How can Social Impact Projection help entrepreneurs raise money from investors?

Catherine Griffin, Founder of ImpactableX Analytics, has a vision to help entrepreneurs demonstrate the social impact of their business with data-driven projection models.

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Speaker: Welcome to this episode of the EastWest PR podcast today, I'm really delighted that I've got Katherine Griffin, who's joining us all the way from Philadelphia. She's a co founder and CEO of the ImpactableX company, which is doing some really exciting things around measuring the economic impact of sustainable activities. Catherine, welcome to the EastWest PR podcast.

Catherine: Thanks, Jim. It's great to be here.

Speaker: Can you just give us a bit of history about ImpactableX, what are you doing and helping companies to identify the impact that they're making?

Catherine: I was the managing director at an accelerator for early stage social entrepreneurs called Good Company Ventures. We worked with the Obama administration's Climate Data Initiative, and Bloomberg Philanthropies, and Wharton social impact initiative, and others, all around supporting new innovations to solve really old and challenging social and environmental issues. Over the course of that time, so many of the founders were really grappling with how to verify and validate their aspirations for impact, how to differentiate themselves in front of investors, impact traditional venture tech investors, and how to really sort of legitimize what were otherwise anecdotal experiences of impact on final beneficiaries. So we looked around at some of the other approaches to impact quantification and verification, and found that they really applied to later stage companies, corporations really. They evaluated supply chain, as an operational footprint, as opposed to measuring the products and services of a company. They were also strictly retrospective. The entrepreneurs we work with, we're really grappling with a way to engage investors around their potential. They have new innovations that can solve massive challenges and they need to engage investors around that possibility. So we needed an approach to impact quantification that captured that future potential. It was really out of this personal experience with entrepreneurs seeing their real struggle with this issue for years, among hundreds of entrepreneurs, that we developed an approach to quantifying social impact and projecting it over a given term.

Speaker: Just talk us through what's the real mechanics behind the system.

Catherine: So many entrepreneurs, I think, struggle with the data piece, especially on the social side, which often is viewed as quite subjective, or anecdotal, as I mentioned before. What we do with our founders is we operate on a unit level. So we take a unit of sale, think of one thing sold, or one buyer sold to, and identify the impact on a unit level. Where a company is lacking primary data, which is often the case with startup companies, we are able to draw from comps, from comparables from other companies that are doing similar things  and the efficacy that has been proven there, or through third party research that says this kind of an innovation can do or generate this kind of impact. But generating that impact on unit level really makes it much more manageable. We have a three step process. It's very simple. It's very straightforward. First step we define the metrics. So take, for example, a tonne of carbon as the first impact metric. Then in the second step, we identify the unit level impact. So for each thing sold, how many tons of carbon are abated or saved or in one case from a current client and actually pulled from the atmosphere to generate a new product. So we relate a unit of sale to a unit of impact. By operating on sort of individual basis, we then allow entrepreneurs to have a dynamic future looking projection. Because if we know the impact of one thing sold, then we know the impact of 50 or 100, or 10,000, things sold over the next five or 10 years.

Speaker: So what would be some of the kind of models that you're running for companies? You mentioned one company that's extracting carbon from the atmosphere. Can you talk us through a case study?

Catherine: Absolutely. So we had a company that participated in a project with Bloomberg Philanthropies in the city of Philadelphia, and more in a social impact initiative, and it was addressing recidivism. The company is now going on to do incredible things. But when they worked with us, they were still just very new. The idea was that by selling certain types of tablet technologies into prisons, with educational content built in, they could reduce the likelihood of recidivism, of an inmate returning to prison within a certain period of release. When we worked with them, it was sort of this theory. So step one, we identify their core metrics. For them, it was reduced three year re-incarceration rate, and sustained employment one year post release. Then in the second step, we talk about that unit level impact. So here, we're talking about a prison. So we looked at how many prisons they expect to sell to over the next five years. How many prisoners, on average, are in each prison? How many active users per prison will use their product and then of those, how many will be released over a given period and won't return to prison, based on what the research says. The RAND Corporation had recently published a report that said that this type of educational content can reduce the likelihood of returning to prison by quite a substantial percent. We typically like to discount that percentage just to really engage stakeholders and operate as conservatively as possible. So now we have a rough number of prisoners, who, based on the research, won't return to that one prison over a given term. So we can then apply that across all of the prisons that he expects to sell to over the next five years, and we get a total number of prisoners, who based off of the research won't return to prison within the next five years. So that's an impact output or KPI. Then in the third step, we look at economic valuation of impact, which is something you and I have talked at length about. This is where we look at new value created, and costs avoided as a function of the impact. So here, we looked at what it costs a state, every time an inmate is released and returns to prison within a period of time. It's expensive. I mean, the costs to the state are astronomical. And so again, we often even discount it and look at averages  over the entire country. But we're able to multiply then this economic value of one prisoner returning to prison within three years of release by the number of prisoners that the research says will be impacted by this technology over the same period of time. And we get social impact projection for that one metric, which represents the total impact value that this company can generate over a given period of time, pursuant to their sales and revenue projections.

Speaker: Oh, how interesting. So, it's not just a sort of an environmental index in terms of carbon or water, right? It's lots of different metrics that you're making impact. So that UN sustainability goals that cover so many different aspects, you're really talking to a large number of them, right?

Catherine: That's right. So, this gets into a little bit of the theory behind our approach, which is social entrepreneurs are solving massive problems. And by solving massive problems, they create massive value, but they can only monetize a portion of that value that they create. If you just look at a company's revenue model, you're missing all of that additional value that they're creating. So our approach really tries to capture all of that external value, whether that value is experienced by the buyer, or whether it's experienced by the comments. We try to capture that value. That can be social or that can be environmental. That's why really getting clear on what the metrics are in that first step, and aligning with global standards, like the impact management project, Iris+, and notably, the sustainable development goals, their indicators and targets as well, is so important, because it's not standardized.  The kinds of impact that different innovations and business models and technologies can have should really be acknowledged, I think, on a case by case basis, even though they can roll up into more sort of general categories or impact verticals.

Speaker: If there's a business owner out there, what are they getting? Do they come and engage ImpactableX and get a software in a box? Do they get consultancy?

Catherine: When we work with a founder, we start by having that conversation about their company's impact metrics and we understand their business model.  Then they get access to software that walks them through the data collection process, all of the different inputs that they need, in order to generate these analytics. They get access to the methodology, and they get guidance through it customized for their specific innovation and business model. And once we have all of the sort of baseline data collected, then we generate the following deliverables for them. First, they get a company report, which shows all of the high level data points that we uncover. Their impact metrics, their impact outputs, impact valuations, and impact multiples. We didn't talk about this earlier, but we generate revenue to impact multiples and capital to impact multiples, which I think is particularly fascinating and interesting for investors. So we generate a company report that has all of that clearly laid out. That's also supported by a data validation page, which essentially shows all of our work, our assumptions, if we make any calculations, citations, etc. Then we generate a certification mark, so a founder can say on their website or pitch deck or marketing materials that this data has been verified, it's third party certified. They also get a core logic model, which is essentially a stable formula with variable inputs. They can play around with the revenue and sales projections, or they can play around with their impact percentages, or capital requirements or the various sort of data points that feed into their analytics within a stable formula. So that allows them to be you know, startup founders to play around with their assumptions and expectations of how their business will grow over time. Then from there, we check in with founders  every three months, just to make sure that their data is tight. If they've pivoted we, we update their analytics. We support them with office hours with investors, marketing advisors and experts who can help them integrate some of these data points into their marketing and branding. Our mission is really to help founders deliver their impact at scale. We want to see social impact scaled far and wide. And so we really want to provide all of the value, practical and theoretical, that can help them do that we think that impact data is the right place to start.

Speaker: What has been the response from the VC or the finance community to the ImpactableX, offering and formula?

Catherine: So increasingly, impact investors are beginning to really require impact data. I think investors for quite some time have been trying to figure out what kinds of impact we're reporting to expect from the founders they invest in. And they're very wary about placing undue burden, etc. So they love that this is so streamlined. This is intended to take a couple of weeks to a month. This is not intended to be a lifecycle assessment. It's not intended to take years and require piles of primary data. It also streamlines ongoing impact reporting. So once we certify the relationship between revenue and impact, then Impact Reporting becomes a function of financial reporting, which they're doing already. So it really streamlines the whole process. They aslo love that there's third party validation as well. It adds a degree of credibility and legitimacy to the impact claims of entrepreneurs. The other piece here is that by converting it into $1 value, it allows impact to integrate into traditional fund management practices. So investors can actually understand impact performance against financial performance, and they can see what kind of ownership stake they and their LPs have in the impact generation of their portfolio companies. It just generates tremendous new insights for investors, while also offering a really user friendly approach. So it's been a resounding reception.

Speaker: Wonderful. Can you tell us a little bit about who can afford this? What does it cost to ring Catherine? Have you help figure out their impact?

Catherine: You know, we don't want the cost to be a barrier to entry for founders to build social impact projections. So we've priced based certification at 995$. That provides access to the methodology guidance through it and the deliverables that I mentioned earlier. There's additional services that we can offer to support founders, with research with data collection, etc. But that base certification is really priced excessively for founders.

Speaker: Catherine sounds amazing. Where can people find out more about you?

Catherine: You can find me on LinkedIn, or visit us online at www.impactablex.com.

Speaker: Wonderful! So thank you, Catherine, so much for joining me, I know that you're a very busy lady. Thanks for making time to share what you do with ImpactableX.

Catherine: It's been a real pleasure, Jim, thank you so much.

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