tbn members day 2011 - steve beck - changing attitudes in the fight against poverty

Download TBN Members Day 2011 - Steve Beck - Changing attitudes in the fight against poverty

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Steve Beck gave an overview of the changing attitudes towards the fight against poverty, the role of the private for-profit sector in development and the growth of the Social Venture Capital sector. He also gave 3 examples of successful investments made into businesses that are directly impacting poverty.

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  • 1.Changing Attitudes in the Fight Against Poverty TBN Members Day December 3, 20110 SpringHill Equity Management LLC

2. The Executive Summary1 SpringHill Equity Management LLC 3. Business-As-Usual Isnt Working2 SpringHill Equity Management LLC 4. Prompting Some Paranoia3 SpringHill Equity Management LLC 5. And Some Serious Soul-SearchingThe figures for the last quarter are in.We made significant gains in the 15-26 year-old age groupBut we lost our immortal souls.4 SpringHill Equity Management LLC 6. Impact Investing Bursts On the Scene Danook shows off his Swiss Army Rock.5 SpringHill Equity Management LLC 7. Everyone Is Now Talking BIGWe have two offices throughout the world.6 SpringHill Equity Management LLC 8. But Lasting Impact Is Not Yet KnownUh oh7 SpringHill Equity Management LLC 9. Wheres The Beef?8 SpringHill Equity Management LLC 10. Questioning the Post-War Aid ModelEconomists Adventuresand Misadventuresin the Tropics9 SpringHill Equity Management LLC 11. Aid Does Not Deliver Development Fosters dependencyAid and Income Growth in Africa (10-year moving average) Distorts markets Misaligns incentives 20 2.5 Growth GDP/Capita (%) 182.0 Rarely yields scalable, sustainable 16 impact Aid/GNI (%) 14 1.5 12 1.0 10 Fuels donors need to be needed 80.5 60.0 Undermines accountability 4 2-0.5 between government and its 0-1.0 citizens 70 73 76 79 82 85 88 91 94 97 00 19 19 19 19 19 19 19 19 19 19 20 Encourages the best and brightestAid/GNI Growth GDP/Capita in recipient countries to work Source: ECIPE Analysis of World Development Indicators Online for government or international NGOs10 SpringHill Equity Management LLC 12. Giving Dangers & Limitations Celebrating the grant Measuring the activity Appealing to the donors messiah complex Fostering dependency Lacking sustainability Lacking scalability11 SpringHill Equity Management LLC 13. Good Giving Does no harm Meets emergency (temporary) needs Fuels local initiative Has the potential for local sustainability Recognizes that the giver and recipient are both benefactors and beneficiaries12 SpringHill Equity Management LLC 14. Impact Investing Defined Investments intended to generatea positive social impactbeyond financial return Investments: debt or equity capital. Intentional about positive social and/or environmental impact (not just negatively screened). Social/environmental impact is therefore measured. Financial return is expected. Source: JP Morgan & GIIN, Impact Investments: An Emerging Asset Class, November 2010.13 SpringHill Equity Management LLC 15. Investing in Primary Education State School System 3rd quartile pupil achievement For-profit schools @ < $4 per month Universal free education is NOT free Pupils outperforming peers by 30- ($2-5/month)100% 30-50% of instruction time lost due to 37 schools; now opening a new school teacher absenteeism & neglect every 3 days No accountability to parents By 2018: 3,300 schools; 2.4m students; 36,000 teachers Investment valued at 2.5x in Dec 2010 Series B financing14 SpringHill Equity Management LLC 16. Investing in Mobile Information AccessGoogle & Craigslist (Addis Ababa) Less than 5% Internet penetration Short-code SMS/MMS info portal Lost time Built and launched multiple applications: Information asymmetry e.g., health management, job More than 450 million mobile phones listing/search, news Mobile phone is the computing 18% market penetration in 4 months platform of choice Poised to expand to new country markets15 SpringHill Equity Management LLC 17. Investing in Energy Efficient Stoves Traditional Stove 20-30% of income spent on wood or 50% saving on fuel (time & money) charcoal Reduce smoke & toxins by 85% Respiratory ailments Local (Kenya) manufacturing Fire hazard Target sales: > 700,000 stoves Deforestation/environmental damage Carbon offset > 30% IRR16 SpringHill Equity Management LLC 18. Impact Investing Growth DriversMoney seeking diversificationValues driven investors andconsumersImpact WILLGrowing inequity and Investingenvironmental crisisIT is nowTAKEApparent early successlocked inOFF?Talent pushing new careersOpenings for policy change Source: Monitor Institute.17 SpringHill Equity Management LLC 19. A Growing Movement18 SpringHill Equity Management LLC 20. Despite the Hype, Its Early Days UncoordinatedMarketplaceValue CaptureMaturityInnovation Building Disparate Developing Growth occurs as Activities reach aentrepreneurial activitiescenters of mainstream playersrelatively steadyspring up in response to enter a functioning stateactivitymarket need or policymarket Growth rates slowincentives Building enabling Entities leverage the Industry Disruptive innovators infrastructure fixed costs of theirconsolidationpursue new business that reduces previous investments inmodels in seemingly transaction costsinfrastructure acrossmature industries Unlocking latent higher volumes Characterized by lack ofsupply of capital Organizations becomecompetition except at topmore specializedby buildingend of marketefficientintermediation Developing theabsorptivecapacity forinvestment Source: Monitor Institute. capital19 SpringHill Equity Management LLC 21. Enabling Infrastructure and Standards IRIS ImpactBaseGIIRS20 SpringHill Equity Management LLC 22. Investor Segments Impact Floor High Financial-first investors with an impact floor Financial ReturnImpact-firstinvestors witha financialfloor Financial Floor00 High Social Impact Adapted from Solutions for Impact Investors: From Strategy to Implementation, RPA 2009.21 SpringHill Equity Management LLC 23. A Growing Field...InvestorsManagers22 SpringHill Equity Management LLC 24. ON Flexible CapitalFoundationLLC$239m $209mEquity & GrantsPRIsDebtOmidyar Network is structured to support the notion that philanthropy is morethan a type of funding. In its truest sense, philanthropy is about improving thelives of others, independent of the mechanism our investing style transcends typical boundaries that separate for-profit investing and traditional philanthropy.We believe using both grants and for-profit investments can be powerfully complementary.23 SpringHill Equity Management LLC 25. Integrated Investing Target: 100% mission-related investments delivering net performance of CPI plus 5%.It does not make sense to partition our grant-making and investing, especially because our investments could potentially contradict ourvalues. We are entrepreneurs and we always think about leverage.With limited capital and especially limited grants, what better way to enhance impact that using all available capital to reinforce what we believe in?24 SpringHill Equity Management LLC 26. The Risks: Impact Investing Is too HARDtoo EASY Insufficient compensation for The current financial markets risk results in lack of interest and incentives create an There may not be enough good irresistible pull toward dealsgreenwashing and dilution ofstandards Execution proves to be too difficult The very premise of having apositive impact is undermined Hype creates a bubble, and the industry is discredited especially from overpromising Source: Monitor Institute.25 SpringHill Equity Management LLC 27. Summary and Concluding Thoughts The intentional transforming impact of business is now well recognized. The impact investing field is developing rapidly and becoming more professional. But these are still early days with more talk than walk. TBN has been an early mover in business as development. How to focus and leverage TBNs experience now?26 SpringHill Equity Management LLC 28. Thank You www.springhillequity.com27 SpringHill Equity Management LLC