Changing the Guard    Entrepreneurial Solutions for Prosperity                                                TBN Conferen...
The Executive Summary1         © SpringHill Equity Management LLC
Business-As-Usual Isn‟t Working…2                © SpringHill Equity Management LLC
…Prompting Some Paranoia…3               © SpringHill Equity Management LLC
…And Some Serious Soul-Searching            “The figures for the last quarter are in.    We made significant gains in the ...
Impact Investing Bursts On the Scene       Danook shows off his Swiss Army Rock.5                 © SpringHill Equity Mana...
Everyone Is Now Talking BIG    “We have two offices throughout the world.”6                 © SpringHill Equity Management...
But Lasting Impact Is Not Yet Known                        „Uh oh…‟7                 © SpringHill Equity Management LLC
Where’s The Beef?8        © SpringHill Equity Management LLC
Questioning the Post-War Aid Model                                                      Economists’ Adventures            ...
Aid Does Not Deliver Development                                                                                         ♦...
Impact Investing Defined     “           Investments intended to generate                      a positive social impact   ...
Investing in Primary Education           State School System     ♦   3rd percentile pupil achievement                     ...
Investing in Mobile Information Access             “Google & Craigslist”                (Addis Ababa)     ♦    < 5% Intern...
Investing in Energy Efficient Stoves            Traditional Stove     ♦   20-30% of income spent on wood or               ...
Impact Investing: The Promise♦    Up to $1 trillion impact                                     ♦     Catalyze private capi...
A Growing Field...          Investors                                        Managers16                    © SpringHill Eq...
With Different Priorities                                 Impact Floor     High                                           ...
ON – “Flexible Capital”                Foundation                                              LLC                    $266...
Reality Check: Too Good to Be True?     ♦     Green-washed:              ❖   Any investment in emerging markets is impact ...
Or A Predictable Evolution?     Uncoordinated   Marketplace                                               Value Capture   ...
It‟s Just Early Days…         Uncoordinated               Marketplace                                                     ...
Summary and Concluding Thoughts…     ♦   The intentional transforming impact of business         is now well recognized.  ...
Thank You     www.springhillequity.com23       © SpringHill Equity Management LLC
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Steve Beck, Springhill Equity Partners – "Changing of the Guard"

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Steve Beck, Springhill Equity Partners – "Changing of the Guard"

  1. 1. Changing the Guard Entrepreneurial Solutions for Prosperity TBN Conference May 25, 20120 © SpringHill Equity Management LLC
  2. 2. The Executive Summary1 © SpringHill Equity Management LLC
  3. 3. Business-As-Usual Isn‟t Working…2 © SpringHill Equity Management LLC
  4. 4. …Prompting Some Paranoia…3 © SpringHill Equity Management LLC
  5. 5. …And Some Serious Soul-Searching “The figures for the last quarter are in. We made significant gains in the 15-26 year-old age group… But we lost our immortal souls.”4 © SpringHill Equity Management LLC
  6. 6. Impact Investing Bursts On the Scene Danook shows off his Swiss Army Rock.5 © SpringHill Equity Management LLC
  7. 7. Everyone Is Now Talking BIG “We have two offices throughout the world.”6 © SpringHill Equity Management LLC
  8. 8. But Lasting Impact Is Not Yet Known „Uh oh…‟7 © SpringHill Equity Management LLC
  9. 9. Where’s The Beef?8 © SpringHill Equity Management LLC
  10. 10. Questioning the Post-War Aid Model Economists’ Adventures and Misadventures in the Tropics9 © SpringHill Equity Management LLC
  11. 11. Aid Does Not Deliver Development ♦ Fosters dependency Aid and Income Growth in Africa (10-year moving average) ♦ Distorts markets 20 2.5 ♦ Misaligns incentives Growth GDP/Capita (%) 18 16 2.0 ♦ Rarely yields scalable, sustainable impact Aid/GNI (%) 14 1.5 12 1.0 10 8 0.5 ♦ Fuels donors’ need to be needed 6 0.0 4 ♦ Undermines accountability -0.5 2 between government and its 0 -1.0 citizens 70 73 76 79 82 85 88 91 94 97 00 19 19 19 19 19 19 19 19 19 19 20 Aid/GNI Growth GDP/Capita ♦ Encourages the best and brightest in recipient countries to work for Source: ECIPE Analysis of World Development Indicators Online government or NGOs10 © SpringHill Equity Management LLC
  12. 12. Impact Investing Defined “ Investments intended to generate a positive social impact ” beyond financial return ♦ Investments: debt or equity capital. ♦ Intentional about positive social and/or environmental impact (not just negatively screened). ♦ Social/environmental impact is therefore measured. ♦ Financial return is expected. Source: JP Morgan & GIIN, Impact Investments: An Emerging Asset Class, November 2010.11 © SpringHill Equity Management LLC
  13. 13. Investing in Primary Education State School System ♦ 3rd percentile pupil achievement ♦ For-profit schools @ $4 per month ♦ Universal “free” education is NOT free ♦ Pupils outperforming peers by 30- ($2-5/month) 150% ♦ 30-50% of instruction time lost due to ♦ 75 schools serving > 18,000 students teacher absenteeism & neglect at end April; 1,250 employees ♦ No accountability to parents ♦ Opening a new school every 3 - 5 days ♦ Target: 10 million students ♦ Attracted significant equity investment12 © SpringHill Equity Management LLC
  14. 14. Investing in Mobile Information Access “Google & Craigslist” (Addis Ababa) ♦ < 5% Internet penetration ♦ Information/content portal on the mobile ♦ Lost time ♦ Built and launched multiple applications: ♦ Information asymmetry e.g., health info, job search, news ♦ Yet there are > 500 million mobile ♦ 4.5 million users in 8 months & rising fast phones in Africa ♦ 26% market penetration ♦ Mobile phone is the computing ♦ Cash flow positive; targeting expansion platform of choice13 © SpringHill Equity Management LLC
  15. 15. Investing in Energy Efficient Stoves Traditional Stove ♦ 20-30% of income spent on wood or ♦ 50% saving on fuel (time & money) charcoal ♦ Reduce smoke & toxins by 75% ♦ Respiratory ailments ♦ Local (Kenya) contract manufacturing ♦ Fire hazard ♦ Target sales: > 1 million stoves; first ♦ Deforestation/environmental damage year sales 2x plan ♦ Pre-sold carbon offset14 © SpringHill Equity Management LLC
  16. 16. Impact Investing: The Promise♦ Up to $1 trillion impact ♦ Catalyze private capital to solve investments in < 10 years. entrenched social problems ❖ 5-10% of portfolio assets ♦ Harness entrepreneurial talent ❖ 52 investors deploying $3.8 & innovation billion in the next year ♦ Drive sustainable & scalable♦ 199 impact investing funds solutions today. ♦ Nurture dignity & equality Sources: JP Morgan & GIIN, Impact Investments: An Emerging Asset Class, November 2010; and Insights into the Impact Investment Market, December 2011. ANDE.15 © SpringHill Equity Management LLC
  17. 17. A Growing Field... Investors Managers16 © SpringHill Equity Management LLC
  18. 18. With Different Priorities Impact Floor High Financial-first investors with an impact floor Financial Return Impact-first investors with a financial floor Financial Floor 0 0 High Social Impact Adapted from Solutions for Impact Investors: From Strategy to Implementation, RPA 2009.17 © SpringHill Equity Management LLC
  19. 19. ON – “Flexible Capital” Foundation LLC $266m $225m Equity & Grants PRIs“ Debt Omidyar Network is structured to support the notion that philanthropy is more than a type of funding. In its truest sense, philanthropy is about improving the lives of others, independent of the mechanism …our investing style transcends typical boundaries that separate for-profit investing and traditional philanthropy. We believe using both grants and for-profit investments can be powerfully complementary.18 © SpringHill Equity Management LLC
  20. 20. Reality Check: Too Good to Be True? ♦ Green-washed: ❖ Any investment in emerging markets is impact investing. ♦ Quixotic: ❖ Too few investment opportunities ❖ “Forget it – you’re not going to make any money.” ♦ Detrimental: ❖ Drive organizations off mission ❖ Substitute needed philanthropic funds ♦ Unproven: ❖ Missing track record Sources: “The Trouble with Impact Investing,” by Kevin Starr, Stanford Social Innovation Review, January 24, 2012. “The Case for Philanthropy in Impact Investing,” Monitor Company, April 2012.19 © SpringHill Equity Management LLC
  21. 21. Or A Predictable Evolution? Uncoordinated Marketplace Value Capture Maturity Innovation Building20 © SpringHill Equity Management LLC
  22. 22. It‟s Just Early Days… Uncoordinated Marketplace Value Capture Maturity Innovation Building Disparate entrepreneurial  Developing  Growth as mainstream  Activities reach a activities in response to centers of activity players enter a functioning relatively steady market need or policy market state  Building enabling incentives  Entities leverage fixed  Growth rates slow Disruptive innovators infrastructure that costs with higher volumes  Industry consolidates pursue new business reduces  Organizations become models transaction costs more specialized Lack of competition except  Unlocking latent at top of market supply of capital by building intermediation  Developing the absorptive capacity for investment Source: Monitor Institute. 21 © SpringHill Equity Management LLC
  23. 23. Summary and Concluding Thoughts… ♦ The intentional transforming impact of business is now well recognized. ♦ The impact investing field is developing rapidly and becoming more professional. ♦ But these are still early days with more talk than walk. ♦ The opportunity is there: ❖ For innovative entrepreneurs to tackle new markets ❖ For investors to be more integrated and intentional ❖ For intermediaries to prove the thesis22 © SpringHill Equity Management LLC
  24. 24. Thank You www.springhillequity.com23 © SpringHill Equity Management LLC

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