pipeline fellowship managing impact & portfolio strategies

8/2/2019 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
http://www.goldenseeds.com/home/


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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

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2

3

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



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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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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?
http://youtu.be/2tZLPU9rNxI


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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


(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.


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


Access to Capital North America Angel Investing

Access to Capital

Workplace Equity

United States

(Midwest and

South)

Angel Investing


(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
http://www.goldenseeds.com/home/http://www.85broads.com/http://www.womensfundingnetwork.org/http://www.goldenseeds.com/home/


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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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Beyond investing,

Beyond educating yourself and others,

There are lots of ways to support building this field


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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Beyond investing,



Community/Education

Case studies

Events for ecosystem playersinvestors, intermediaries,

entrepreneurs

What Else Can Yo Do?


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Beyond investing,



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

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