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Impact investing is exploding. Position yourself to succeed.

The Impact Investing Market is Exploding

What does this mean for you?
Entrepreneurs are changing the world, driving such compelling returns that Larry Fink, CEO of Blackrock, says we have seen a tectonic shift of capital. As we speak $4T has been invested to drive impact or ESG.  And according to the Global Impact Investing Network (GIIN), “nearly universally”, impact investors agree on the importance of impact measurement and management, for understanding not only impact performance, but for driving business growth as well. Impact drives alpha. As millennials come of age and assume responsibility for an estimated $68T in capital, demand for investments with impact and ESG will continue to skyrocket.

So, if you’re planning to raise capital from impact investors, expect them to ask you how you measure your impact. They may not have clear expectations for how you should respond, but they will ask. Depending on your stage of development, they may ask you to track and report on your impact along side your financials. The founders who are prepared to respond to these questions with clear data and analytics will be positioned to differentiate themselves. Indeed, 80% of the companies in our portfolio have raised a total of $180M from impact investors within one year of working with us.

100%

Nearly universally, investors said that impact measurement & management (IMM) is important for understanding:
  • Whether they are making progress toward their impact goals (100%)
  • Improving their impact performance (99%)
  • Poactively reporting impact to key stakeholders (98%)
  • Capturing business value (93%)
  • Marketing or fundraising (92%)
  • Addressing client demand for impact information (80%)

How to differentiate when approaching impact investors

Here is how to position yourself to succeed
You need a clear theory of change. What is the systemic change your innovation is designed to drive? What key direct outcomes Align your metrics with global standards: The UN SDGs targets and indicators, the Impact Management Projects (IMP) 5 dimensions of Impact, and the IRIS+ core taxonomy provide a solid core set of metrics designed to standardize how we talk about what we’re measuring and align our efforts towards key goals. Do your best to align with them so your data and analytics will be compatible with any other framework referenced by stakeholders. This doesn’t necessarily mean that your metrics need to be pulled directly from these standards. Don’t try to measure something that you don’t do or that provides meaningless data. Define your metrics to be meaningful and measurable for your work. Then align these with global standards. If they match perfectly, fantastic. If not, that’s perfectly fine as well.
Impact Investing

Measure what matters.

Focus. Identify the top 2-4 metrics that underscore your core value proposition. The investors who’ll potentially be doing the impact investing don’t expect your innovation to save the world. In fact, some only track one impact metric over the duration of their investment. Measure what matters most.

Impact = Change

Provide Context
Just like you articulate the cost savings, time savings, or improved performance of your innovation, you want to articulate the degree to which your impact performance solves a problem as well. This is key when approaching impact funds. How many people or resources are affected by the social or environmental problem your innovation addresses? For how many of these can you alleviate the problem they experience? Abstract numbers are less meaningful than relative ones. Impact is all about the material change that is uniquely attributable to your innovation. We cannot claim responsibility for outcomes that may have happened anyway. Your impact is the volume of change you create in the world. Lay this out for investors. They may not have the same domain expertise that you do so make it as clear and consumable as possible.
Your impact is the volume of change you create in the world
Impact Investing

Credibility is crucial.

Validate your impact
66% of impact investors reported significant concerns about “Impact washing,” or unsubstantiated claims of impact in a recent survey published by the GIIN. Legitimize your impact claims as much as possible and you will differentiate yourself among impact investing funds. Reference research, provide primary data,  and have a third-party review to validate your claims.
Impact washing is investors' #1 concern
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