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Innovations in financing
development solutions
Antony Bugg-Levine
Business Innovations in International Development
Octobe...
How will I find capital to
grow my development-
focused business?
How can I assess the
capital raising strategy of a
busin...
• Retail investors
• HNWI
• Private bank clients
• Family offices
• Private foundations
• Institutional investors
• Sovere...
Supply
(Buy-side)
Demand
(sell-side)
Intermediation
Supply
(Buy-side)
Demand
(sell-side)
Intermediation
• Retail investors
• HNWI
• Private clients
(UHNWI)
• Family offices
•...
Where is the money?
Retail bank
High net worth
Private bank
Family office
Insurance fund
Pension fund
DFI
Foundation
endow...
Retail savings
High net worth
assets
SWF
Insurance
funds
Pension funds
Foundations (US)
Private giving (US)
DFIs
ODA
1. Retail investors
2. HNWI
3. Private bank clients
4. Family offices
5. Private foundations
6. Sovereign wealth funds
7. ...
Where is the money?
Retail bank
High net worth
Private bank
Family office
Insurance fund
Pension fund
Capital/account
Inve...
The Scott Budde Problem…
ERISA
Make impact
investments…
$700MM commitments
At scale
• Retail investors
• HNWI
• Private bank clients
• Family offices
• Private foundations
• Institutional investors
• Sovere...
Social
enterprise
Social enterprises stuck in the middle
when trying to raise funds
Social return
Charity/
non-profit
~20%...
~20%
Impact investing industry emerging to fund
social enterprise
Social return
-120%
0%
Risk-
adjusted
financial
return
E...
~20%
Impact investing industry emerging to fund
social enterprise
Social return
-120%
0%
Risk-
adjusted
financial
return
E...
~20%
Market-rate impact investing
Risk-
adjusted
financial
return
Social return
-120%
0%
~20%
Market-beating impact investing
Risk-
adjusted
financial
return
Social return
-120%
0%
Examples:
generation__
~20%
Can impact investing become a stable
equilibrium?
Social return
-120%
0%
Risk-
adjusted
financial
return
Examples:
Bu...
Opportunities for entrepreneurs
Investment
firms
• Structure deals
• Make investments
NGOs
• Raise capital
• Fund manageme...
Capital raising examples
• Private foundations
• Family offices
$20MM
• Private foundations
• Family offices
• (U)HNWI
• C...
Columbia capital markets presentation oct 2010
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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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