iEurope had a great Investment Forum in Budapest on 23 September. iEurope is one of the pioneering VC’s in the CEE Countries with great backers including Howard Morgan, Esther Dyson, Karen Gordon Mills, Gil Penchina and Thomas Lehrman. iEurope’s Co-Founding Partners, Kristina Perkin Davison, and Laszlo Czirjak along with partner Miklos Kovacs are focused on investing in the region’s early stage technology companies and assisting them to become world players. The Investment Forum featured iEurope’s partners, Kristina Perkin Davison, Laszlo Czirjak, and Miklos Kovacs, who through iEurope, is a co-founder of the Hungarian Business Angels. It was a wonderful opportunity for Hungarian Business Angels, Slovenia Business Angels, Slovakian Business Angels, and Croatian Business Angels to come together and was a great occasion to also see our EBANInvest company, enbrite.ly, where at least 20 of our network members have invested and which is doing very well.
“There’s a real hunger to understand impact investing. Everyone’s talking about it, saying, “I have to go speak to my boss about it and don’t know what to say”, David Banks, the head of ImpactAlpha was quoted in a recent study on impact investing education in the US and globally conducted by the Beeck Centre for Social Impact and Innovation at Georgetown University.
Existing learning opportunities do not meet market needs
Many of the existing learning initiatives in the impact investing field focus on impact delivery organizations and social entrepreneurs only. Accelerators and investment ready programs, for example, help them meet the expectations of a growing number of investors exploring opportunities in this field.
But what if part of the mismatch between demand and supply for impact capital was not only due to potential investees’ capacity constraints but also a lack of awareness, knowledge and skills on the side of investors and market intermediaries? In fact, Xavier de Souza Briggs of the Ford Foundation pointed to a significant gap on the supply side of the social investment market noting that there was “more investor appetite than […] investor preparedness” (Beeck report, 2016). An investor survey conducted by the Bertelsmann Foundation in 2015 found that asset owners lacked awareness as well as internal capacity to pursue an impact oriented investment strategy and identified a significant market gap of impact investment advisors and intermediaries with the required expertise and skills. For pioneer investors in the early days of impact investing, informal learning such as learning-by-doing, reading reports, following the industry events and networking with peers used to be the main source of learning. With the field maturing we see a range of formal learning opportunities emerging in the past years. This includes major industry conferences and events, customized learning opportunities and technical assistance for a specific target audience; research, trainings and webinars by academic institutions, non-profits and practioners institutions; fellowship opportunities and secondments as well as toolkits, best practice case studies and practioners research.
However, a closer look confirms that what we need to think beyond what is out there both in terms of what kind of learning, to whom and how it is offered.
Expand education in Europe and emerging countries
In Europe, there are only few public, international learning initiatives for professionals and investors such as the Oxford Impact Investing Executive Program in the United Kingdom, the Centre for Social Investments at Heidelberg University in Germany and Finance for Change at the Impact Hub Berlin. In addition, the European Venture Philanthropy Association EVPA in Brussels offers trainings, research, events and peer learning for both members and non-members.In a few selected emerging country hubs such as Kenya, South Africa, India or LATAM countries a growing number of education initiatives target investors, fund managers and other financial practitioners often thanks to the direct or indirect support by development agencies such as USAID and DFID and a few market builders (e.g. ANDE trainings).
Most of the existing learning initiatives in this field however, are still based in the US or UK using the respective country context as the main point of reference for any learning initiative.
An increasing number of webinars, written material, conferences and 101 learning opportunities inspire and introduce newcomers to the field. Some complain, however, about the lack of consistency in the existing material, the confusion created by varying views on the same issues depending on the source of content as well as the superficiality of information provided. In fact, little content is available for those seeking in-depth knowledge to dissect what happens on the ground in actual deals. Guidance is also need for mainstream investors on how to apply traditional financial practice to impact investments including on exits, deal structuring, pricing or portfolio diversification and guidance to social and public investors on how to carry out due diligence and assess the financial potential of investees. A few players have published detailed experience and structures of investment mechanism such as hybrid finance, pay for success models, crowdfunding or community and place based investing (see case studies on hybrid finance by the German Financial Agency for Social Entrepreneurship FASE or guidance material on Social Impact Bonds by the UK Government) but practical interactive education on specific financial mechanism as well as sector specific instruments are still limited. The field also needs a broader understanding on mechanism for financing and supporting social innovation and systems change; on blended finance structures or on lean and integrated application of outcome measurement methods to just name a few.
Integrate development of leadership skills in learning initiatives
Learning in the social impact investing field is as much about personal and collective leadership development as it is about technical skills. Many investors and intermediaries are driven to this field at an infliction point in their personal and professional lives looking for their role in the emerging impact investing ecosystem and how they may use their financial, human and social capital for the common good. Furthermore, the cross-sectoral and innovative nature of the impact investing field needs leaders, who are able to bridge divides and “translate” between different partners and who have learned the art of leading collectively. The challenge for designers of learning initiatives here is to apply and link individual and collective leadership development tools to the social investment context. The Finance Innovation Lab in London, for example, founded by individuals from WWF UK and the Institute of Chartered Accountants in England and Wales uses innovative leadership approaches and system thinking to build a financial system that serves people and planet. The Finance Innovation Labs at the Milken Institute regularly assembles a multidisciplinary group of investors, industry experts and public officials to tackle a specific financing or policy question.
Don’t overlook intermediaries and government
Players that may potentially have a high impact on scaling the impact investing field include lawyers and accountants, investment advisors and banks as well as rating agencies and market researchers. So far, there are few programs that consider the specific needs of these important eco-system players (see for example the legal training courses on social entrepreneurship and impact investing provided by the TrustLaw Connect Program of the Thomson Reuters Foundation).
In addition, policy makers, regional and local government officers as well as development agencies could take a leading role in shaping the policy environment, as outcome buyer or as catalyst and (co-) investor. Interest in government about using finance for entrepreneurial ideas that tackle social challenges is increasing. Nevertheless, due to the lack of tailor-made opportunities and a limited budget for education and events for government officials, reform champions in the government hierarchies find it challenging to explore opportunities in the social impact investment field and get their superiors to buy in. It is therefore not surprising that government policies often fall behind the dynamics driven by market players and civil society organizations. The Impact Investing Policy Collaborative initiated by the Rockefeller Foundation in 2011 was an attempt to build a global research based, peer learning format involving and targeting policy makers, academics and practitioners and from around the world, but was suspended in 2015.
Meet demand for evidence based, practical and blended learning methods
Demand is strong for hands-on learning formats grounded in research and experiences as well as action oriented formats such as site visits, real world investment simulation. In our experience, both newcomers and experienced players appreciate the opportunities for peer learning and sharing of experiences with people from diverse backgrounds. Where learning formats tend to be top down or where they follow the training providers’ specific school of thought, there is little room for applied learning, out of the box thinking and appreciation of diversity of approaches – which all essential ingredients to the quality of learning in this emerging field.
Online formats such as webinars have become more frequent. Mass open online courses (MOOCs) still treat this subject as part of other courses syllables on social entrepreneurship or philanthropy. While expensive, MOOCs have the advantage that they are highly scalable globally and allow to reach learners outside the main social investment hotspots, such as those in rural areas or emerging countries or those players that would simply not be attracted by the prospects of sitting in a “classroom”.
Research suggests that blended learning, i.e. combining online and on-site formats facilitating personal interaction such as piloted by the Social Finance Academy developed by Roots of Impact have the potential to achieve scale AND achieve better outcomes.
Invest in better and affordable education infrastructure and research
The costs of impact investing education or attendance at one of the main industry events such as SOCAP are still prohibitively expensive or they are reserved for members and selected participants thus excluding many less known philanthropic and social investors, small fund managers or government officials. The BEECK Study found: “The price points of most trainings are currently too high to be accessible to a wide range of professionals.”
On the other hand, quality training is expensive to provide and most training providers, event conveners or providers of other learning and research initiatives hardly break even without subsidization of curriculum development, coverage of trainer and speaker expenses or scholarships. Some of the most promising formats in terms of outreach, scalability and effectiveness such as blended learning and collaborative learning arrangements require considerable upfront investment to maintain such offerings accessible and affordable. The BEECK Study concludes that for the field to mature it needs:
- Investment in educational infrastructure with a variety of learning options from executive education to technical assistance and peer learning formats.
- Investment in keeping offerings affordable by supporting participation and formats targeting non-profit organization, government officials and intermediaries.
- Investments in research to inform curricula development and feed into other learning and support formats that help the field to progress.
Finance for Change is a leadership program in social finance and impact investing that promotes the innovative use of finance to address the big societal challenges of our times. The F4C Bootcamp, is a two-day practical learning experience on social finance and impact investing. It is an invitation to investors and intermediaries from the private, social and public sector to acquire practical skills, to explore new opportunities in impact oriented investing and social finance and to exchange experience with peers from Germany and other countries around the world. The next F4C Bootcamp will take place at the Impact Hub in Berlin on 2 and 3 December 2016. More information and registration on www.finance-for-change.net
Reposted from Social Impact Markets.
Findings suggest that – in certain market segments – investors might not need to expect lower returns as a tradeoff for impact
PHILADELPHIA, PA – The Wharton School of the University of Pennsylvania announced on 7 October 2015 the release of a new report, “Great Expectations: Mission Preservation and Financial Performance in Impact Investments.”
The new study provides an objective, rigorous look at two of the most important aspects of impact investing: financial returns and long-term impact. Specifically, the study explores the widespread assumption that impact investing private equity funds cannot achieve market-rate financial performance. The report’s findings suggest that – in certain market segments – investors might not need to expect lower returns as a tradeoff for social impact. Impact investing is an investment approach that intentionally seeks to generate measurable social or environmental impact alongside a positive financial return. According to the study’s authors, certain market segments of funds in the sample yield returns close to those of public market indices.
The new study evaluated the financial performance of 53 impact investing private equity funds—representing 557 individual investments—relative to public market indices such as the Russell 2000 and other benchmark indexes. The study also sought to determine what one might expect to happen to a portfolio company’s social or environmental mission when its impact investors seek liquidity.
In doing so, the study acts as a key reference point for investors seeking to compare impact investing to other asset classes and investment options.
The research found that impact funds in the sample that reported seeking market-rate return—which is only one segment of the broad spectrum of impact funds—demonstrated that they can achieve results comparable to market indices.
The Wharton study marks one of the most rigorous and data-driven approaches to addressing this gap—employing a research methodology consistent with market analysis in other industries but rarely seen for impact investing.
The research was supervised by two Wharton finance professors David Musto and Chris Geczy, and authored by the Wharton Social Impact Initiative (WSII).
“Our research fills a near-void of rigorous analysis of private investment and social impact outcomes and most importantly the link between the ideals of doing well and doing good,” says Prof. Geczy. “The study examines the tension between profits and purpose, also bringing to bear analyses characterizing relative performance as well as statistical certainty about the result. It represents an exciting initial advancement in our ongoing social impact research agenda.”
The data collection effort was catalyzed by the Skopos Impact Fund, a global investment fund that aims to promote human dignity and social justice through impact investing.
EMPEA, an independent nonprofit organization for private capital in emerging markets, was a collaborator in the project and recruited funds from their global membership to provide data to the study. EMPEA’s President and CEO, Robert van Zwieten, said the organization was “committed to providing members with authoritative intelligence—backed up with verifiable data—so they may successfully navigate the impact industry as well as other innovative markets.”
In order to further understand issues such as impact investing financial performance and mission persistence, researchers at WSII intend to continue the project over many years to come.
“As a research institution, we recognize the need for more rigorous data collection and analysis across this nuanced field, particularly on social outcomes” says Jacob Gray, Senior Director at WSII. “For instance, the industry includes distinct market segments with very different social and financial value propositions. One must be very careful not to generalize the performance of the market-rate seeking segment of funds that we studied to the entire, multi-dimensional industry.”
Read the report: great-expectations-mission-preservation-and-financial-performance-in-impact-investing
Reposted from: University of Pennsylvania
“Our findings underscore just how large an influence this fast-growing clean energy market can have on global energy poverty. More importantly, our report emphasizes the need for international institutions, like the World Bank, to put their money where their mouth is by providing the investments required to spur this solar energy revolution,” said Justin Guay, Associate Director of the Sierra Club’s International Climate Program.
The report also finds that, in order to support and foster this market and ultimately end energy poverty, international financial institutions must not only fulfill their stated commitments to supporting clean energy but also provide adequate funding quickly,over the next two to three years.
By expanding solar power to those living beyond the energy grid, investments from international financial institutions — like the World Bank, European Bank for Reconstruction and Development, the African Development Bank, and the Asian Development Bank — will be able to power life-changing interventions such as mobile phone charging, televisions, fans, and lighting. These initial interventions will ultimately help build a fundamentally different, distributed, and democratic power system for those currently living in energy poverty. This innovativation will, in turn, prioritize putting power in the hands of people today and allow them to move up the energy ladder rather than wait for decades for an energy grid that may or may not ever arrive.
And not only is off-grid energy access possible, this report shows its already starting to become a reality. Seventy-five percent of new mobile connections come from these emerging markets, creating a demand for more electricity in rural off-grid areas. By using existing mobile phone access, off-grid companies are able to tap in to mobile money platforms to lower costs and increase access for payments to even the most remote of customers. Additionally, hundreds of thousands of cell phone towers that have been built off the grid are now providing access to “community power” for local people.
This advancement isn’t just restricted to one geographic area either. In Bangladesh, 80,000 solar home systems are being installed each month, while in sub-Saharan Africa, the off-grid solar market has grown by 95 percent. With the support of major financial institutions, like the World Bank, these numbers can continue to grow and clean energy access will be achieved by all.
The report was co-authored by Evan Mills of Lawrence Berkeley National Lab, Stewart Craine of Village Infrastructure Angels, and Justin Guay of the Sierra Club.
Read the full report here.
Originally posted on the Sierra Club website.
On 14-16 September 2016, The University of Warsaw Library hosted one of the greatest and most prestigious conferences presenting scientific research on innovative business processes: the 9th Annual EuroMed Conference on innovation, entrepreneurship and digital ecosystems.
The Conference Inauguration was chaired by Prof. Katarzyna Śledziewska – Executive Director of DELab UW. Representatives of the conference sponsors welcomed the participants with speeches: Mariola Belina-Prażmowska – Pelion SA, Bartłomiej Żerek – Adamed Group, Sebastian Grabowski – Orange Poland, and dr Marek Prawda, the Head of the European Commission Representation in Poland. The Inauguration was honoured by Prof. Maciej Duszczyk, the Vice-Rector of the University of Warsaw and Candace Johnson, the President of EBAN (European Business Angel Network). EMBRI (EuroMed Research Business Institute) was represented by Prof. Demetris Vrontis and Prof. Yaakov Weber.
Candace Johnson gave a one of a kind workshop (“The Missing Link”) on the cooperation between startups, scientists and corporations. Candace drew attention to the challenges startups need to overcome, shared advices on entrepreneurship and accented the crucial role of positive and self-confident way of thinking. Candace told the story of her first business started at the age of 23: the problems she solved and the hardships she conquered. The highly involved audience asked many questions regarding the development of their own startups.
Candace also emphasised the important role of women in business and on the labour market. She introduced the inspiring story of a group of women at the Pacific Islands, who developed their own communication network with satellites, providing Internet connection for the entire region.
According to Candace, the most valuable achievement is to turn an idea into an innovation. Contemporary economy is based on innovations, which are introduced by startups to a large extent: that is why big corporations should cooperate with innovative young firms. However, there is a “missing link”, as corporations expect similar organisational procedures and business culture from the more agile and innovative, but less formal and financially constrained startups. Startups need the support of business angels, who invest their own money into startups, giving their own experience and not counting on immediate return.
Read more about the conference and the workshop given by Candace Johnson.
