Pipeline Fellowship Managing Impact & Portfolio Strategies
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Transcript of Pipeline Fellowship Managing Impact & Portfolio Strategies
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Managing Impact & PortfolioStrategies
Pipeline Fellowship Workshop
January 27, 2012
Jackie Vanderbrug Managing Director, Criterion Ventures
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How has a gender lens impacted your life?
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Agenda
Social Investing
Gender Lenses
Measuring Impact
Case Study
Call to Action
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Agenda
Social Investing
Gender Lenses
Measuring Impact
Case Study
Call to Action
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Social InvestingSocial investments seek to generate both financial returns for investors and social
returns that benefit broader society
Social
Returns
Financial
Returns
Low
High
High
Philanthropists:
Maximizing social returns
Social Investors:Blended Value Social and financial returns
Investors:
Maximizing profit
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Impact Investing
Actively placing capital in businesses and funds that generate social and/or environmental
good and at least return nominal principal to the investor
SRI Screens
Venture Philanthropy
Micro-lending
Crowd Funding
Program Related Investing
Carbon Markets
Women Invest in Women
Community Investing
1980 1990 2000 2010
Impact Investing
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Global Assets Under Management Socially-Oriented Investments
Socially-OrientedInvestments
Screens: $6.99 T
Philanthropy: $.33 T
Impact Investing $.5 T
Impact Investing: Magnitude
$50 T
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Who is investing in social enterprise?
Friends & Family Foundations & Institutions
Program Related Investments (PRIs), microloans PRI Makers, Confluence
Angels and Angel Networks
Toniic Investors Circle
PYMWYMIC Women
Fund Managers RSF Social Finance
Venture Capitalists City Light Capital
IGNIA
Banking New Resource Bank
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North AmericanPioneers
Emerging MarketsPioneers
25 Pioneer Funds
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Who else is financing
social entrepreneurs?
Crowdfunding
Kickstarter
Kiva
Crowdrise
Indiegogo
Foundations/Nonprofits/Academic Institutions
Awards, Fellowships, and Grants
Examples: Echoing Green, Mobilize.org, Draper
Richards Foundation, Global Giving, Kauffman
Foundation, Skoll Awards, Unreasonable Institute11
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Where Pipeline Fellowship Fits In
Reference: Angel Resource Institute, Angel Investing: An Overview. (2011).
Self
Banks,
IPO,
etcCapital
Contributions
Friends &Family/Public
Loans,
Grants,
Awards
US$1,000 -
US$50,000
Angels
Equity, Debt
US$150K
US$1 million
Venture
Capital
Equity, Debt
US$1 million& up
US$50,0000
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Across Asset ClassesAn increasing number of innovative financial products (investment vehicles) across asset
classes, altering the landscape of social investing for consumers
Equity Debt Cash Real Estate Commodities
Ownership;
Stocks; LongerDuration
Fixed Income;
Bonds
Cash Equivalents;
Money Markets;
Liquidity; ShortTerms
Commercial;
Residential;
Industrial;Mortgage-Backed
Securities
Futures;
Forwards;
Options; Oil;Gold; Corn
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Impact Portfolio: Geographic
Emerging Markets
Latin America,
Africa, Asia
Domestic/Local
Example: Boston Metro Area
Multi-national Cross-border issues (environmental, human
trafficking, etc)
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Impact Portfolio: Issue Area
Environment Climate Change, Water,
Sustainable Agriculture,
Fisheries
Womens Rights
Womens Education, Womens Health, Sex Trafficking
Healthcare Accessible Technology, Affordable Medicine,
Research, Systems
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Types of Companies/Ventures
For-Profits (Companies and Stock Corporations)
Non-Profits
Hybrids
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NON-PROFIT
FOR-PROFIT NON-PROFIT FOR-PROFIT
FOR-PROFIT
NON-
PROFIT
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Benefit Corporation
Purpose is to create a general public benefit
Adds a fiduciary responsibility - a public benefit
Requires certification by a recognized entity & an annualfor-benefit report
Benefit officer joins the board as a voting member
Required two-thirds super majority to change the status
from a for benefit corporation
L P fit Li it d Li bilit C
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Low-Profit Limited Liability Company
(L3C)
Purpose to further a socially beneficial mission and
mirror the PRI requirements
Charitable or educational purpose of IRS code
Production of income/appreciation of property not asignificant purpose
Purposes not to include political/legislative
In a small and growing number of states (Vermont,Michigan, Wyoming, Utah, Illinois, Maine, Crow and
Oglala Sioux Nations)
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Companys articles of incorporation would have tospecify a special purpose that the corporation engages
in, which can include but is not limited to charitable
activities
-Can include promoting positive effects of companys activitiesupon stakeholders, community, society, environment OR
minimizing adverse effects
Unlike the Benefit Corporation, the CA legislation does
not require that flexible purpose corporations and theirspecial purposes be certified by a third party
Unlike the L3C, profitability is still an express purpose of
the corporation - directors are not required to prioritize
the charitable purpose over profit
Flexible Purpose Corporation
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Impact Investing: Current StateImpact investing could become a complementary force for providing capital, talent and
creativity necessary for addressing critical social challenges
Challenges Opportunities
Lack of efficient intermediation
Lack of enabling infrastructure
Lack of sufficient absorptive
capacity
Growing interest among capital
providers
Need for new solutions to social
problems
Early successes; developing track
record for impact investing
Flock of talent
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Agenda
Social Investing
Gender Lenses
Measuring Impact
Case Study
Call to Action
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Goldman Sachs
World Bank
Nike Foundation
Hillary Clinton
100 Years, 100 Women
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Women Effect Investments (WEI)Women Effect Investments is a field-building initiative that seeks to mobilize more
investment dollars toward improving the condition ofwomen and girls worldwide
Mobilizing women investors and
investment capital towards generating the
Women Effect through investment
Strengthening and creating new
investment opportunities with a gender
lens across a diverse set of financial
intermediaries (funds and other vehicles)
When women are economic agents and leaders, social change accelerates and returns
multiply This is the WOMEN EFFECT
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3 Gender Lenses
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Access to
Capital
Workplace
Equity
Products
& Services
A gender lens serves as a viewfinder for investment opportunities both fromimpact and financial return perspectives
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Workplace Equity
Workplace
Equity
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Products & Services
Products
& Services
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Access to Capital
Access to Capital
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Asking Questions is the First Step
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Management and Board # of females on management
team?
# of females on the BOD or
board of advisors?
Employees
% of total female employees?
Breakout of number and percent
of females by level
Initiatives in place to increase
female employment?
Policies and Programs
Maternity leave policy?
Onsite daycare services?
Other policies and programs for
female employees? Flexible career options (eg
telecommuting)
Reporting on these policies and
programs? Historical compliance?
Suppliers and Vendors
Gender composition of supply
chain (female ownership of
distribution, manufacturing)
Workplace
Equity
Products
& Services
Products and Services
Products and services targeted at
female customers?
If so, how do they provide value to
females?
Any indirect benefits females
receive from the products and
services? % of female customers?
Legal
Complaints or
reports of gender
discrimination, such
as salary inequality?
Capital Access Services
Services that helpwomen gain access
to capital, such as
technical training?
Ownership
% of company owned
by women
Access to
Capital
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Agenda
Social Investing
Gender Lenses
Measuring Impact
Case Study
Call to Action
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Th G t D b t
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The Great Debate:How, How Much, and When?
RCTs
Pick one
thing
Uniform
metrics
to build
an
industry
Context-specific measures as
developed by the
entrepreneur. Tom Bird
Multiple stakeholders asking for
different metrics has crushed toomany good organizations.
George Overholser, NFF
The first impact evaluation I ever saw of
microcredit made my stomach ache. It askedclients You are eating better now, compared
to before yes? [This organization] was
doing just as much to measure its impact as
anyone elsevery little. Dean Karlan, IPA
Core
guidingmetrics +
context -
specific
Timeframe
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Timeframe
and Different Perspectives
Concept Investment Profit
New
business
Job # 1 is to get to
sustainability or you
cant accomplish
anything
You need to get to
break even before
measurement.
You need to be
measuring from the
outset or you wont
know what youre
achieving.
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Financial
Customer
Business Process
Learning Growth
Customized Metrics for Each Organization in 4 key areas
Core metrics across portfolio, that serve as proxy for
returns and impact for individual organizations
Revenue Growth
Lives Touched Growth
Whats the right way to measure?
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What s the right way to measure?
Logic Model = Impact Value Chain
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Build acommunityof CertifiedB Corporations
Advancesupportivepublic policies
Drive capitalto impactinvestmentsthrough useof GIIRS
1
2
3
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GIIRS Products
1 COMPANY RATINGS
2 FUND RATINGS3 CUSTOMIZED PORTFOLIO
IMPACT ASSESSMENTS
4 GIIRS ANALYTICSBeta teststarts in Q1
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North AmericanPioneers
Emerging MarketsPioneers
25 Pioneer Funds
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Impact Area Subcategories
Governance Corporate Accountability, Transparency
Workers Compensation, Benefits, & Training, Worker Ownership, Work
Environment
Community Community Practices (Local Involvement, Suppliers & Distributors,
Civic Engagement & Giving, etc.), Community Products & Services
Environment Environmental Practices, Environmental Products & Services
Socially &
EnvironmentallyFocused Business
Models
The Socially and Environmentally focused Business Models (SEMs)
highlight a companys core impact business model, amplifying theirpositive impact beyond simply high impact business practices
Company Assessment - Topics
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IRIS & GIIRS
Impact investors require a commonlanguage to describe social andenvironmental performance
IRIS was developed to meet thisneed
GIIRS uses IRIS definitions tocreate ratings and then applies anassurance process
From the beginning, IRIS andGIIRS were designed to fulfillcomplementary roles in the impactinvesting sector
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Adopting IRISDirect investors can adopt IRIS by identifying a set of applicable metrics and reporting
performance data consistent with IRIS definitions
Benefits Credibility, Comparability, Consistency, Benchmarks, Infrastructure
Whats the right way to measure?
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What s the right way to measure?
IRIS
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GIIRS
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Impact Measurement at SvF
SROI (Social Return on
Investment)
BACO (Best Available
Charitable Option)
Measures the system-level socio-
economic value created by an
investment as opposed to the
individual beneficiarys earnings
boost
Compares the cost-effectiveness of creating
one unit of social impact through investing
to the cost-effectiveness of creating one
unit of social impact through charitable
option
REDF Acumen Fund
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TRASI
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Whats the right way to measure?
How much should we be spending?
What do we get out of it? (Is it worth it?)
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Getting in the Entrepreneurs Shoes
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Agenda
Social Investing
Gender Lenses
Measuring Impact
Case Study
Call to Action
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What is The Hoop Fund?
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Bundles
For profit
social enterprise
3 full time employees
Mission:
Change consumerbehavior
to build a more
connected
marketplace
Customer The Hoop FundProducerBrand Partner
$5.00$10.00 $10.00
Minus Costs
- customeracquisition
- transactionfees
$25.00
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Social Return on Investment
Attract and Retain Impact Investors
Internal Growth Measurement
Assess Impact of Individual Projects
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SROI Quantifiable Benefit
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Runa Tea
Social Impact Indicator Measured by Goals for Success
Increase in yearly income per
family
Amount of increased income $800.00 per family per year
Increase in employmentopportunities
Number of new cooperativememberships
New memberships as a result ofincreased profitability forfarmers
Improved quality of life Stories and testimonials Farmers and families reportimprovements
Total Loan Amount: $575
Total Number of Lenders: 17 ($28 each)Loan Recipients: 20 Kichwa farmers(part of a 200 member cooperative)Product Made: Runa TeaProject Funded: Reforestation of organicGuayasa treesPrimary Target Impact: In 5 years, theincome generated from harvesting
guayusa will generate approximately$800 per family per year, doubling theirincome vs. the areas average.
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Agenda
Social Investing
Gender Lenses
Measuring Impact
Case Study
Call to Action
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Investment Vehicles in the Market
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Microcredit, Mezzanine Debt, Social Investment
Vehicle Gender Lens Geography Category
Access to Capital Global Microcredit
Access to Capital United States
(Ohio)
Microcredit
Access to Capital United States
(Bay Area, NYC,
Chicago)
Microcredit
Access to Capital Southern USA Mezzanine Debt
Access to Capital
Workplace Equity
Africa
Latin America
Social Investment
Products andServices India Social Investment(Venture Capital)
Access to Capital
Workplace Equity
Products & Services
Global Social Investment
(Note)
Investment Vehicles in the MarketV t C it l P i t E it M t l F d
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Venture Capital, Private Equity, Mutual Fund.
Vehicle Gender Lens Geography Category
Access to Capital United States Venture Capital
Access to Capital West Coast USA Venture Capital
Access to Capital Spain Venture Capital
Access to Capital
Workplace EquityProducts & Services
Iceland Private Equity
Access to Capital
Workplace Equity
France Private Equity
Access to Capital Netherlands Private Equity
ISIS
Fund
Access to Capital
Workplace Equity
Global Private Equity
Access to Capital
Products & Services
Sub-Saharan
Africa
Private Equity
Workplace Equity Global Mutual Fund
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Investment Vehicles in the MarketAngel Investing
Vehicle Gender Lens Geography Category
Access to Capital North America Angel Investing
Access to Capital
Workplace Equity
United States
(Midwest and
South)
Angel Investing
Access to Capital United States
(Wisconsin and
Midwest)
Angel Investing
I T k E
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Investment Vehicles Investor Groups
Supporting Networks Supporting Organizations
It Takes an Ecosystem
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What Can YOU Do?
VOICE:The questions you ask
What you write
Advocacy
#GenderLensInv
LEARNING:Gender Lens Investing Forum
Ecosystem Calls
Research papers
Wh t El C Y D ?
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What Else Can You Do?
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Beyond investing,
Beyond educating yourself and others,There are lots of ways to support building this field
And they wont happen with out philanthropy.
TECHNICAL ASSISTANCE
Women entrepreneurs
training, incubation,
mentorship
Support social entrepreneurs to
get capital-ready
Wh t El C Y D ?
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What Else Can You Do?
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Beyond investing,
Beyond educating yourself and others,
There are lots of ways to support building this field
And they wont happen with out philanthropy.
Research
Due diligence around fund design
Field/pipeline mapping
Specific inhibitors (e.g. advisor strategies)
Wh t El C Y D ?
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What Else Can You Do?
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Beyond investing,
Beyond educating yourself and others,There are lots of ways to support building this field
And they wont happen with out philanthropy.
Community/Education
Case studies
Events for ecosystem playersinvestors, intermediaries,
entrepreneurs
What Else Can Yo Do?
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What Else Can You Do?
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Beyond investing,
Beyond educating yourself and others,There are lots of ways to support building this field
And they wont happen with out philanthropy.
THE ENABLING ENVIRONMENT
Cultivate the opportunity for more gender lens investing vehicles
Mobilizewomen investors and investment capital to invest with a gender lens
Women Effect Investments
Bringing a Gender Lens to Investing
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5 Things to Keep In Mind
1. Look for ventures with multiple lenses
2. Ask questions from a gender lens perspective,even if youre not making demands
3. Push questions of impact, while being flexibleabout when and how the measurement willhappen
4. Stay active in the emerging space of impact
assessment5. Avail yourself of experts when you need them
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Resources/References
B Corp (Beth Richardson), Pipeline Training
IRIS: Impact Reporting and Investment Standards. (n.d.). Retrieved December 5, 2011,
from http://iris.thegiin.org/
Global Social Venture Competition. (n.d.). Retrieved December 5, 2011, from
http://www.gsvc.org/the_competition/social_impact_assessment/
How We Assess | Venture Philanthropy Partners. (n.d.). Retrieved December 5, 2011, from
http://www.vppartners.org/results/how-we-assess
Local Money Flows (LM3) | nef consulting. (n.d.). Retrieved December 5, 2011, from
http://www.nef-consulting.co.uk/services/local-money-flows-lm3/ Social e-valuator - measurement of social return on investment (SROI). (n.d.). Retrieved
December 5, 2011, from http://www.socialevaluator.eu/SROItool.aspx
SVT Group (Sara Olsen and Paul Lamb), webinar, Spelling Out the Alphabet Soup of
Impact
Tea Loan | Planting 2,000 Guayusa Trees in Ecuador. (n.d.). Retrieved December 5, 2011,
from http://hoopfund.com/loan.webui?id=11247
Tools and Resources for Assessing Social Impact. (n.d.). Retrieved December 5, 2011, from
http://trasi.foundationcenter.org/record.php?SN=83
TRASI -Tools and Resources for Assessing Social Impact. (n.d.). Retrieved December 5,
2011, from http://trasi.foundationcenter.org/browse_toolkit.php
http://trasi.foundationcenter.org/browse_toolkit.phphttp://trasi.foundationcenter.org/browse_toolkit.php