● VCC launched the Resilient Capital Program in May this year to invest in high impact opportunities that may feature higher risk or require more patient capital – raised around Cdn$4 million and aiming to raise a total of Cdn$10-15 million● VCC works alongside other divisions and partners of Vancity, such as Vancity Community Foundation and Vancity Community Investment, which provide grants and technical assistance – ranging from business planning to strategic grants to help social enterprises through various stages of development
  3. 3. Impact
  4. 4. Impact Investment
  5. 5. Impact Investment Impact investments are investments intended tocreate positive impact beyond financial return. They require the management of social andenvironmental performance in addition to financial risk and return. JP Morgan/ Rockefeller Foundation
  6. 6. Social
  7. 7. Social Finance
  8. 8. Social Finance Social finance is an approach to managing money that delivers a social and/or environmental dividend as well as an economic return.SiG, Causeway, Volans - Building the Case for Social Finance in Canada 21 August 2009 Sustainable finance with a social or environmental goal. Tim Draimin, TIDES Canada - 29 May 2007 Leveraging multiple sources of financing to achieve long term, accountable social impact and economic return. Al Etmanski, President, PLAN, Partner, Social Innovation Generation (SiG)
  9. 9. Social Finance & Impact InvestmentSocial impact bonds, Big Society Bank, Big Issue Invest – a specialisedprovider of finance to social enterprises or trading arms of charities that are findingbusiness solutions that create social and environmental transformation, BridgesVentures – a sustainable growth investor, Microfinance, Kiva, CommunityDevelopment Finance Institutions, Credit Unions & Financial Co-ops,Transform Capital Management – a global impact investment bankSocially responsible investment, Philanthropy & Philanthrocapitalism,Patient Capital, UnLtd, UnLtd Big Venture Challenge, NESTA, YoungFoundation, RSF Social Finance – founded as the Rudolf Steiner Foundation,Nonprofit Finance Fund – Where money meets mission, Renewal Partners –funding change through investments, grants, and collaboration, Vancity CommunityCapitalSome frequently recurring phrases: mission-based, change, social andenvironmental performance/ return/ benefits/ dividend, investment,grants, finance, sustainable, growth, global
  10. 10. Challenges● Gaps in language and terminology used amongst investors, entrepreneurs, and social purpose business people● Many professionals working at impact investment firms are from the conventional investment sector (note: based on personal observation, not empirical evidence)● Lack of innovation, creativity, and openness in the impact investment sector – does not mirror the organisations they seek to finance and support – Slow to embrace co-design of finance, neither side seeing each other truly as a partner, attempts to innovate with financial instruments rather than addressing behaviours or culture of social finance● Risk of value extraction and exploitation of social enterprises rather than true capacity building● Frequent use of terminology such as “fast growth”, “scale”, “replicable”, which are not necessarily appropriate for social enterprises
  11. 11. ChallengesWhat other challenges do you see or have you experienced?Solutions & OpportunitiesWhat are the solutions and opportunities to bridge the gapbetween social financiers and the enterprises they want tosupport?Lets open up the conversation...
  12. 12. Ideas● Impact investors and social financiers must look at their own business model and strategy – Consider co-operative, open-source, and other unconventional ways of doing things and ask themselves how they could apply those models● They should walk a mile in the shoes of their investee companies – secondments to social enterprises, sit on the Board – and learn their language, experience their issues first hand● Invite social enterprises to shadow impact investors or conduct peer reviews of business models and business plans – so that they can understand better the investment process, improve transparency● Impact investors and social financiers need to move out of their comfort zone – step away from the numbers, examine behavioural and intuitive aspects of investment in social enterprises – consider non- financial incentives, measures, resources, and services (the importance of advice, strong management teams and operational experience, training and continuing education)
  13. 13. Stay in ContactBonnie WongAt work: or +1 604 877 8284All the time: bonnie.o.wong@gmail.comOn Twitter: @BonnieOWongBlog: (mainly aboutimpact investment and social finance, with links to my otherwriting)