rod schwartz. social impact investment

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Social Entrepreneursh ip Forum , Riga

11 November 2014

Rodney SchwartzCEO, ClearlySo

[email protected]

Bringing impact to investment

mailto:[email protected]

mailto:[email protected]



Setting the Scene on Impact Investing:

What drives investors?



Object ives for to day

• Introduce myself

• Provide a background to these developments

• Offer some thoughts on this thing we call social or impact investment

• Provide some examples of these wide-ranging enterprises

• Explore different investor types and what they are looking for

• Briefly explain what ClearlySo does

• HAVE I MISSED ANYTHING???



Caveats and my own “hidden” agendas

• Combine practical experience with theory and ClearlySo activitieswith what we see elsewhere

• Predominantly a UK oriented view, for the most part—although

informed by experience elsewhere

• My own interests—”all things spring from the personal”

• Would be delighted to entice one of you into becoming an active in

this area—I am NOT objective!



My own careertrajectory



Social economy approach

within the context of other models



A sustainability crisis…..our traditional view



There is a b roader “Western”susta inabi li ty c r is is

Unsustainable systems

Environmental

Financial

Institutional

Familial/personal

Unjust societies

Unsuccessful economies

Widespread

signs of socialunrest



The old models/systems for fixing things do not work

(and how we do things is not divinely decreed!):

The government model



1. Government (tax and spend )

Not awful, but:

• Short term oriented

• Costly to citizens

• Frequently lacking democratic support

• Officials often seen as incompetent, corrupt or both

• They are like “parents” in a dysfunctional family



The old models/systems for fixing

things do not work:

The charity model



2. Charity

More connected, but:

• Ineffective at times

• Inefficient—as so much resource is spent on money raising

• Becoming less sustainable in the current fiscal climate



The old models/systems forfixing things do not work:

The business model



3. Bu siness

Effective & Efficient, but:

• Unbalanced in terms of objectives

• Generates substantial negative externalities

• Proven to be less sustainable then we thought

• Heavily subsidized by the state



A new enterprise and investment model:

What are the key components?



Two views o f the same basic

idea —accord ing to most

By type oforganisation

negatively

screened

assets(SRI funds)

programme

related

investments

grant

making

fully

commercial

assets

mission

resonant

investments

positively

screened

assets

By type of

investment



Thing s we say

3D investing Risk, return and impact

Third dimension Externalities

}High-impact

Transformative

Disruptive

Impact-centred

Impact-focused

Extraordinary

entrepreneurs

businesses

investors

funds



Things we don’t say

Socialbusiness

enterprise

investing

entrepreneur

‘The sector’

Corporate business and social

business

Impact as an asset class



And what is “social” anyway?



These entrepreneurs DO possess some cons traints,

bu t also certain competi t ive advantages

• Legitimacy/moral authority• Access to free labour

• Ability to sell products at higher prices

• Readier access to publicity

• Access to below market-rate capital due to major changes in the

investment environment!

The interplay of below market rate capital

and intentional social impacts is what

creates the conditions for new

possibilities in finance



The world o f investm ent in the 1980s

Risk

Return



Today: “3D Investing”

Risk

Return



Some examples…



It’s not always a sacrifice - there is no

“impact see- saw”



Sometimes they are early stage

grow th ventures

https://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&docid=tKwBRMH7PnBLYM&tbnid=UL9eDiniiX6vLM:&ved=0CAUQjRw&url=http://wayra.org/en/startup/insane-logic&ei=-uwdUuuTDYeW0QW6pYCYDw&bvm=bv.51156542,d.d2k&psig=AFQjCNGGq4t-0jkCJv3ykSMCWimQDpGarg&ust=1377779314974360

https://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&docid=86eozZ03Q0GEHM&tbnid=vmsiVg8bywBZJM:&ved=0CAUQjRw&url=http://www.cpft.nhs.uk/services/psychologyonline.htm&ei=hu4dUobTB8r50gWmzoGYDg&bvm=bv.51156542,d.d2k&psig=AFQjCNE0W-XQYk7uiC1M3448ZGo7uTrUFg&ust=1377779689918181

http://news.agropages.com/News/NewsDetail---4386.htm

http://www.cact.org.uk/patrons-scheme/



…but what drives investors?



Types o f investors

• Governmental (single country)

• MFI

• Institutional

• Award givers

• Individual investors



Governmental (single country)

investors

Direct investment funds

• Australia - SEDIF

• UK – Futurebuilders, NESTA, UnLtd

Domestic market-building funds

• Germany – KFW

• UK – Big Society Capital

International development funds

• SDC, Sida, CDC, USAID, etc.



Mult inat ional Financ ial Ins t i tut ions

• UN SEED initiative

• European Investment Fund (plus the EIB)

• IFC (studying impact investment)



Ins t i tut io nal Investors

• Impact investment funds (e.g. Acumen, Social Venture Fund, Bridges

Ventures, LGT Venture Philanthropy)

• Renewal Partners. (50 year strategy/500 year intention Carole Newell)

• Fund managers (e.g. AXA Investment Managers)

• Banks and financial firms (e.g. Deutsche Bank)

• Pension funds and life insurers (e.g. Waltham Forest)

• Foundations (e.g. Kellogg, Esmee Fairbairn, Bertelsmann)

• Housing associations



“Award givers”

• Skoll

• Schwab

• Global Social Venture Competition

• SEIF (Switzerland)



Ind iv idual Investors

• HNWIs

• Family offices

• Private banks

• IFAs• Retail funds (e.g. Threadneedle/Big Issue)

• Crowdfunding and community share issues

• Justgiving, Kiva, Kickstarter, CrowdCube



And where does their moneyactually come from?



From you and me!



What dr ives investors?

• Governmental (single country)

• MFI

• Institutional

• Award givers• Individuals



And what does ClearlySo actually do?



Entrepreneurs



Entrepreneurs Investors



Thank you

Rodney Schwartz

CEO, ClearlySo

Email: [email protected]

Twitter: @rodneyschwartz

Skype: rodneyschwartz

Website and blog: www.clearlyso.comTelephone: +44(0)20 7490 9524

rod schwartz. social impact investment

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