Courtesy of the Saïd Business School at Oxford University / Professors Aunnie Patton Power and Alex Nichols.

1. Impact Finance Innovations:
Conclusion

2. 2
Innovation Framework

3. 3
Week Overviews

4. 4
Learning Questions

5. Week 1 – Fundamentals of Impact Finance Innovations
Session 1a – Laying the groundwork
Why now?
Structures
Incentives
Impact Investing Transitions
Processes
Estimated Returns -100% -2.5% - 0% Market Rate (-) 8% - 18% 1% - 10% 1% - 2% Market Rate (+)
Approximate Market Size USD $75 billion USD $1.5 trillion USD $715 billion USD $742 billion USD $1.3 trillion USD $30 trillion
Spectrum Impact first Blended Returns Finance first
Type of Investments Grants PRIs MRIs Impact Investments Development Finance Green / Social Bonds ESG finance
Impact
Investing
Emerging
tech
New type of
deals and fund
structures
Business Growth profiles’ classification
Impact measurement and management
innovations
Mezz financing & structured exit agreements
Grant capital in impact finance
AI, blockchain, and other emerging tech
for impact measurement
Embedding impact into contracts
Blended finance toolkit
Negotiation exercises in blended finance
deals
Community led sourcing, due diligence, exits,
and ownership
Impact Finance Innovations
Impact
Investing
1.0
Impact
Investing
2.0
Impact
Investing
3.0
Do good & do well?
Trade-off between
impact and returns?
• Co-opted traditional financial structures
• VC
• PE
• Debt
✓
Indeed do good & do
well
No trade-off between
impact and returns
• Increased use of public debt and equity
• Creation of bespoke impact structures (i.e. Impact Bonds)
• Risk / Return / Impact efficient frontiers
Recognition of environmental and social imperatives, as
well as financial advantages around impact investing
Systematic market failures that need to be addressed in
structures, processess, and incentives
✓
• Mainstream of impact parallel
to revaluation of traditional:
Financial structures, Investment
processes and Incentives.
• Catalytic capital and blended finance emergence
• Systemic and systematic market failures
• Outcome / impact alignment needs
• Lack of responsiveness to market reality
• Restrictive current financial approach to create impact
• Distributed ownership
• Impact linked financing and Social Impact Incentives (SIINC)
• Lack of reward for innovations and impact
• Short term scope of incentives
• Lack of stakeholder awareness
• Lack of collaboration
• Need for community-led sourcing
• Due diligence and benchmarking simplification
• More transparency on financial and impact disclosure
• Lack of stakeholder engagement

6. Week 1 – Fundamentals of Impact Finance Innovations
Session 1b – Impact
IMP: “Impact is a change in an
outcome caused by an
organization. An impact can be
positive or negative”
Is it hard to
measure impact?
+
Financial Non-financial
Impact measurement
No!
(If…)
Michael T. Walsh Jr.: “Prioritizing the bridging between deep understanding
and measurement of impact at an initiative level and how that should inform
capital deployment choices which may occur at far distance from the initiative
is essential; temporal adjustment is also key to reframe what impact means;
opportunity cost of the bridge not being built well is high”
• Evidence-based
policy making
• Monitoring reports
• CSR/ESG reports
Critical framework
Why measure?
Material for
whom?
What to measure? How to measure?
Design Implementation
• Outcomes goals
• Impact
management
• Benchmark
performance
• Risks identification
• Stakeholder
accountability
• Fund raising
• Capital allocation
• Strategic decision-
making
• Reporting and
disclosure
Investors
Standard setters
Regulators
Employees
Beneficiaries
Media
Theory of Change
Reporting
• External: Principles
& standards
• Internal: Methods
and metrics
Actors
• Data producers
• Data analysts
• Data consumers
Approaches:
• Quantitative
• Qualitative
Stakeholder
engagement
Standarization of impact metrics
OIFI 2021 reflection
Impact definition
Impact measurement digitization
• Cost-benefit analysis
• Benchmarking
• Wellbeing indices
Why the
need of
digitization?
To bring consensus
on standards
Leverage on
technology
Reduce costs on
regulatory
compliance
Current state of
play of data
Decentralized
disclosures
Redundant
requirements
Non-
Financial Digitisation Working
Group (NDWG)
• Standard-setting organizations to assess the
relationship between non-financial
frameworks, standards and structured
information
• Standards could be enabled through a global
registry of digital taxonomies
• USD $ 3.3 million in 16 grants
• Working efforts to advance
on the impact metrics, data
and measurement

7. Week 2 – Redesigning Risk Capital
Session 2a - Debt Alternatives: Mezzanine Financing
Mezz financing is a term used for a broad group of debt instruments that combines equity and debt features.
Mezz Debt: Loan that is paid back with a fixed interest and an upside through “kickers” such as warrants or profit shares.
With a moderate to fast-growing path
Looking for cash to fund growth or working capital
That don´t want to raise equity or that an exit to a third party is not likely
Companies with limited assets serving as collateral
Features:
Suitable for companies:
Combination of equity and debt (quasi-equity)
Criteria is based on riskiness of the business projected growth
Terms often include a kicker, such as warrants or profit shares
Allows companies to take on more risk capital
Cost
Funders’ considerations:
Amount
borrowed
= + Fixed interest +
Kicker (cash or
equity)
Affordability
(Potentially after
a grace period)
Cash interest
payments
= + Kicker payments +
Principal
amortization
Future financing
plans
• Likely the debt will continue to sit on the Balance Sheet after a
raise
• Mezz will need to be repaid upon a sale
• Right similar to debt holders with some equity provisions
Risk
Mezz
Traditional
debt
>
Finance costs
Mezz
Traditional
debt
>
Profit share kicker (Cash) +Higher burden on the company/founder
Warrant kicker (Shares
purchase)
+Higher
complexity on
cap table
Dilution on
founder’s
ownership
Guest speaker - Eelco Benink
Why Mezz? – The problem: Financing challenge
Equity Debt
Difficult to obtain,
especially for “zebras” in
emerging markets
VC and PE firms reluctant to
invest in SMEs due:
• High risk
• High transaction costs
• No clear exit strategy
Often not optimal as
traditional forms of lending
are not tailored to the needs
of fast-growing companies
Typically come with
constraining requirements
regarding collateral and
track record
Debt-like
Equity-like
Partially unsecured /
junior loans
Royalty-based
lending
Convertible loans
Preference shares
Redeemable
equity

8. Week 2 – Redesigning Risk Capital
Session 2b – Trade Finance
Trade finance: Allows to use customer orders or invoices as collateral to access working capital funding
Supply-chain financing Factoring
• It is a buyer-driven approach that provides access to working capital for small
businesses by paying them early
Early purchase
Dynamic discounting
• Example:
Client pays within 5 days
instead of 30 days
1.5% discount on purchase
Client pays immediately 2% discount on purchase
• The process/approach is initiated by the buyer (large business)
• It is an off-balance sheet transaction, since it is a payment of accounts receivable
• Is a way for businesses to use orders from customers as a form of collateral to secure
funding
Purchases order financing: Uses invoices or purchse orders as collateral, and
it is initiated by producer/supplier
Invoice factoring: Financiers buy a business’ invoices for goods that have
been delivered
• Example:
Producer
Department
store
Financier
$20,000 order
placement
Sells $10,000 of
the order
Pays $9,500 in
advanced cash
Deliver
goods
$20,000 payment Pays $10,000 remaining of
original order
Considerations:
• The process is initiated by the producer/supplier
• Is a loan with receivables as collateral
• They are used to bridge a cash gap or scale, NOT to survive over time
• It should be evaluated based on opportunity cost
Guest speakers takeaways
Yasemin Saltuk Prateek Shrivastava Rezaan Daniels
Impact investing celebrates
innovation, however this
type of funding is a tested
tool to scale capital to
support social
entrepreneurs
Trade finance covers a
great gap of financing
Technology plays a
relevant role with this type
of funding
Impact falls into the
affordability feature
Impact story is twofold:
Microborrowes can
produce more and create
more impact with that type
of fuding
It enables the choice at the
last mile entrepreneurs

9. Week 2 – Redesigning Risk Capital
Session 2c – Structured Exits
Risk capital agreement where founders and funders contractually agree on a plan for the funder to fully (or partially) exit
Redeemable Equity Revenue-based Financing (RBF) Convertible RBF
• Equity agreement where shares can be bought back at a
later stage
• Do not have to exit a third party to satisfy the investor’s
return expectation
• Do not have to begin the repurchase process until the
company has income
• It is useful for high-growth, early-stage companies
• Cost: Redemption price of shares (potentially multiple of
purchase price or mutually agreed amount inf future)
• Affordability: Dividends, only declared when company is
solvent, and/or a one time buy-out payment from internal
cash flows
Best parts of
equity
Best parts of
debt
• Flexibility
• Patience
• Self-liquidation
• Cost
Does not require exponential growth
Does not have an open-ended agreement
Does not require a future buyer of stock exchange listing
Zebra instead of Unicorn style of company
Specific and achievable plan to exit
Contingent on some kind of revenue or cash flow calculation
✓
• Loan based on recent revenues figures
• Repayment is based on a percentage of future revenues
• Most suitable for post-revenue, early-stage to growth stage
seeking for working capital or growth funding
• Possibility for founders to avoid or delay dilution of equity
• Cost: Multiple of amount borrowed or % of amount
borrowed
• Affordability: Repaid as a % of future revenues
• Variable payment based on revenue or earnings
• Option of converting into equity by funder
• CRBF allows funders who are taking an equity-like risk to
create contracts with additional upside if founders raise
capital
• Does not require exponential growth from founders
• Cost: Multiple of amount borrowed
• Affordability: After a grace period, repaid as a % of
revenues or cash flows
✓
✓
Guest speaker - Rodrigo Villar (New Ventures Group)
• “If you want to really do impact investing, RBF models
are the structures you should be considering, especially
for companies that have a decent growth but
probably are not VC investment material”
• “There has to be a great understanding and
communication for LPs about this funding structures in
order to explain returns’ expectations and the social or
environmental impact their funding is creating”
o Regulatory risks that could change the company’s revenues
o Relationship with equity investors
o Projections and payment scheme
o Payment schedule flexibility
o Exit timing and return tradeoffs
Considerations

10. Week 3 – Innovative Grant Funding
Session 3a – Catalytic Capital
Five P’s framework (Debra Schwartz)
Catalytic capital blends the properties of grants, debt, and equity to support founders’ purpose-driven start-ups, small businesses and non-profit
organizations
Program related
investments (PRIs)
Guarantees Recoverable grants Forgiveable loans Convertible grants
Debt, Equity, Traditional
Grants
Global Access Health Case Study (Mark Radford & Sean Hinton)
Price – Accepting an expected rate of return that is below-market relative to expected risk
Pledge – Providing credit enhancement via a guarantee
Position – Providing credit enhancement via a subordinated debt or equity position
Patience – Accepting a longer or especially uncertain time period before exit
Purpose – Accepting non-traditional terms to meet the needs of an investee (unconventional or
no collateral, self-liquidating structures, smaller investment sizes, higher transaction costs, etc.)
Catalytic
capital
• Inclusion
• Innovation
• Place/Region
• Scale
Additiona
lcapital
• Debt
• Equity
• Guarantees
• Deposits
Patient
Risk-tolerant
Flexible
Concessionary
Time & effort
“We talk a lot about leverage and unlocking blended finance, which is one way
in which catalytic capital might work, but the equally, if not more powerful form
of catalytic capital, is leveraging the work that happens horizontally over time
and on multiple levels; is not about the deal is about building scalable enterprise”
Social impact buy-outs – Taking non-impact focused companies and make them more
impactful
This type of deals allows to build a sustainable structure to develop and distribute
diagnostic technologies at cost and affordable prices for the underserved populations
Is a hybrid model that works not only on the commercial space but also by securing the
pipeline of innovations the global health space needs
Transaction was only possible with the full support of the management team
Opportunity to replicate this model in similarly challenged sectors and focus on the needs
of low-income populations
Challenges include accessing growth capital in the future as equity funding is no longer
applicable
Global Access Health
Impact
Focused
Investors
Bought out VC
Investors in For-
Profit Co.
To create a public health co. funded by long term debt
(Non-profit)
(For-profit)
Global Access Diagnostics
(Non-profit)
Tested Structures
New Approaches To Drive Targeted Impact

11. Week 3 – Innovative Grant Funding
Session 3b – Recoverable Grants and Forgivable Loans
Recoverable grants & Forgivable Loans
Caroline Bressan’s Takeaways
Grants that are repaid to funders and loans that convert to grants. Conversion depends on the achievement of certain pre-agreed financial or social outcomes.
Other Grantmaking orgs.
Foundations Governments
• Timely bridging capital
• Low risk proof-of-concept
• Opportunity to build credit history
• Flexible capital to on-lend or invest
Founders
• Capital recycling
• Catalytic capital
• Initial step into impact investing
• Ability to play in the 0% - 100% capital
returned spectrum (i.e. principal)
• Signal to the market that they qualify
for below market financing that may
not be repaid
• Tool to support both for-profit and
non-profit organizations
• Serves the needs of the borrowers
with corresponding social and
environmental targets
Fudners
Considerations
of
Recoverable
Grants
vs
Loans
Funders Founders
• How urgent is the funding
need?
• What pool of funding will I
be disbursing from?
• What returns am I looking
for?
• When and how do I
anticipate being repaid?
• “The financial markets are powerful but people need to have
more voice on it to become even more powerful”
• “Philatropic capital is the best money to use to change the
world because is the capital that asks itself ”what does the
world need?”
• “Investing means moving money to the world you project, and
impact investing means moving money to the world you want
to see”
• How do I want this funding to show up
on my balance sheet? As a loan? As
equity?
• Under what circumstances would the
funding be converted/forgiven?
• What are the expectations of my
auditor?
Impact
Risk Return
”Impact is the first step in the due diligence process, after all, the money disbursed
seeks to change the world for the best”
“Besides the impact side, understanding revenue models and cash flows is key”
USD
$1
trillion
Family offices
& foundations
Donor Advised
Funds
7% grants
93% pure
financial
investments
“Donor Advised Funds no longer belong
to the donors, they belong to society
since they are already intended to
deliver positive results to it” – Graham
Singh – OIFI Participant
Ted Levinson’s Takeaways Endowment & DAF Opportunity

12. Week 4 – Embedding Impact into Financing
Session 4a – Future of Impact Measurement and Management
Why?
Strategic decision-
making
Impact
management
Benchmark
performance
Risk identification
Stakeholder
accountability
Reporting and
disclosure
Materiality
Investors
Standard setters
Regulators
Employees
Beneficiaries
Media
What?
Theory of Change
How?
Standards
Methods
IMM SROI IWA SASB
Karim Harji (Impact Measurement)
Guest Speaker - Jessi Baker (Provenance)
Alex Nicholls (Impact Monetization)
Guest Speaker – Dan Viederman (Working Capital Fund)
• Data collection
• Data verification
• Social outcomes
measurement
• Correct valuation
• Data standardization
• Alignment of
reporting standards
• Tech to engage
stakeholders
• Financial and impact
performance integration
Challenges
Opportunities
“One way to avoid impact dilution is by having the right metrics and the right approaches to get them;
however they tell only part of the story. You should think about what else could be indicating that there
might be impact or not”
“Why monetization as an impact measurement tool? Because people like numbers; money is seductive and
cashing value is cool ”
Monetizing impact outcomes is useful for
comparative decision-making
Can be misleading depending on variables
used and risk factors
Oversimplifies complex impact data
Current models have high transaction costs
Prioritizes one perspective over others
It is best used in tandem with other IMM
models
79% of consumers are changing purchase preferences based on sustainability
67% say they lack information on how ethical or sustainable different products are
40% of green claims could be misleading, which could turn onto more regulation
“Tech is essential due to the scale of the problems
that need to be solved. However, despite
technology such as AI or blockchain being already
here, its use is not evenly distributed ”
“There has to be more market pressure to make
brands more transparent and improve their
internal traceability”
Sources: Kapgemini, Kantar & UK Competition and Market Authority
IMM approach
• Impact Due
Diligence
• Evidence
Generation
• Knowledge
Sharing
• Investee
Readiness
• Learning
Reviews
“A good thing is that there are more regulations
towards impact goals, such as labour policies.
However companies are not paying that much
attention, otherwise they’ll have to disclose more
information ”
“Surveillance technologies, if used properly, can
tell stakeholder a lot about how things are being
run in a company and the real impact, whether
positive or negative, it is creating”
• Theory of
Change

13. Week 4 – Embedding Impact into Financing
Session 4b – Impact-Linked Finance
Linking of financial incentives to the achievement of social and/or environmental performance targets; that is, directly influence when capital is allocated and how
much it costs. The key to linking impact to financing is that funding is linked to a theory of change framework.
Interest rate
rebate
SIINC
Outcomes-based financing (SIBs & DIBs)
• Aims to incentivize borrowers by linking the cost of the loan to impact outcomes
• Interest rate adjusted as desired outcomes are achieved; outcomes targets are set
upfront
• It pulls together multiple stakeholders to incentivize social/environmental
impact
• Are meant to to get social enterprises the impact capital they need,
while providing incentives to stay “on mission”
MSDF Case Study – Rahil Rangwala (Guest speaker)
Considerations
Founders Funders
• Is an option to embed impact into deal
contract
• A mission aligned investor is needed
(foundations or family offices)
• Will to give up some financial return if
borrower achieves target
• Flexibility and mission alignment is key to
own stakeholders
• Defined & simple measurable metrics
Two funding entities required:
1. Investor: Provides upfront
operating or growth capital
2. Philanthropic “outcomes payor”:
Agrees to kick in some grant
capital as “bonus funding” if
impact milestones are achieved by
the social enterprise
1. Government/foundation (outcomes payor) commissions a contract from a non- profit with a
specific social/environmental target (SIBs-Government; DIBs-Private funders)
2. An intermediary organization is recruited to tap private investors for working capital
3. Capital is funneled to the service provider implementing the programme or intervention that
(hopefully) will achieve the outcomes payor’s desired impact
4. Intermediary keeps track of data and milestones on the initiatives’ targeted social and
environmental outcomes
5. At certain milestones, an independent third-party assesor reviews whether pre-agreed
outcomes are met
6. Succesful social achievements then trigger payments to the private investors
“Despite being innovative instruments, you should always get back to basics about a simple
structure, especially in order to be understood by the borrowers.”
“Impact measurement plays a “cool” role with these complex/innovative funding structures,
however you should always look for something objective and especially not that costly nor
complicated; measurement cannot be more costly than the incentives themselves”
“Setting specific timelines is key to evaluate outcomes based on the right incentives, whilst also
allowing some time to re-set the course to correct interventions”
“Incentives have to be aligned all the way to the value chain of the interventions”
“Don´t try to completely change the system you want to intervene in; it´s about making connections
and aligning incentives to improve it”

14. Week 5 – Innovative Fund Structures
Session 5a – Impact Fund Toolkit
1) Capital Structure Position
Equity Debt and/or Equity Debt and/or Equity
• Junior Equity • Subordinated Debt • First-loss capital
2) Technical Assistance 3) Guarantees
Choosing the position in which the capital funding sits within the fund
depending on the risk that is preferred
Capital used that sits either alongside an investment
or just to be able to create markets
Incubation
• Skills training
TA Fund
• Grant Capital
When a large organization pledges to repay investors
if the project or fund fails
Guarantee funds Funds with guarantees
• Certainty on full or partial
return
• Downside protection
4) Patience
Holding Companies
• Long-term investments
Willigness to wait for returns beyond traditional fund or deal structures
Open-Ended Funds
• Allow to grow as it
proves its thesis
• Prioritize social over
financial returns
5) Lifecycle Funding
Multi-stage approach to support companies in
different stages (from proof of concept to scale)
Stage 1
• Seed
financing
• Start-up &
testing
• Transitioning to
scale
Stage 2 Stage 3
6) Advanced Market Commitments
Ability to pool demand and thus procure supplies at
lower prices
It is used to guarantee a viable market for a product
once it is successfully developed
• e.g. Covax vaccine mechanism
“Patient” Capital
Guest Speaker – Joan Larrea (Convergence)
Data Trends
Annual blended finance capital flows
have averaged approaximately USD $9
billion since 2015
Funds represent the largest share of
blended finance transactions
Sub-Saharan Africa most common
destination for blended finance deals
Agribusiness and climate-smart
agriculture momentum
• Lack of private sector
mobilization strategy and
action plan
• Low coordination from
governments and domestic
resources
• Lack of transparency
• Underdeveloped blended
finance ecosystem
1. Donors should make private sector
participation a key strategic pillar
2. MDBs and DFIs must engage with
investors on a radically different scale
3. Governments should enable blended
finance environment
4. Practitioners should support scale by
proven and replicable structures
5. Innovation and transparency should be
promoted by practitioners, but particularly
donors
Challenges Reccomendations Takeaways
“We need large structures where the blending part is effectively
calibrated by big players like pension funds and insurance companies”
“Anonymizing Term Sheets and making rankings among organizations
could help to improve information disclosure”
“Domestic capital is key to compensate currency risk but also an
opportunity to innovate with guarantees in the blended finance space”
“Blended finance requires Ecosystem additionality to cover gaps that can
be covered with a specific role or strategy”

15. Week 5 – Innovative Fund Structures
Session 5b – Emerging Fund Structures
Lilian Mramba (Permanent Capital Vehicles)
Are open-ended structures that can continue in perpetuity for as long as the fund is performing without
the need for a fixed capital quota to be raised
R1 R2 R3 R4
Continous loop
• Alignment between the fund,
target businesses, and
investors
• Suitable for impact
mandates
• Flexibility to exit
• Maintain focus on pipeline
quality and impact
PROs CONs
• Liquidity concerns for
investors
• Investors returns closely
tied to the valuation of
underlying portfolio assets
• Perception in the market –
challenging to raise
capital
• Ongoing fundraising throughout the life
of the vehicle
• Ongoing capital deployment
• Ability to recycle funds
• Investors can come and go as they wish
• Fairly new with mixed investor reception
Chid Liberty (Impact Transformation Funds)
ITFs buy the scale that social start-ups need to have a meaningful impact in the world and transform
these companies to benefit people and the planet while earning market rate returns
Social Start-
up
Search Fund
LBO
ITFs
Entrepreneurs can focus on
positive impact and growth by
skipping the risky and long stage
of scaling-up a social start-up by
instead acquiring it
• Business infrastructure is already
built and at scale
• Impact Transformation creates
measurable ESG impact
• Transaction size can be much larger
than for a search fund
• ITFs create synergies, increased
productivity and retention
• ESG/SDG metrics as KPIs
Michael Lewkowitz (AngelLists’ Rolling Funds)
An investment vehicle that raises money through quaterly subscriptions from interested investors and
invests it as they go (ergo “rolling”). The flexibility allows LPs to bet on new fund managers and new
fund managers to bet on new LPs
• Can raise in public – harnessing social media and
networks
• Can invest on first capital – demonstrating thesis
and approach real- time
• No hurdles for first close – putting capital
work right away
• Flexibility – Increasing diversity of LPs using
subscriptions
LP subscriptions
Rolling Fund
# Investments 2 3 5 6 3 4 3 4 2 2
Rob LeBlanc (Search Funds)
Raise capital (2-6 months)
Is an entrepreneurial path undertaken by one or two individuals who form an investment vehicle with a
small group of aligned investors to search for, acquire, and lead a privately held company for the
medium to long term
Search & buy (Up to 30 months)
Manage & grow (4-7+ years)
Return capital (3-6 months)
• VC-like upside potential / PE-downside protection
• They generate an average gross IRR of >30% and >5x
invested capital
• Impact boosters:
o Enabling underfunded entrepreneurs
o SME preservation
o Job & wealth creation
o ESG targets with SDG alignment
Steps to launch an ITF:
1. Be an
entrepreneur
2. Select a company
3. Acquire funding
4. Transform the
company

16. Impact Tranches
Outcomes Payments
Week 5 – Innovative Fund Structures
Session 5c – Incentives Structures
Incentivizing Funds to Create Impact
1. What outcomes are the ones aimed to achieve?
2. Who needs to be incentivized to achieve these outcomes?
3. Is the achievement of these outcomes align to financial performance?
4. If a trade-off is required to achieve these outcomes, who is willing to bear the cost?
Impact Carry
• Incentives at the individual level designed to
encourage impact achievement; generally cash
• Similar to SIINCs/SIBs/DIBs but at fund level to
incentivize fund managers to invest in specific
mandates with impact verification tools
• Ringfenced part of a fund that is directed to
spend the capital seeking different results from
the ones the fund aims
Impact Carry Considerations
Carry Construction
• There is no template for devising a carry arrangement – a lot of variation across markets, asset classes, and fund
size
Key Considerations
• What levels of the organization will have access to the carry in the fund? Above certain treshold or a bit to
everyone?
• What is the appropiate level of carry for each person being granted an option? Do you compensate those who
took on greater risk in the beginning?
o Carry is one part of overall compensation and different team members (senior vs junior) will value short-
term cash payments (salary/bonus) over long-term and potentially riskier payments (carry)
• How do you manage carry so that it continues to be an incentive?
o Providing too little rather than no carry for particular roles can be de-motivated
o Overall fund performance vs individual regions or investments?
• What happens to someone’s carry when they leave the organization?
o Vesting periods
o Good leaver vs bad leaver provisions

17. Week 6 – Community Led Capital
Session 6a – Making the Investment Process More Inclusive
Guest Speakers: Bernardo Afonso & João Magalhães – Crowdfunding (“Code for All” Case Study)
Crowdfunding Considerations
Allows the community of supporters, end users, and everyday
invididuals to participate in a fundraising process and business
evolution
Donation-based: Individuals donating money toward a
social or environmental project
Rewards-based: Individuals donating money to a project or
business with the expectation of receiving a non-financial
reward in return, i.e. goods or services
Equity: Individuals investing into a company in return for
ownership in the company
Debt: Individuals lending money to a company over a set
period of time
Guest Speakers: Allie Burns (Village Capital) and Liz Ureta & Enrique Mezo (Plant Squad) – Peer-based decision making
Founders
• It is more than just money
• Tech-enabled platforms helpful to raise
• Provides access to networks, mentorship and non-
financial support
• Useful for early-stage growth capital and
working capital
• Represents a risk for non-accredited investors
• Lower transaction costs vs traditional funds
• Additional clarity around regulation and
increased awareness improves crowdfunding
attractiveness
Peer-driven investment approach Key takeaways
Model that explores whether entrepreneurs who have lived experience of the problems, customers,
and markets they are working on, can conduct due diligence and make investment decisions more
effectively than the traditional venture capital diligence and investment process
Benefits
Leads to improved performance
Works to identify prospects for
venture growth and investment
returns
Helps support a more diverse
portfolio, with less risk gender,
geographic, or racial bias
Challenges
Willingness to leave business due diligence
to external stakeholders
Resource intensive (cost and time)
Not enough evidence for later-stage
companies with substantial track record
Funders
Key takeaways
o Fit the fundraising strategy into the overall strategy of the company
and not the other way around
o Invest some time learning about different types of investors and be
opportunistic about fundraising; this is true to any company and
especially true to Impact start-ups
o Since the fundraising is an emotional process, be a storyteller
o Fundraising also needs to be supported by facts/rational so, sooner
rather than later, the mission/purpose needs to be supported by a
great product with traction and growth
o There isn’t a one size fits all framework in a fundraising process so
tweak/adapt to your specific needs, stage, region, investors
o This approach helps to have a comfortable environment to ask questions among peers, experts
and people that have been on the same path
o Humbleness helps to receive truthful feedback from peers to improve a product or service; thus
fostering the decision-making process more sound
o Village Capital considers peer-review as a product, thus it seeks to constantly evolve it to keep
improving in order to make due diligence and investments processes more effective
o One challenge of this model is that it is hard to scale, thus it has potential to make it lighter via
technology platforms
o This process mitigates bias because it adds different perspectives into the due diligence process
and thus it makes the investment process more objective

18. Week 6 – Community Led Capital
Session 6b – Community and Employee Ownership
Employee Ownership
Guest Speaker: Morgan Simon (Candide Group) – Community and Employee Ownership
Business Entity
The creation of an employee-owned entity
(by transitioning the existing business, or
setting up a new equity like a trust or a
worker co-op
Exiting owners must be focused on preparation. In an
ideal world, retiring business owners would use a five-
year runway for these planning considerations; as they
must think through a wide host of legal, financial and
human relations complexities
Sales Transaction Roles & Culture Transition Profit Sharing
The current owner/owners sells/sell the
existing business (or its shares or assets) to
the employee-owned entity and executes a
purchase and sale agreement
Transition of roles and the development of
an ownership culture brings the many
proven benefits of employee ownership to
life
Though not built into all employee
ownership models, profit-sharing is an
important support for developing an
ownership culture
Because the financial transaction that creates
employee ownership can occur separately from the
management transition, businesses can complete the
financial sale first and then the management
transition after
Timing is an enormous consideration when
it comes to transitioning to employee
ownership, particularly in regard to the
original owner and their relationship to the
business
Why ownership? Because impact investing
should be about shifting power
Community ownership is a non-extractive type
of funding, in turn it builds and distributes
wealth more evenly
Distributing ownership goes a long way to
building assets for communities
Employee ownership is playing a more
relevant role in the impact space
Aligning and constantly readjusting
expectations for capital returns for this type of
scheme could be a real challenge
Impact Management over Impact Measurement
could be better for the success of this type of
approach
Advocacy is very much needed to support the
scalability of this type of structures
Community engagement and stakeholder
activism must be at the forefront of this scheme
Social education is one of the main steps
towards community accountability
Staying involved on the ground should be seen
as integral to the work of investors
Disposition is key to stay positive doing social
activism
We have to decide to enjoy the world and the
social causes worth fighting for. We wouldn´t
try to save the world if we didn´t consider it as a
beautiful place

19. Week 6 – Oxford Impact Finance Innovations Programme
Session 6c – Class Discussion & Wrap-Up
Approaches to make investment structures, incentives and processes more inclusive, equitable and impactful
Structures Incentives
Recognize that impact finance is a journey.
Beginning the journey imperfectly is more
effective than having absolute clarity before
beginning.
Understanding that we have impact as part of an
ecosystem, as opposed to ourselves/individuals
Put community at the center – Community
permissibility
Review applicable legal structures to understand
how some new models can be implemented, such
as revenue -financing
Combining/linking the grant and equity buckets
with new instruments
Need to think about how to engage the
entrepreneurs we support. How to empower their
voices in our support
Consider permanent capital vehicles
Underwriting impact initiatives so that it is priced
in
Processess
Impact commitment to be inbuilt into the
company
Build impact KPIs into financial structures-
milestones to release funds
Creation of sustainable remnant of the original
investment
Incentive for financier and recipient to identify
goals mutually with big picture in mind (beyond
themselves)
Incentivize the objective (impact) not successful
exit
Be flexible in structures to build in incentives and
to provide the freedom needed to pivot when
needed
Impact carry is an interesting opportunity
Look at integration of impact into the mission
statement
More collaboration by sharing more insights and
learnings
Share results of research/data collection back
with community and ask for input/feedback to
validate
Peer review processes for implementation
Be ok with the process being messy, that’s how
we get to structures best-suited for particular
needs
Use of innovative technology like blockchain to
reduce the cost of investment processes
Learn to listen more, be truly stakeholder centric
Inculcate beneficiary-centric IMM processes, to
help achieve real, positive, and measurable
impact
Include governance structures to ensure
accountability pre- and post-close, like impact
committees