Developing an iis
- 1. Developing An Impact Investment Strategy By Ratan Rajpal
- 2. ___ What is Impact & Impact Investment? āThe only limit to impact is your imagination and commitmentā - Tony Robbins, motivational speaker
- 3. mpact Investment seeks to generate a positive social or environmental impact alongside a financial return.
- 4. Key Characteristics of Impact Investment Aims To Have A Positive Social And Environmental Impact Delivers a Financial Return on Capital Spans a Broad Range of Sectors and Regions Measures Social/ Environmental Impact regularly
- 5. ___ Impact Investment Strategies āI have been struck again and again by how important measurement is to improving the human condition.ā Bill Gates, businessman and philanthropist
- 6. The Focus Test: Arrange in Order ā¢ Sourcing an investment pipeline ā¢ Conducting due diligence ā¢ Getting to deal terms ā¢ Developing an investment strategy ā¢ Managing for mutual success ā¢ Accessing and achieving performance
- 7. Investment Strategy Process 1. Developing an investment strategy 2. Sourcing an investment pipeline 3. Conducting due diligence 4. Getting to deal terms 5. Managing for mutual success 6. Accessing and achieving performance
- 8. 1. Developing an investment strategy 1. Setting Investment Priorities: ā¢ Impact-first or Financial-first ā¢ What portion of portfolio goes to early-stage impact investment? 2. Align investment themes along with the definition of impact ā¢ Articulate companyās mission and values ā¢ Decide on industry, impact goals and investment themes ā¢ Strengthen sector knowledge ā¢ Recognise geographical preference ā¢ Define āTheory of Changeā 3. Assess the assets
- 9. 2. Sourcing an investment pipeline 1. Find trusted partners 2. Incubators and accelerators 3. Impact investing funds 4. Networking groups 5. Deal flow and investor networks 6. Key events and conferences 7. Impact intermediaries 8. Crowdfunding(if possible)/ Co-investors
- 11. 3.1 Due Diligence: Essentials 1. Validating the investment and impact thesis; 2. Evaluating their strategy for achieving impact; 3. Assessing the experience of the team; 4. Visiting fund offices, investees, and pipeline; 5. Analysing fund economics; and 6. Assessing fund operations
- 13. 4. Getting to Deal Terms ā¢ Clarify investment options based on country of capital origin and placement ā¢ Confirm return expectations, the appropriate type and size of investment based on analysis of the business opportunity ā¢ Get the terms right ā¢ Close the deal.
- 14. 5. Managing for Mutual Success 1. Establishing a regular financial and impact reporting process ā Seek constant updates directly from the entrepreneur in writing ā Use benchmarking techniques/ tools for portfolio-wide reporting 2. Working directly with the enterprise ā Provide regular concurrent support ā Become a partner, not just oversight ā Structure governance in accordance with the level of investorās involvement and entrepreneurās needs ā Share success and help with further investments if required
- 15. āAsk entrepreneurs what they need regularly and think about how to help give them access to networks, resources, etc. Talk with them about the frequency of check-ins that will make sense for them, recognizing that earlier-stage businesses might benefit from higher frequency.ā`
- 16. 6. Monitor and Achieve Performance ā¢ Setting clear targets for social and financial performance. ā Start with the end in mind ā What kind of return equals success shall help in setting Financial Targets ā Ask the following questions in terms of Theory of Change to determine Impact Target: ā¢ What will happen as a result of our intervention? ā¢ What are the metrics we can track to be sure that is on the right path? ā¢ How will we know weāve succeeded? ā¢ Managing financial returns and measure impact using proprietary or standard metrics.
- 17. No Metrics When investors do not directly measure impact, either because of large unmanageable portfolios or lack of staff and resources Limited Metrics Some investors start slow and measure one or two indicators across their portfolio, planning to eventually expand as they learn more Standard Metrics Ideally, investors should use standard metrics but supplement with proprietary metrics depending on their goals and strategies
- 18. ___ What is Thematic Investment Approach? Courtesy: https://www.responsability.com/en/impact-and-esg
- 19. Insight On Thematic Investment Approach by Responsability TRADITIONAL IMPACT FIRSTTHEMATICSUSTAINABLE PHILANTHROPY Competitive Financial Returns ESG Risk Management High Impact Solutions Agriculture Energy Finance
- 20. Idea behind the Thematic Approach is to classify potential portfolio companies into following six impact themes based on UN Sustainable Development Goals promoted by the United Nations.
- 22. Thank you