“The early days of venture capital remind me very much about today. There is change in the air. People want to do meaningful things – not just financial. The world can’t continue to function as it is now.”
These were the words of Sir Ronald Cohen – the grandfather of Social Investment – on June 6, 2013, at the G8 Social Impact Investment forum. As I wrote in my June 5th blog, I had the honour of attending the forum with ~100 other global experts in a day-long agenda of speeches, discussions and networking. I was struck by the leadership and insights of Sir Ronald during the session. And I wasn’t the only one – see Ben Thornley’s take-aways from the forum.
Prime Minister David Cameron opened the forum, declaring that “Social investment can be a great force for social change on the planet. It can help us to build bigger and stronger societies.” Of course, he was preaching to the converted but his speech was directed less at the audience than at the global community. And his goal was less to merely raise awareness than to catalyze the social impact investment agenda worldwide. To guide that effort, Prime Minister Cameron turned to – you guessed it – Sir Ronald Cohen, asking him to lead a new Social Impact Investment Taskforce. Its mandate will focus on growing a global market for social investments, as well as bringing clarity to the measurement of social returns and asset allocation strategies.
From a development standpoint, I was excited to see the conversation moving more towards the how than the why – not surprising since the pioneers and up-and-comers were all in the room: Acumen, Omidyar, Africa Enterprise Challenge Fund, Ashoka, Gates Foundation, KfW, Tony Elumelu Foundation, USAID, DFID and Grand Challenges Canada. I had the opportunity to outline our early work in global funds and the active testing of impact investment approaches to scale our pipeline of 300+ innovations by leveraging the expertise/knowledge of the private sector and their capital. We are actively involved in a number of deals that have attracted various social angel investors, who bring their business knowledge and experience to the table. Not to mention the business scars that come with helping to scale our pipeline of bold ideas.
Here are my top reflections from the forum related to impact investing for development:
- Role of Foundations, Donors, DFI’s and Governments: One of the most fascinating sessions was dedicated to the potential for social impact investing in international development. What ensued was a dynamic discussion on the role of foundations, donors, development finance institutes (DFIs) and governments to increase the number of impact investments. In particular, there was a push for foundations to step up and take more risks. DFI’s need to be catalytic and bold in terms of their positioning in the ecosystem. Governments need to focus on building a pipeline of innovations that can then feed into an established marketplace/ecosystem. Governments must also focus on specific regulatory and business/technical services that will help to ‘prime the pump’ of investment opportunities and exciting new ideas. This is an area where I believe Canada has a lot to share. We’re taking an approach of engaging the various actors in the ecosystem. I recently attended an Impact Investment Forum convened by the Department of Foreign Affairs, Trade and Development. It was a great discussion, with some of the front-line leaders in this space: Omidiyar, Serona Asset Management, Lundin Foundation, Engineers without Borders, Building Markets, Aga Khan Foundation of Canada, Grand Challenges Canada and others. These players are best positioned to advise on the role of stakeholders across the ecosystem and I believe the impact investment community needs to adopt a more entrepreneurial bent by embracing an open source learning network. Grand Challenges Canada has found great opportunity in this approach. Already, we have five impact investment deals on the table. To share our learning, we’ve committed to blog, tweet and spread the word as we work our way through this deal-by-deal approach.
- Learning by Doing: The quote of the day came from Chris West of the Shell Foundation: “There are three certainties in life: death, taxes and changing business plans”. Certainly, that reflects our own experiences in working with our Investment Committee to recommend and structure impact investment deals. As indicated above, we are learning valuable lessons in our early days of impact investing. In one of our social angel investor deals, the approach was simple: put a million dollars on the table with very few concessions, and focus on a milestones-based reporting approach and accountability of results. We’re anxious to share what the lead angel investor, in partnership with Grand Challenges Canada, did to leverage additional private capital. Please stay tuned in the coming months for the announcement of this deal.
- Domestic and International: Both Ben Thornley (see his blog) and I were struck by the insights of Elizabeth Littlefield, President and CEO of the US Overseas Private Investment Corporation: “Impact investing is nothing short of a revolution, transforming the way the world thinks about money, the purpose of our lives, and the relationship between the global north and south.” Compared to other larger countries (the US and the UK), I think Canada is in a very strategic position to leverage lessons learned and experiences from domestic and international pursuits. Both Siobhan Harty from HRSDC and Ted Anderson from the MaRS Centre for Impact Investing attended the forum, and we have begun to discuss how domestic and international efforts could come together and how this would link to the already established Social Impact Investment Task Force in Canada. Grand Challenges Canada established this informal task force with the mandate of updating, discussing and learning from the various activities of relevant government departments/organizations in the impact investment space.
- Need for Learning: I was also impressed with the launch of a new Global Learning Exchange that will be created by the World Economic Forum and supported by the Impact Investing Policy Collaborative (IIPC) and the Global Impact Investing Network. I am intrigued to follow the development of this exchange; if it’s user-friendly and accessible to all, then sign us up! The need for transparency was a continuous theme of the forum and this learning exchange would be a great step forward for the sector.
So where do we go from here? Grand Challenges Canada will continue to build our pipeline of bold ideas, and to structure and implement deals that strike the appropriate ‘impact investment’ balance. We will also continue to promote the strengths and role of Canada in this space, informed and influenced by the knowledge we draw from our results and community stakeholders.
Finally, we will be committed to blogging and tweeting our progress and lessons learned. Please follow me @TaylorAndrew1 and through the hash tag #impinv.