Club of Amsterdam Journal, March 2013, Issue 155

Welcome to the  Club of Amsterdam Journal.

Impact investments are investments made into companies, organisations, and funds with the intention to generate measurable social and environmental impact alongside a financial return.
Join us at our next event about the future of Impact Investment – Thursday, March 28, 18:30 – 21:15!

Felix F Bopp, Founder & Chairman
 A collaboration with the World Future Society.

Markets for Good: Put Your Data Where Your Mouth Is

By David Bank is co-founder and editor of Impact IQ and ImpactSpace
Open Data to Fuel Impact Investing

I’m an old-school journalist steeped in the timeless wisdom: follow the money. So when I assigned myself in 2012 to cover impact investing, I wanted to know who was making bets on what, and how they were working out. To my surprise, there was no daily, weekly or even annual dealsheet of the kind that venture-capital and private-equity investors take for granted.

There was no easy way for me to track private investments of equity or debt in for-profit enterprises explicitly seeking and measuring positive social and environmental results along with financial returns.

If it was hard for me to track “impact” deals, how could impact investors themselves? How could new investors and entrepreneurs just exploring the opportunities make sense of the marketplace?

White papers were easy to find. There was the foundational 2008 Monitor Institute report that made a “good guess” at a $500 billion impact investing market in a decade. And a 2010 JP Morgan report that estimated impact profits of up to $667 billion from just five base-of-the-pyramid sectors — urban housing, rural water, maternal health, primary education, and microfinance. And last year’s Hope Consulting survey multiplied the 69 percent of financial advisors at least warm to the idea of “sustainable investing” by one-third of their clients and 10% or so of their portfolios. That equals 2.5 percent of the $26 trillion in managed investments or $650 billion.

None of these estimates took me to actual investments backing the numbers; so I kept looking for the deals. ImpactBase is a terrific resource from the Global Impact Investing Network, the closest thing to an industry association for the nascent field. It now counts 221 funds with $14 billion in committed capital. The GIIN counted 2,200 impact deals worth $4.4 billion in 2011, up from 1,000 deals worth $2.5 billion in 2010.

In their most recent survey, the GIIN and JP Morgan report that 99 fund managers who committed $8 billion to impact investing in 2012 expect to commit $9 billion this year. Most of those investors reported they had at least one “home run” — an investment that significantly outperformed expectations while delivering the intended impact.

But there’s no way to identify those deals. The GIIN collects data from funds and provides it to JP Morgan in aggregated and anonymized formonly. PCV Insight, which surveyed 300 private equity firms and found 69 firms, with $4 billion in assets, that can be considered impact investors, doesn’t list the funds. ImpactAssets does produce an annual list of 50 impact investment funds, but doesn’t track their portfolio investments.

If impact investing is such a compelling way to leverage private capital for social impact, where are the impact deals?

Even impact true believers have grumbled they keep hearing the same examples, be it Bridge International Academies’ low-cost private schools or d.light’s solar lanterns. Terrific ventures, but not nearly big enough to shoulder the whole load of expectations. Impact investing risked death by anecdote and allowed the conventional wisdom to take hold: There was too much impact money chasing too few impact deals.

Too much money? As if! The veritable explosion of small and growing businesses, entrepreneurial start-ups, social ventures and NGOS with innovative approaches and disruptive technologies is one of the bright spots in the global economy. But few of the entrepreneurs trying to build scalable models to cost-effectively deliver transformative change for vulnerable populations would say there’s too much money. No, the first problem to address is just getting the information.

But, openness challenges the traditional practices of some investors and funds, as well as of some data providers in other investment domains. Some investors want to guard their privacy; fund managers don’t want to telegraph their strategies. Both funders and entrepreneurs can be wary of premature publicity for ventures that may fail. Some funds, of course, publish lists of their portfolio companies, but generally without deal details. Many deals are so small they don’t get announced, much less picked up by the media.

Nevertheless, the pros and cons increasingly favor disclosure: to show the world that impact investing is a real and growing market and attract new investors…to gain insight and forge common solutions from the ecosystem of stakeholders…to validate their portfolio teams and perhaps get some credit themselves…and to embrace accountability in a market robust enough to stand up to scrutiny.

As Lucy Bernholz declared in her excellent new report on trends in philanthropy for the year ahead: “Linked, comparable, accessible data is the new starting line. The race is now on to see who will create what public-facing tools for making sense of this information.”

That holds true for impact investing as well. As the data becomes more robust, we’ll be able to report trends by quarter, by sector, by geographic market. We’ll be able to spot new kinds of financial instruments and term sheet provisions, and track acquisitions and other exits. We’ll be able to track the flow of capital as it goes to ground in projects on the ground.

Deals are real-time indicators of the flow of capital, such as it is, toward a sustainable, inclusive economy for the 21st century.

Are we approaching a tipping point? The data is in the deals.

Closing the Deal

It’s one thing to advocate for greater transparency to accelerate the marketplace for private investments that deliver positive social and environmental impact along with financial returns. It’s another thing to make it happen.

As we explored the terrain of impact investing for Impact IQ, the startup media platform I founded last year, we tested our arguments for transparency and disclosure on every entrepreneur, angel investor, fund manager and social-venture accelerator operator we met. Nearly everyone supported openness, except perhaps when it came to their own data.

Along with my colleague Avary Kent, Impact IQ started building the case (with the support of Kevin Jones and Penelope Douglas of SOCAP and the Stiefel Family Foundation). One of the first to provide data was Acumen Fund which on its own had disclosed general information about its portfolio results and lived to tell the tale. Others that agreed to “put their data where their mouths are” included First Light, Hub Ventures, Toniic, Unitus Seed Fund, Unreasonable Institute and Village Capital.

One of the first public supporters was Acumen Fund which on its own had disclosed general information about its portfolio results and lived to tell the tale. Others that agreed to “put their data where their mouths are” included First Light, Hub Ventures, Toniic, Unitus Seed Fund, Unreasonable Institute and Village Capital.

That meant simply broad support for “the voluntary and timely disclosure of basic information about financial investments in ventures and projects that seek social, environmental and financial returns, consistent with regulatory and confidentiality requirements.”

At the same time, ImpactSpace was building a robust database platform and pumping in data about just such deals. Ravi Kurani and Zuleyma Bebell, and their team, collected public data and started entries for more than 500 impact investing financial organizations and ventures including, for example, more than 100 deals completed by Root Capital.

Of course that’s barely a start. Many entries remain incomplete. But new funds and companies are going up quickly. The newly announced Unitus Seed Fund, for example, has posted its four early deals and will add to its portfolio page as it closes its planned dozen investments a year in base-of-the-pyramid ventures in India. Already that page shows that Hippocampus Learning Centers, which is building a network of low-cost private schools, leveraged seed financing from Unitus to raise Series A financing from Acumen Fund and Lok Capital. An ecosystem is coming into focus.

Collaborating for Impact

In the spirit of collaboration, Impact IQ and ImpactSpace are merging their complementary efforts. Think of it as TechCrunch and CrunchBase — for impact. ImpactSpace is building the data store and tools for gathering, filtering and displaying the data. Impact IQ is about notable deals, compelling people and gathering trends. Together, we’re building the database through voluntary submissions, manual “scraping” of public data and old-fashioned reporting.

We’re committed to open-source and open data. “Open impact data” means that basic deal data — venture, investor, amount, type, date — is available for re-use by stakeholders and service providers of all kinds. As a public good, the basic layer of open data is available under an open-data license to any number of free and paid-for products and services — apps — serving the needs of impact investors and entrepreneurs. ImpactSpace’s data fields are compliant with industry standards, such as the IRIS taxonomy, to facilitate data exchange and integration.

Common and open data platforms can support the very specific services needed by different stakeholders. For example, the network of social-venture accelerators is collaborating to create a common application form to enhance collaboration and reduce the burden on social ventures. Academic researchers are using open impact data and tools to analyze trends and practices in impact investing. Emerging social finance mapping efforts, such as the Impact Investing Ecosystem Map in Mexico and the Ayllu Initiative in India can draw from, and contribute to, the open impact database.

Transparency

Transparency is needed across the capital spectrum, but one area is particularly ripe for openness: the new class of startup entrepreneurs mixing technology, emerging markets and new financing mechanisms to disrupt business as usual in food, water, health care, education, energy and even sanitation.

Angel investor networks such as Investors’ Circle are buzzing with activity, and greater transparency is the price of admission to this new environment. “Accelerators” open for applications every month to drive new ventures toward investor pitch days. New seed funds, such as Unitus, are raising capital from venture capitalists such as Vinod Khosla. Accredited-investor exchanges and portals such as Mission Markets in New York, the Impact Investment Exchange in Asia and MaxImpact in Zurich are looking for deals. “Crowdfunding” sites eagerly await federal regulations to offer equity stakes in startups to smaller investors.

Sen. Michael Bennett of Colorado, an author of last year’s federal crowdfunding legislation, recently wrote to Mary Schapiro, chairwoman of the Securities and Exchange Commision, that many entrepreneurs, angel investors, lawyers and software developers feel “that businesses must be transparent about their capital structure before participating in a crowdfunded offering.” Such practices will migrate upstream over time.

Challenges Ahead

We know there are practical and conceptual question marks all over the place. Impact investing is not only, or even primarily, about equity; tracking debt, project finance and other forms of financing may be even more important and more difficult. Financing is not the only, or even the best signal of a venture’s success; companies able to bootstrap their growth from revenues won’t show up in a dealsheet of investments.

One of the biggest challenges is measuring, valuing and communicating social and environmental benefit. Impact, of course, is what sets these investments apart.

And system-change is more than a series of deals, as Joy Anderson of Criterion Institute reminds us. How does a database of transactions help in the hard work of “looking for new patterns, crossing boundaries, messing with taxonomies, shifting the rules of the game”?

Money follows money. Today’s seed investment is tomorrow’s growth company and maybe the next world-changer. Tracking such investments can itself help catalyze capital for the sustainable and inclusive future. As the geeks would say, that data “wants to be free.”

How to Participate

Tag impact deals. Use #impinvdeal as a hashtag for flagging financing events on Twitter. Combined with the already popular #impinv, it’s an easy step toward real-time reporting of impact investing.

Add or edit your profile. Add a company, financial organization or person profile. (You can also send a spreadsheet or link to your portfolio to info@impactspace.org.) If your venture or financial organization is already in ImpactSpace, please review and update the information.

Put Your Data Where Your Mouth Is. Add your organization to the roster of those supporting disclosure of basic impact investment deal data.


David Bank is an entrepreneur and thought leader in social innovation, technology and finance. As a reporter for the Wall Street Journal, he covered software, the Internet and venture capital. His book, Breaking Windows: How Bill Gates Fumbled the Future of Microsoft(Free Press, 2001) was named one of the “Best Business Books of 2001″ by the Harvard Business Review and Amazon.com. Most recently, he was a Vice President of Civic Ventures / Encore.org. where he advanced innovative ideas and compelling people making a difference with encore careers. Bank was a 1996 Nieman Fellow at Harvard University. He has an M.S. in journalism from Columbia University and a B.A. in politics from the University of California at Santa Cruz.

Next Event: the future of Impact Investment

the future of Impact Investment

Thursday, March 28, 2013
Location: DoubleTree Hilton Hotel, Amsterdam Centraal Station, Oosterdoksstraat 4, 1011 DK Amsterdam

The conference language is English.

This event is in collaboration with  India House
Media Partners: Forbes India & CNBC India

The speakers and topics are

Herman Mulder, Chairman of the Global Reporting Initiative – GRI, impact investor, the Netherlands
Impact Investing as key driver for new-style International Development Cooperation

Giuseppe van der Helm, Executive Director, Dutch Association of Investors for Sustainable Development (VBDO), President, Eurosif (European Sustainable Investment Forum), the Netherlands
Impact investment: investing in your mission, delivering more than financial returns

Maximilian Martin, Founder and Managing Director of Impact Economy SA, Switzerland
Mainstreaming Impact Investing: What Are The Levers?

Neeraj Bhatia, Executive Director, Member of the Board, Bank of India Ltd, India

Our moderator is Hedda Pahlson-Moller, Angel Investor / Impact Investor, Omnisource International, Luxemburg

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Tablet Touch Walls in your hotel room

“ITH Room Xperience” – a model hotel room made of Microsoft Surface Tablets. Technological boundaries research by SerranoBrothers™ – a project exploring the future of hotel rooms through technology and guests experience.

Presented in Fiturtech 2013 and commissioned by Instituto Tecnológico Hotelero, Madrid, Spain.

Club of Amsterdam blog

Club of Amsterdam blog
http://clubofamsterdam.blogspot.com

The Egg
Joy Rides and Robots are the Future of Space Travel
The Transposon
10-step program for a sick planet
Public Brainstorm: Economic-Demographic Crisis
Public Brainstorm: Energy
Public Brainstorm: EnvironmentPublic Brainstorm:Food and WaterPublic Brainstorm: Overpopulation

News about the Future

A Report Card for Global Food Giants

The social and environmental policies of the world’s ten biggest food and beverage giants need a major shake-up, said international relief and development organization Oxfam America as it launched its new global campaign called ‘Behind the Brands’. The campaign was launched with new research that for the first time scores and ranks the agricultural policies, public commitments and supply chain oversight of Associated British Foods, Coca Cola, Danone, General Mills, Kellogg, Mars, Mondelez, Nestlé, Pepsico and Unilever.

The research reveals that the “Big 10” food and beverage companies – that together make $1 billion-a-day – are failing millions of people in developing countries who supply land, labor, water and commodities needed to make their products.

ABF (19%), Kellogg’s (23%) and General Mills (23%) scored most poorly. They have weaker policies than Coca-Cola (41%), Unilever (49%) and Nestle (54%) for example.

“While some companies are doing better than others, no company has passed the test,” said Raymond C. Offenheiser, President of Oxfam America.

World in 2050
A report by pwc

The BRICs and beyond: prospects, challenges and opportunitiesKey findings:
The world economy is projected to grow at an average rate of just over 3% per annum from 2011 to 2050, doubling in size by 2032 and nearly doubling again by 2050.

China is projected to overtake the US as the largest economy by 2017 in purchasing power parity (PPP) terms and by 2027 in market exchange rate terms. India should become the third ‘global economic giant’ by 2050, a long way ahead of Brazil, which we expect to move up to 4th place ahead of Japan.

Russia could overtake Germany to become the largest European economy before 2020 in PPP terms and by around 2035 at market exchange rates. Emerging economies such as Mexico and Indonesia could be larger than the UK and France by 2050, and Turkey larger than Italy.

Outside the G20, Vietnam, Malaysia and Nigeria all have strong long-term growth potential, while Poland should comfortably outpace the large Western European economies for the next couple of decades.

Bringing down Europe’s energy prices for 2020 and beyond

Ecofys prepared this study by order of Friends of the Earth Europe and Climate Action Network Europe.

The actual scale of benefits of energy savings is often underestimated. In this paper, we show that energy savings do not only bring direct cost savings; they also indirectly reduce energy prices. In other words, consumers would use fewer units of energy, and the price of the units used would be lower than they would otherwise.

[…]

Conclusions
Many studies on efficiency conclude that there is a large potential for cost-effective savings. But these studies generally only consider the cost savings for consumers and businesses resulting from avoided energy use. In this paper we have drawn attention to the fact that energy savings do not only result in direct cost savings, but have a multiplier effect due to their downward effect on energy prices. The result is that real cost savings from exploiting the EU’s cost-effective energy savings potential are likely to be considerably higher than figures commonly cited.

Savings in 2020
We have shown the three main effects of energy savings on energy prices:

1. Energy efficiency policies in the EU will lead to lower fossil fuel prices in Europe
2. In addition, lower electricity demand will lead to lower electricity prices
3. Infrastructure investments can be cancelled or postponed, leading to a further reduction of energy prices

We have estimated that the first effect is already substantial, leading to a decrease in energy prices of up to 1% for every 1% of energy saved. The impact on short-term electricity prices is difficult to quantify, but will be significant for electricity. The impact on infrastructure investments will be more noticeable in the long term.. It is important to note, however, that there will be trade-offs between the three effects (notably that more investment in certain types of infrastructure supports the use of lower cost fuels).

All in all we expect that for every €1 of direct energy cost savings, an additional €1 could be saved due to lower energy prices.

Therefore, net additional annual cost savings on the order of €100 billion can be expected on top of the €107 billion that will result from implementing cost-effective energy savings measures.

Savings in 2030
If ambitious energy savings are pursued further in the period 2020 – 2030, we expect net direct energy cost savings to be in the order of €200 billion per year and indirect energy cost savings on the order of €50 billion per year in 2030, giving €250 billion per year total net savings for consumers.

To conclude, we note that energy efficiency can bring great economic benefits to European consumers, but without effective regulation savings will not materialise. It is therefore of vital importance that ambitious and effective policies are put in place in order to see these benefits realised.

Recommended Book

Earth Hour

Earth Hour is one of the single, largest, symbolic mass participation event in the world. Born out of a hope that we could mobilize people to take action on climate change, Earth Hour now inspires a global community of millions of people in 7,001 cities and towns across 152 countries and territories to switch lights off for an hour as a massive show of concern for the environment.

Earth Hour has now become much more than a symbolic action. It has evolved into a continuous movement driving real actions, big and small, that are changing the world we live in.

Uganda
In Uganda, the world’s first Earth Hour Forest was allocated with 2700 hectares of land, challenging Ugandans to fill it with 500,000 trees to fight against the 6000 hectares of deforestation that occurs in the country every month. Standard Chartered Bank (250,000 trees), the Ugandan Minister of Water Environment (1,000 trees) and many individuals have taken on the challenge.
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Russia
The Russian parliament passed a long-awaited law to protect the country’s seas from oil pollution in December, after the voices of 120,000 Russians were presented to the government during the I Will If You Will campaign for Earth Hour 2012.

Botswana
The Former President of Botswana and Earth Hour Botswana coordinators Wena Environmental Education and News Trust, recently launched a project called ‘One Million Trees-Plant For Life’ as part of our I Will If You Will campaign. The project will rehabilitate degraded lands through the planting of more than one million trees over four years in Botswana.

Futurist Portrait:  Michell Zappa

Michell Zappa is a São Paulo-based technology futurist who has spent part of his life between London, Berlin, Stockholm & Amsterdam. His work, called Envisioning Technology, focuses on explaining where society is heading in the near future by extrapolating on current technological developments.

His research facilitates understanding the field for those who work in technology by painting a bigger picture of where the landscape is heading. In this, he tries to guide both corporations and public institutions in making better decisions about their (and society’s) future.

Envisioning the future of education technology

Click to see the visualization


Keynote Michell Zappa at TNW Latin America 2012

https://youtu.be/PI6IxhVNz_A

Agenda

Season Events 2012/2013 March 28, 2013 the future of Impact Investment Location: DoubleTree Hilton Hotel, Amsterdam Centraal Station, Oosterdoksstraat 4, 1011 DK Amsterdam In collaboration with India House April 25, 2013 the future of Digital Identity or the death of Social Media as we know it. Location: Info.nl, Sint Antoniesbreestraat 16, 1011 HB Amsterdam [Next to Nieuwmarkt] Supported by Info.nl & Freelance Factory May 30, 2013 the future of Europe Location: Amsterdam In collaboration with the World Future Society Supported by India House June 27, 2013 the future of Urban Gardening Location: Geelvinck Museum, Keizersgracht 633, 1017 DS Amsterdam Supported by Geelvinck Museum