VENTURE PHILANTHROPY AND SOCIAL IMPACT INVESTMENT PRACTICAL CASES FROM EUROPE AND LATIN AMERICA - Webinar, 20 May 2020 - EVPA
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VENTURE PHILANTHROPY AND SOCIAL IMPACT INVESTMENT
PRACTICAL CASES FROM EUROPE AND LATIN AMERICA
Webinar, 20 May 2020
SPEAKERS | LATIMPACTO & EVPA TEAM
CAROLINA SUÁREZ ALESSIA GIANONCELLI
CEO Head of Knowledge Centre
LatImpacto EVPA
SPEAKERS | EXPERIENCED PRACTITIONERS OLIVIER DE GUERRE PIETER OOSTLANDER NATÁLIA LEME PEDRO CASTILLO PhiTrust Shaerpa and SI2 Fund Arymax Foundation Promotora Social Mexico France Belgium Brazil Mexico
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AGENDA OF TODAY WEBINAR
INTRODUCTION
By Carolina Suárez
INTRODUCTION TO EVPA GUIDE TO VENTURE PHILANTHROPY AND SOCIAL IMPACT INVESTMENT
By Alessia Gianoncelli
PHITRUST: INVESTING FOR IMPACT IN EUROPE
By Olivier de Guerre
SI2 FUND: INVESTING FOR IMPACT IN EUROPE
By Pieter Oostlander
QUESTIONS FROM THE AUDIENCE
ARYMAX FOUNDATION: INVESTING FOR IMPACT IN LATIN AMERICA
By Natália Leme
PROMOTORA SOCIAL MÉXICO: INVESTING FOR IMPACT IN LATIN AMERICA
By Pedro Castillo
QUESTIONS FROM THE AUDIENCE
CLOSING
By Carolina Suárez
INTRODUCTION By Carolina Suárez
PATHWAY TO IMPACT
We are the Latin American community of philanthropists and social
investors that connects and mobilizes capital (human, intellectual,
and financial) committed to achieving more and lasting positive
social and environmental impact by promoting the exchange of
knowledge on the most innovative and effective models of social
investment, management, and impact measurement and by
facilitating connections for greater collaboration and co-investment.
We belong to the family of VP Networks
Connected by
With the support of
OUR GUIDING PRINCIPLES
PRINCIPLE #5 PRINCIPLE #1
• A global • Diverse types
• collaborative of
• movement • investors
PRINCIPLE #4 PRINCIPLE #2
• Independent •
• organizations •
Disciplined
• focused on
investment
• serving their own
regions
PRINCIPLE #3
•Investment
•along the full
•continuum of
•
capital
Diversity in
PRINCIPLE #1 the types of investors
Attract and connect
providers of capital
Professional
Universities,
Service
Family Government Research,
Foundations
Corporates
Firms
Offices related Investors Think tanks
Foster learning,
collaboration and
accountability
Capture and disseminate Connecting actors and fostering Wide array of value-added
knowledge regional and local collaboration services Enable access
to knowledge,
assets of
global
community
Multiply positive social and environmental impact
Latimpacto brings together diverse parties with capital (financial, human and intellectual) seeking social impact
Investment Along the
PRINCIPLE #3 Full Continuum of Capital
PROMOTING & STRENGTHENING VENTURE PHILANTHROPY APPROACH + CONNECTING CONTINUUM OF CAPITAL
Investing for Impact Investing with Impact
(Venture Philanthropy) (Impact investing)
Traditional investing
Social purpose that will Social purpose organizations ESG Compliant
Traditional grant-
Social purpose organizations Traditional businesses
never be with a potentially financially with a proven financially with intentional social traditional
financially/self – self- sustainable business sustainable business model impact businesses
making
sustainable model
Only Social Impact Profit first as a
Social Impact as a Priority
Priority
Our strategy emphasizes de value of Venture Philanthropy and Social Investment along the continuum of capital, as a
catalyst that complements and enables impact investment
* Source: Adaption from EVPAPRINCIPLE #5 A Global Movement
The yellow dots are those countries where Latimpacto is starting to have presences. The purple dots are the ones where our sisters have members.
We are diverse peoples with synergistic perspectives, experiences and skills –and shared passion and
zeal to improve our world.MISSING GAP
A Platform that will collaborate with existing ecosystem players to
1 2 3 4 5
Connect the entire Connect providers of Operates fully at a
Connect seamlessly to
continuum of capital capital across all Latin American level
Promote the most the largest community of
“silos” global social investors
From philanthropic effective investment Based in the region
grants to full market approaches to achieve with leadership and
From foundations to 1000+ organizations
rate return impact “impact first” governance from the
corporates, investors, who are members of
investment, including family offices, region
EVPA and AVPN, which
talent and intellectual professional services, gives access to cross-
capital academia and public border learning and to
sector actors foreign-based capitalINTRODUCTION TO EVPA’S GUIDE TO VENTURE PHILATHROPY AND SOCIAL IMPACT INVESTMENT By Alessia Gianoncelli
THE EVPA PRACTICAL GUIDE (1/3)
• Overview of all the key practices and activities of investors
applying the venture philanthropy approach
• Point of reference for introducing the concept of venture
philanthropy and social investment to new comers or to
organisations that are exploring the possibility to join the
impact space
• 4th edition in 2018, following:
the 1st edition, which was a working paper in 2008
the 2nd edition in 2010
the 3rd edition in 2016THE EVPA PRACTICAL GUIDE (2/3) • It includes all the insights and knowledge gathered by the EVPA Knowledge Centre throughout the years, thanks to the exchanges with members and practitioners, including data collected and frameworks developed by EVPA • It includes practical cases from EVPA members • Three sections: 1. Setting up a VP organisation 2. Investment strategy 3. Investment process
THE EVPA PRACTICAL GUIDE (3/3)
Thanks to the collaboration with LatImpacto
Now also available in Spanish and Portuguese!1. SETTING UP A VENTURE PHILANTHROPY ORGANISATION Funding model • Grant-making / Social investment (through loans, equity, hybrid financial instruments) Organisational structure • Background of the team (balance in between investment sector / social sector) • Role and level of engagement of the board (e.g. management-driven model, mixed model, investor-driven model) Fundraising • Where the resources come from (e.g. own endowment in case of foundations, corporations, governments, High-Net-Worth individuals, institutional investors, etc.)
2. THE INVESTMENT STRATEGY Investment focus • Social sector choices • Geographic choices Type of social purpose organisations to support • Legal structure • Business model • Stage of development Tailored financing and the different types of financial instruments Non-financial support • SPO’s social impact related skills (theory of change / impact strategy / impact measurement) • SPO’s financial sustainability (fundraising / revenue strategy / financial management) • SPO’s organisational resilience (human capital support / governance support) Co-investment policy Start making considerations on the exit strategy
3. THE INVESTMENT PROCESS
3. THE INVESTMENT PROCESS
The first step of the appraisal process is a preliminary screening
procedure of the investments opportunities available (deal flow), followed by
a knock-out screening of the applicants that do not meet the standard
application criteria (first screening)3. THE INVESTMENT PROCESS
Detailed screening, which will usually be performed (at least in part) through
the analysis and validation of a business plan3. THE INVESTMENT PROCESS
Including:
• Preparing the non-financial support plan
• Choosing the best financial instrument
• Discussing the exit plan3. THE INVESTMENT PROCESS
When the investment is actually managed.
The EVPA Guide includes insights of management:
• At portfolio level
• At the SPO level3. THE INVESTMENT PROCESS
After having previously assessed the different exit possibilities, the VP
organisation executes the exit, choosing whom to exit to (e.g. follow-on
investors), balancing its own financial and social impact return
expectations.3. THE INVESTMENT PROCESS
The investor for impact, after the exit, can continue to provide non-financial
support in different forms, such as:
• Providing access to networks
• Helping the SPO look for follow-on investors
• Keeping a seat on the boardPHITRUST INVESTING FOR IMPACT IN EUROPE By Olivier de Guerre
INTRODUCTION
• History:
• A meeting with Ashoka being launched in France in 2005,
• Realising that Social Entrepreneurs needed Capital to develop their business and that
classical funds/foundations, wil not provide it,
• We launched Phitrust Foundation in 2006 to support and mentor Social Entrepreneurs,
• We launched our first Social Investment fund in 2007 “PhiTrust Partenaires”,
• We decided to apply Private Equity philosophy to support not for profit & for profit ones,
• Our team in France, one of the first to adopt “VP philosophy” and EVPA vision, being convinced that we
had to “reinvent” the way social organisations were financed and mentored,
• Our vision is “Impact first” meaning that we aim at a social mission and that economic sustainability is a
“mean” to develop impact:
• It obliged us to change the way we develop capital into those social organisations,
• It pushed us to develop a close mentoring,
• We developed our own tools for measuring Impact (philosophy that European Investment Fund
uses today)DEPLOYING EQUITY
IN THE SOCIAL IMPACT SPACE
• First “French Private investors social fund” and French EusEF (European Social Investment Fund),
• 50 m € invested in social organisations
• Mainly in France, Eu, (80%) but also in Africa & South East Asia, being convinced that social
innovation is no longer “geographic” but worldwide with specificities,
• In young projects (some start ups) and mostly in accelerating ones,
• In many “hybrid” models with not for profit and for profit organisations,
• It is Long term investment : We assumed since the beginning that investment will be long term because
it is very difficult to manage both ambitions (social and sustainability) in 3/5 years. Therefore:
• PhiTrust Partenaires is a company (not a fund) with no end date at the beginning,
• Our average duration of investments is 11 years…
• Liquidity is organised for 2026 (20 years) but many investors want to continue…
• Low risk/Low return: We thought at first that those projects will be very risky. Unfortunately as the
market is growing (…) those are not so risky and we discovered:
• That our risk was very low (4 failures in 15 years with 37 projects…),
• That our expected return was low (3-5%) because we were focusing on social projects.PROVIDING NON-FINANCIAL SUPPORT
• Social enterprises have a double mission: Deliver Impact and Be sustainable…
• Non financial support is KEY because it is a real challenge to deliver both…
• It is also a way to lower the risk…
• Private entrepreneurs invested in our funds (60% of investors) and 14 of them participate actively in the
Investment Committee and in the boards of our investees
• Support is mainly strategical support as we can call for specific experts,
• Support is always given Probono,
• Mentor always participate actively in the governance of the supported organisations,
• Meetings between our investees and investors are organised at least once a year, to create a “network”
with the capacity to use investors own networks for social enterprises that have not the same networks,
• Main issue is the cost of mentoring which is not covered by external funding. We have the chance to
have Probono support from investors, whuch are entrepreneurs and are very happy to help. They bring
strategical value to social entrepreneurs.MEASURING AND MANAGING IMPACT
• Measuring Impact : a long learning process. We looked at many different tools in the last 15 years and
built our own referential because we do not found a simple and effective methodology :
• Small organisations cannot support long “impact expertise” from outside or deliver “tons” of
objectives for the “sake” of investors because they are small organisations with no specific team,
• Impact objectives are the heart of their mission. Therefore it must be a strategic tool for the CEO
and for the board to “pilot” the organisation :
• During due diligence process before investment, we ask the organisation to define 3-5 years
objectives,
• Those objectives are looked annually and discussed between boards,
• They can be revised if there is reasons/issues to do so,
• European Investment Fund uses the same methodology and
• Has decided that our “carried interest” will be based on the realisation of these objectives,
• We decided to give them, if any, to our foundation.SI2 FUND INVESTING FOR IMPACT IN EUROPE By Pieter Oostlander
Introducing… SI2 Fund
• We back innovative social enterprises
offering breakthrough solutions to
• Since 2012 – First in Benelux!
societal challenges
• Early growth stage SEs • Size = €17 mio
• system-changing innovation • Europe (Benelux + UK)
• Sustainable business model with high
impact
• Opportunity for investors to drive
societal change in a sustainable way
• Families, HNWI and Foundations
• Goals: high societal impact & fair
financial returnDeploying equity in the social impact space
• Ticket size = 250k to 1500k
• Instruments = Equity, loans or a mix
• Target stake: significant minority stake with
board seat
• Bottom-up - The need of the SPO is leading!
Is there a fit with the SI2 Fund funding model?
• Often need for risk-bearing capital
• Unrestricted loss (of funding) countered with
unrestricted upside
• Result/performance related component
• FROI > 3,0 % (fund level)Providing non-financial support
• Active board member and partner:
• Active guidance, hands-on support,
access to a European network
• Bottom up - Tailored to the SPO needs!
• Organisational development, leadership
and team, strategic guidance, financial
control, business development, …
• Always: impact measurement and
managementMeasuring and managing impact
WHY HOW
Target SROI ≥ 2
• Key to creating real societal value • 5 indicators = what, who, how
= core of impact investing and social much, contribution, risk (*Impact
Management Project)
entrepreneurship
• Preferred method = SROI (*SVI)
• IMM = business intelligence • Quantify the value of (+ and -)
• Understand what impact you truly effects experienced by
create (needs of and effects on stakeholders
stakeholders; vs assumptions) • Understand, compare values,
identify ways forward,…
• Make the right decisions to improve!
• Bottom up + always ongoing
• More impact ànd/is better business!Any questions?
Q&A
Q&A SESSION
OLIVIER DE GUERRE PIETER OOSTLANDER
PhiTrust Shaerpa and SI2 FundARYMAX FOUNDATION INVESTING FOR IMPACT IN LATIN AMERICA By Natália Leme
INTRODUCTION The Arymax Foundation is a philanthropic family foundation that focuses on supporting initiatives that promote the productive inclusion of people in economic vulnerability, aiming at generating work and income and increasing productivity in Brazil. The purpose of our theory of change is to impact economically vulnerable populations in Brasil with stable and lasting access to work and income. For this, we seek three impacts: 1) Healthy enterprises that generate jobs and income; 2) Vulnerable people better qualified and with greater access to employment; 3) More investments and more mechanisms to support Productive Inclusion initiatives.
Guidelines for our operation
We support networks, alliances and
We support initiatives in which we coalitions and we want to be part of
recognize effective potential for impact; them, fostering cooperation and
synergy relations in the ecosystem;
We support initiatives that reach scale We consider that is essential to
and in large populations; strengthen players who are already in
the field with accumulation of
experiences and knowledge;
We support initiatives that offer
We want to produce relevant
innovative and inspiring solutions to knowledge and solutions that support,
current and future challenges of the with good evidence, productive
productive inclusion agenda; inclusion initiatives in Brazil;
We support initiatives that can act as a We monitor and evaluate our
demonstration effect for other players; actions and those of our investees
to learn, improve and gain power.DEPLOYING DIFFERENT FINANCIAL INSTRUMENTS Arymax is a Grantmaker Foundation. Therefore, we directly support only via donations/grants; However, we support organizations that promote blended finance; We help to mobilize different players to make grants or to use other financial instruments to compose the capital of the supported initiatives, such as other foundations and companies. Exemples:
PROVIDING NON-FINANCIAL SUPPORT
Key premises beyond funding:
It is essential to develop trustful relations with other players in the field
and to strengthen them;
We offer recurring medium to long term support;
We offer permanent institutional support with active listening and
dialogue, providing knowledge and tools to our investees.MEASURING AND MANAGING IMPACT
Questions related to the quality of what is being Questions related to the effect of the
developed, the use of resources, the fulfilment actions in reality, the transformations
of agreements, timeline the production of obtained, the expected and
actions, etc. unforeseen results, the impacts, etc.
Measuring Managing
In terms of the quality Which results in productive
of the process, how have the inclusion have been achieved in
grantees performed? the entrepreneurship and
employability portfolios?
36 KPIs and different instruments for evaluation, built in collaboration with Arymax granteesPROMOTORA SOCIAL MÉXICO INVESTING FOR IMPACT IN LATIN AMERICA By Pedro Castillo
| |
http://www.psm.org.mx/portafoliodeInversion.html
Condiciones que propicien el Emprendimiento Magnitud de Impacto
Social y el Desarrollo del Ecosistema
Estudio Educación
Omidyar Network
En Promotora Social México
Atlas of
entendemos que los vehículos Economic
financieros en forma de donativos, Complexity
créditos e inversiones son cruciales Diccionario
para impulsar el sector de impacto NAFIN
social, sin embargo resultan Libro de
insuficientes. innovación
Publicación
Desde el equipo de Front Office, Enseña por Líderes
México Sistema B
hemos traducido lo que comprende la Mexicanos
construcción de ecosistema, en los
siguientes componentes: Historias
Fábrica de Inspiradoras
Balloon
Líderes PSM
1) 1) Generar conocimiento México Embajadores
2) 2) Promover PSM
3) Articular FLII
3)
Mass Social Impact
4) 4) Fortalecer y dar soporte y Red Challenge Bonds
5) Financiar Pro-
5) Taskforce
Bono
Emprendedore Social Impact Necesito de
s Sociales por Investment Ti
Social Taskforce
Yucatán
Progress
Index
Laguna
InnovadoraPortafolio de iniciativas actuales (junio 2017 – abril 2018) CONOCIMIENTO PROMOVER ARTICULAR FORTALECER FINANCIAR
Portafolio de iniciativas
El CoMap es un mapeo colaborativo del Ecosistema de Impacto Social que identifica actores y
procesos con propósito social e impacto positivo en México con el fin de facilitar alianzas
multisectoriales e iniciativas de impacto colectivo.Portafolio de iniciativas
El Festival Latinoamericano de Inversión de Impacto llevado a cabo en Mérida. Impulsado desde su
creación hasta la edición 2019.
Uno de los eventos más relevantes de Impacto Social en México y América Latina organizado por el
Tec de Monterrey. Participación en Comité de Contenidoshttps://www.alumbramx.org/
Portafolio de iniciativas
Impulsada por Fundación Grupo México, la Red es una alianza entre Fundaciones
Empresariales y empresas con actividad social que se unen para alinear las opciones de apoyo
y así lograr unificar la labor social en nuestro País y de forma global. La red está conformada
por +90 donantes y 1,900 OSCs
Iniciativa de Impacto Colectivo para incidir y proponer política pública en favor de la primera infancia
desde las candidaturas a nivel federal y en 4 estados de la República Mexicana.Portafolio de iniciativas Movimiento global para crear una nueva economía. Ofrece herramientas de gestión para empresas que desean tener un impacto social y ambiental positivo. Aceleradora con presencia global. Participación en Jurado Evaluador de emprendimientos finalistas de Building for the Masses de Facebook y 2do Cohort de Mass Challenge El laboratorio de emprendimiento e innovación social ESMEX identifica universitarios agentes de cambio para transformarlos en emprendedores sociales otorgando herramientas y métodos para la innovación.
Portafolio de iniciativas
Liderada por New Ventures Group, SVX México, Compromiso Social Citibanamex, Promotora
Social México, ANDE, y otras organizaciones clave, busca acelerar el crecimiento de la inversión
de impacto en el país, como parte de la red global del Global Social Impact Investment Steering
Group.Portafolio de iniciativas
El GIIMAP es la primera plataforma colaborativa que mapea organizaciones e individuos que trabajan en el sector de
inversión de impacto. En un esfuerzo colaborativo en conjunto con Ashoka, Aspen Network of Development Entrepreneurs,
Halloran Philanthropies y Spectron Desarrollo, se logró incorporar a 154 organizaciones clave, 119 empresas socio-
ambientales y más de 8,000 colaboraciones.
Bono de Impacto Social apoyado
por PSM desde 2015>Portafolio de iniciativas • Foro Latinoamericano de Inversión de Impacto (FLII) 2011-2018 • Primer Encuentro Alianzas Público-Privadas para el Desarrollo, CIDEAL 2012 • Social Entrepreneurship Week 2013 - ITESM CSF • Congreso AIESEC – 2013 - 2014 • Premio al Estudiante Emprendedor EO – 2013 y 2014, 2017 • Semana del Emprendedor INADEM 2013 – 2017 • Gifted Citizen - Ciudad de las Ideas 2014 • SOCAP (track de México) 2014 • Encuentro Líderes Agentes de Cambio (ELAC) 2014 y 2015 • Festival de Innovación Social Catapulta – 2014 y 2015 • III Foro Base Internacional BID – 2015 • Congreso Gente Nueva Cancún - Universidad Anáhuac 2016-2017 • INCmty 2014- 2017 • Festival de Emprendimiento Social Transformador -2017 • Festival Epicentro – 2017 • Encuentro Latinoamericano de Innovación Social desde el Sector Público - 2017
Portafolio de iniciativas Edición de diversas publicaciones en materia de emprendimiento, innovación y problemáticas sociales específicas.
http://www.psm.org.mx/Libro_Primera_infancia.pdf
http://www.psm.org.mx/pdf/LIBRO_ANIVERSARIO_10_PSM.pdf
www.psm.org.mx info@psm.org.mx t. +52 (55) 4166 66 00
Q&A
Q&A SESSION
NATÁLIA LEME PEDRO CASTILLO
Arymax Foundation, Brazil Promotora Social MexicoCLOSING
DOWNLOAD OUR GUIDE! https://evpa.eu.com/knowledge- centre/publications/venture- philanthropy-and-social- impact-investment-a-practical- Thanks to the collaboration with LatImpacto guide Now also available in Spanish and Portuguese!
Stay in touch with us!
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EVPAupdates Alan Wagenberg: alan@latimpacto.org
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Alessia Gianoncelli: agianoncelli@evpa.eu.comYou can also read
