Debunking 10 Impact Investing Myths

1. Facts MYTHS Fallacies
All investing is Impact Investing
#ImpInv is offered in all asset classes:
Cash, Debt, Fixed Income, Bonds, Stock,
Property, Private Equity. High & low end
products: index & robo funds, ETPs,
Notes, crowdfunding for impact
Oversimplification: market failures,
uneven development stages & regulation
affect (re) distribution & innovation.
Economic growth provides for all:
Profit → jobs → income → basic needs &
taxation for societies services.
#ImpInv won't scale because it is limited
to unsecure(d) Private Equity
investments and institutional investors.
Misrepresentation: refers to pioneers
pitching exotic products. #Impinv is going
mainstream with public equity products.
Developing new markets ('stars')
requires a vision & strategy, risk
appetite, patience & flexibility.
Catalytic Impact Investing
#ImpInv won't scale because it is limited to
Venture Capitalists investing seed & start up
capital and / or high risk growth capital.
Red Herring: refers to the marginal
riskiest, most ambitious projects, partly
funded by grants or impact first capital.
66% of the larger most active Impact
Investors 'balance impact & return'
to grow both their impact & capital.
Impact first investing for (be) low market
returns, capital preserving to spending
endowments are dominant strategies.
Misrepresentation: Favoring Impact
over Return (and failed) impact investment
is (partial) Philanthropy.
#ImpInv is exclusive requires 100k min.,
sometimes millions for complex funds .
Part of traditional trickle down
(economic) development strategy.
Only for High Net Worth Individuals ,
charities & institutional 'mpact ambitious
investors doing big deals paying large
fees. Thus unaccessible & unaffordable
Cherry picking: based on the dominant
financial sector & theGIIN network narrative
& data from the largest #impinv investors
#ImpInv is inclusive² starts with a few
bucks per deal, fees can being 0 & for
the excluded & underserved. Grassroot
or bottom up economic development
strategy + fintech.
#ImpInv won't scale because turnover &
margins are low and investees have no
access to capital to be effective consumers.
Jumping to Conclusions: small investors
& consumers can build big markets. Facts:
Microfinance, Bottom of the Pyramid, Women
entrepreneurs & Community Development
#ImpInv is not just rebranding Ethical
Responsible, Thematic & ESG Investing.
Introducing Broad (little impact for
many) & Deep Impact ( much for target
groups / regions / markets.) & Costs.
Doing less harm' by exclusion & divesting
policies such as Environmental-Social-
Governance risk integration is 'Doing good'.
False dichotomy: Are you investing for
'Good' or 'Less Harm'? And What kind, where
& for whom? and at what impact price?
Impact Investing is focused onbasic
needs markets with low(er) growth
potential and volatility and higher
governmental pressure and regulation.
There is no money in simple cheap every day
necessities such as housing, land, simple
food, tapwater, waste, health, education,
welfare. Governments regulate to much.
Oversimplification: Value is added by
specialization & 'mega' trends: no nonsense
production & lean distribution.
Frugal innovation & exponential growth.
Impact investing is focused on
technological innovation, capital &
knowledge intensive.
Technological innovation leads to more
complex products & services for fewer
customers and shrinking markets.
Misrepresentation: eg internet & IT now
have global presence providing affordable
access to information, products & services.
False dichotomy: Measure Input →
Output → Outcome → Impact. ESG + sector
materiality. 'Mean & Lean' impact data
merges with for profit market research.
@Alcanne
Measuring impact is to complex to vague
and to normative. ESG metrics are tailored
to fit multinationals, to quantitative on data
& are to much PR tools & impact washing.
What gets measured gets managed, so
measure the right data and use the right
metrics. Impact metrics systems are con-
verging with GRI4 global reporting & ESG.
IMPACT INVESTING