Upscaling Social Businesses, SROI + Impact Measurement

Hi everyone, welcome from GSC impact summit
in a beautiful Buenos Aires in Argentina. my name is Unmesh Sheth and
i’m the founder and CEO of sopact a mission driven company to make impact
measurement and management simple our mission is a scale of the social
businesses and nonprofits and make continuous learning and improvement so
all about outcome is a new webinar series to generate dialogue between the
leaders and change makers for the respective fields together we intend to
learn about challenges solutions and the risk of sustainable development goals in
indifferent team tracked emails all about outcome is a series answer with a
regular webinar series and our next webinar series is going to be a next
December 17 topic would be get ready for 2020 actionable steps to a DS plus
impact management project and SDG impact certification I’m so excited and happy
to see the huge interest in this webinar today is it because there’s a huge
interest in sry or you just want to find out about that is it about your interest
in learning about convergence in standards or is it about scaling the
social business is your interest all together whatever those the interest is
essentially hopefully you will find this webinar to be useful so few housekeeping
items this program is live webinar and Q&A is accessible from web enabled
computer or mobile device if you have a technical challenge please use the chat
window and please use Q&A because I’m sure there’s going to be lots of
question not only that when you have questions please do up upward so that we
can take the high road questions ahead of the cue ball together I request you
to add as many questions as possible and will I promise you that we’re going to
have enough time to have a larger conversations with some of the leader in
the space so this is your opportunity to ask them directly your questions about
space and how things are emerging all together so please do not hesitate do a
port so that we know which to take it all together we will be recording this
webinar and share it on the YouTube channel so that you can and you can
please subscribe to the channel house let us share the channel with you as
well we are so privileged to have a two well-known leaders with experience impact management. A
practitioners as our guest many of you already know Ben Carpenter CEO of sabacc
social value UK and social value international and Timothy Lambert who is
an associate impact VC of the si2 funds in Belgium is not only running the
active fund but he has a very innovative way of essentially thinking about how
social impact ecosystem can be scaled and he is very passionate about helping
social entrepreneurs and he in fact he’s in a Guatemala as we speak has so he’s
helping many many social entrepreneurs Cal their mission out together as ideal
is impact first investment fund with European scope and scaling and
innovative this social businesses with funding access to market and expertise
this fund tries for wall for that for a wall where both entrepreneurs and
investors can engage in addressing the most pressing societal problems of our
time social value International on the other hand is a network of networks
united by a shared mission to change the way the world accounts for the value
with members in over 445 countries representing a range of disciplines in
public private civil society sectors svi is changing the way society accounts for
the value so the topic today is scaling the social business with impact
measurement and management today you will learn about some historical
perspective of trends on social valuation and monetization practical use
case that you will learn form as aside to that define the overall value and
detailed walkthrough of use cases on how social
business is using s ROI and I’m M based practices in social business and trance
will learn a bit more about from Ben and Timothy about impact Minh has been
projects how global valuation English internationally is aligning around a
side-impact management project in addition to their core sry practices so
without delay let let me invite our guest Ben carpenter from UK and Timothy
who is on the mission to mentor hundreds of social entrepreneurs in Latin America
I and so we really want to give an opportunity for Ben and Tim to say
quickly hi to the audience Ben and Tim could you say hi to everyone
go ahead Ben I have gone thanks to a mesh and thank you a mesh a towel and
everyone is very packed for the opportunity during this conversation
right all right hi everyone it’s a pleasure to be here today I would like
to thank so packed for organizing a webinar such an important topic I think
very critical for the future of the impact investing in social sector I saw
it’s quite a diverse audience today so I apologize in advance for any point of
claim that might not be relevant or applicable to each and every one
specific and situation but I do sincerely welcome any critical feedback
any question at the end of the session yeah excellent with that quick
introduction to you all again it’s my pleasure to first invite this is going
to be very informal and very hopefully collaborative session and hopefully this
is going to be a new opportunity to ask a lot of questions about this reason why
you have joined this call today so then with that in a quick introduction out I
won’t really invite you to maybe give us a huge perspective because you sro I was
really founding element of impact now we call impact
measurement and management and so there’s a whole things that have changed
and evolved over the period of time for those of us and many of them are not
familiar and before we go let us share some insights that we received from some
of you so maybe Hittle if we can share the
screen and it was not seeing the screen there you go and so this this is what we
learned today from all of us if we want to transparently share how everybody
thinks about this space essentially so first question we asked is the are you
using s ROI in impact assessment today and 10% said yes and that sounds like a
lot of people are still and on the fence whether they are very interested in
figuring out how to use it or together and so between yes and partially it’s
about 40% that’s not too bad 62% are still trying to figure out what that
means and so I think you will have ample opportunity to learn a little bit more
about that obviously this is not a lesson on sry there are many other
avenues for doing that altogether ok next question is about why do you
want to have an impact evidence and I’ll give a little bit of perspective here so
I’m here in a beautiful Argentina here and I was surrounded by amazing global
investors throughout the wall this is really if you’re not ephemeral GSG is
the global impact investors conference from all over the wall many of them are
the president in underdeveloped countries like someone Latin America
Africa India and one of the interesting element that I saw obviously is that
there’s a huge pent-up the demand and need and growth from impact made
investment now with impact investment there’s a very large call for action
that in order to impact investment to grow and scale impact evidence is the
core of the Honda thing in fact without impact evidence the impact
space cannot grow so people who have been doing impact washing or SDG washing
or green washing I think that their time are over and it’s time to now start
really clearly communicate have a bright strategy in place so that you can start
gathering in back a bit and so with that background in mind I want to really
share with you some of the results so 25 percent say is a good to have and 20
percent say their funders are asking for it and then for all person said need to
have raise more capital altogether and I’m so glad to see the largest
percentages with the we owe it to the stakeholders because fundamental impact
evidence is all about Oh a really creating impact for the stakeholders I’m
very excited that all of you agree with that sentiment and finally what is your
impact management process looks like we ask the question how do you do it today
10% of you are using ideas based approach Wow 17% I using a sir I’ve been
you must be thinking happy about that and then impact management project I’m
glad in fact one in project but there is only two-year-old and I can tell you
from me going from unchain conference to so cap to GSD here there’s an amazing
amount of convergence and so much pent-up alignment around impact
management projects so if you’re not paying attention or impact management
project you should and fake you could come to next wave enough for that as
well so very interesting very very powerful
way of essentially aligning your impact so I am a miss approach and at the end
of the day all those things are around aligning sustainable development goal
obviously we did add some STG as part of the one of the topic but essentially
fundamentally it’s about as different investors and enterprise works alignment
is very CUTE critical and critical element of alignment really typically
comes from STG base approach all together and so that is the core
summary of what we learned from you all and you just wanted to share with you
with that I would like to invite Ben carpenter from C of socialable
international to give us a stoical perspective of social value
international where it has started and where we are and where we are going so
Ben please without any delay you can take it on and Hitler can share a couple
of initial slides that you have afterburn Thank You Amash okay that’s
all if you can load up the slides that might be helpful I think the first slide
is really to remind everyone of our mission as Mash mentioned we’re our
mission is to change the way the world accounts for value so we believe the
value is in too long focused on cost and price and that value needs to broaden
this definition to include special environmental and we are a movement
networks around the world you are bringing practitioners together to
develop what that looks like because we’re entering a new age where value is
in in different ways and we don’t know how to do that yet and we think the best
way to develop these standards is collaboratively drawing on the skills
and experience of professionals or a new discipline so our networks as a mesh
that is a very diverse it’s got people from all around the world coming at it
from different sectors and different perspectives accountancy evaluation
sustainability reporting these are all disciplines that have contributed to the
emergence of the standards it’s a very international develop I still can’t see
the slide so I’m just gonna carry on talking I might be getting off method
but them in terms of the way of accounting for value we our approach is
really around set of principles it’s the seven principles of social value that we
advocate for so when creating an account of value is it’s a principles-based
approach so we’re looking to standardize the approach whether these principles
have been applied and these seven principles
once applied will allow you to create a complete account of the impact or the
value that you’re creating that’s what the the framework is designed to do and
when I say complete accounts it means capturing all of the impacts whether
those are positive or negative whether those are intended or unintended and
that creates that accountability so it is different to other forms of
evaluation in that it is deliberately there to create a complete account of
all material impacts for stakeholders and of course one of the principles is
value what matters and that is principle number three I remember correctly and
value what matters when applied you can use monetization to apply that principle
so you are looking at the impacts and using money to represent the relative
importance that is not the only way to apply the principle and we are very keen
strata if you don’t eat monetization you can use weightings or ranking to express
that relative importance of impact ultimately that principle is designed to
help an enterprise understand which impacts or which outcomes are most
important from the perspective of those stakeholder groups this information is
very important because it allows better decision-making in terms of driving
improvements of the impact that our most important to stakeholders when principal
number three does use monetization to express that relative importance we call
this social return on investment so going back to the title of this webinar
it’s an investment is it is a framework of principles which uses monetization to
express the relative importance of these different impacts yeah so that’s the
origins of the social value principles who we are as a network and what it ends
to do which is that create that accountability framework in terms of
reporting complete counts of material impacts
is that enough an hour mash so your meat sorry so yeah it’s a great introduction
about sry in the user good perspective and history on the sry I before we go to
Timothy I also want to make sure if you can give audience liberal the color and
perspective about how this field has evolved from what obviously Timothy is
going to be talking more about from impact funds perspective basically how
they make that decision to scale their social businesses which is one of the
unique use case of but I would also like you to share some more examples how
historically been used in a other sectors like nonprofits and their
philanthropic and foundational aspect so can you give a little bit more color to
that and basically also where are we going and we can talk about where are we
going last essentially so we can keep to the Future past less but I think you
have I want to connect the dots here from the principles to how people have
been using so far and really and if you see any particularly additional use
cases or just like you know that yeah okay in terms of them use cases the
principles of natural value are being used by ranging different organization a
lot of sexual purpose organizations are using them as a framework you do their
impact measurement management it allows them to apply principles in a way that
is appropriate for the context and it’s not standardized metrics but and these
principles can be applied gradually and in proportionate to the resources I
believe that um and Timothy will ensure elaborate on
this some investors and funders are looking at
my principles and framework of Esperanza a kind of way of checking whether their
investments are complying with a standard an international standard that
is being developed as we speak and how does that relate to other initiatives
well ever since we was set up twelve years ago we’ve constantly been working
with other frameworks that it exists out there to to draw similarities between
the set of principles that we’ve created as a framework and how they relate to
other initiatives whether that’s GRI Irish or in more recent years the impact
management project and and as you mentioned the mesh and it is really
encouraging to notice that and lately certainly in the last couple of years
we’re seeing huge convergence and consistency in thought and about the
principles and the particular data points that need to be collected and so
it’s great to know that around the world whether you looking at management
project or GRI we are talking about principles of involving stakeholders
materiality and assurance and verification so if we’re they look to
the future I see that there is slowly a global consensus on in theory how we
account for value and whether that works in practice is a different matter and
I’m sure we will come on to that but it’s exciting times and I see these
principles being adopted by enterprises and investors and increasingly from
years ahead great so with that some practical use and by the way I can I can
tell you again sitting here in a GSE the full of there was a there was a session
led by Clara bar being more than hundred practitioners from mostly asset managers
sitting in in talking about some of the highly contains about
why we should do a measurement in first place and how we should do it and well
timidly what is the real purpose which is really a compare the results
essentially now these are the very challenging questions the time the same
time is then I can tell you one thing sitting over here is that the the
investor committee is quite familiar with some other challenges obviously of
measuring all those different things and these issues are not simple and that’s
why we have impact practitioners hopping to the unscramble all the different the
jargons and challenges of creating the the partnerships but I think that
there’s a lot of bill that I seen in this community to solve this issue of
the why measurement and why do the valuation
why essentially and there are different approaches obviously from scorecard to
the datings to the SRO I base approach all together and they all can have be
used in different contexts altogether so with that maybe a couple of other
questions I have and this is something way I’m sure that a lot of audience may
have in mind is that what are the challenges at least one challenges that
I see from the tool provider perspective is really about before you even go to
the SRO ah you have to have very well-defined theory of change and
metrics and theta per se and other sharon we obviously see ii bought
financial proxy can you tell us a little bit more about some of the people so we
really don’t worry ejs the expectation make sure we give a real expectation
then what it takes to do sry and that’s very useful to know for the practitioner and by the meta meta are there any of
you can take it as well so yeah what it takes to adopter survive I think I think
there are different perspectives on these questions I can speak from I can
speak from the investor and the social entrepreneur respect for the investor so we so we adopted
Sarah why because because we truly believe as some measuring impacts
adopting the principles is elaborated by social very internationals allows
investors to really add value to the companies they are investing in it’s a
way to not only be accountable to to the stakeholders the various stakeholders of
both the investors and the enterprise but also it’s a way to to really
understand where the added value of the solution developed by the company is and
and how to steer the steer the company so as to maximize impact the different
different questions or different steps that you adopt that you go through when
while doing in a survivor really enlightening many aspects critical for
identifying for instance new revenue generating revenue stream potential ways
of better communicating your message towards your stakeholder therefore being
able to reach better towards to the people in the population you want to
really reach at and various different other things so as Ben mentioned earlier
I think there are different like levels of complexity in SLI I think it’s the
beauty of this principle based approach is that you can really take it you can
approach it from a lean perspective really take it step by step really it’s not the point I don’t think
it’s important it is from experience to try to measure it all and know whether
all the positive and negative outcomes for all the stakeholders at once I think
especially in the context of startups and scallops that have like a limited
amount of resources that really need to to be agile I think I think being able
to deep dive focusing on for instance a couple of stakeholders first looking at
what are the most material the most important outcomes for them and then and
then gradually building of the impact model over time as a
resources grow I think matrix makes a lot of sense and
that’s I think one reason why I survive really applicable and what really
relevant for a practice as well yeah Ben I will let you add on that if you have
anything to you to share
no I think that’s great thanks Oh Matthew you mentioned that you know
social return investment images largely on having a good food chain and I would
completely support that and they’ve changed me in understanding what to
measure and if you haven’t understood the what as the IP call it and then you
could be monetizing or doing a lot of quantitative measurement around the
wrong thing so yes and I always say sort of the the the arts to doing good s RI
no real impact measurement measurement is to focus on actually what are the
outcomes that are worth measuring so yeah just wanted to build on that really
question for Timothy for me how do you encourage your investors to build up
that level of rigor you say that the principles allow for that proportion
approach have you developed that over the years in terms of saying or year one
can you do to this level and and and how do you wrap that up over time yeah yeah
so I think our experience as teach does that it’s not because you are a social
entrepreneurs each burner that’s measuring impacts is an obvious thing of
this thing to do like there are many many social enterprises that do not
consider impact measurement in something critical for running the organization
and while I’m happy to see indeed in the response of the audience that’s like
measuring impact is importance because we owe it to stakeholders I think that
arguments while it’s obviously the foundation is it’s in our case not
sufficient to convince social entrepreneurs to put resources both in
terms of time and commitment of their team and money to pay sometimes for
consultants to really to be take those steps and so
we’ve learned from practices that are the way we communicate the importance of
measuring impact and the way we can convince entrepreneurs to start adopting
the SVI principles and measuring they’re alive we need to we need to adjust our
language so that it it it sounds what goods in the ears of whom we want to
convince and in this in our case we’re not talking to a CSR departments we’re
talking to the CEO CEOs of scale up social businesses and CEOs what they
need to hear from us what we learned is we need to hear that any any resource
allocation leads to greater value for the company be it in terms of a better
reputation that can help secure new partnerships be it in terms of new
revenues that can be created beats in terms of efficiency gains and so our our
quests and then like what we’ve tried to build up over the past years is proved
like the business case for measuring impact in a meaningful way and so by by
pitching it’s in that way we typically gets closer or we get a buy-in from the
CEO to really allocate resources to dance so I do you see is a social
purpose organization by the argument do they see the business case for investing
in the impact measurement imagine so I guess it’s hard to make a generalization
and for this but I I would say we have for instance we have conducted several
impacts measurements for portfolio and in many cases we have been able to
translate a specific elements of the impact measurement let’s say the first
one big part of a survey is looking at your stakeholders and understanding what
are the different segments what but are the subgroups of stakeholders
measuring for instance the outcomes and how important social outcomes are to
specific stakeholders sometimes allows you to also identify different subgroups
into your population and therefore segment your market better well that did
that example is a very like easy one but it’s by showing those concrete examples
based on our experience within the portfolio I think we can yeah we we get
a higher chance of convincing entrepreneurs to to allocate resources
to it but I must say it takes time it’s not an easy sell and we would really
love because we are we just we’re an impact fence with eight companies in the
portfolio we would really like to like to share more with other practitioners
other funds other but even with svi to see to identify like the different
business cases for measuring the impact because yeah I think I think it’s a
critical it’s a critical points to push the practice forwards at least within
the social business sector I don’t I don’t think it’s so might be less of
relevance for nonprofits but in the for-profit world this is a very critical
thing yeah yeah I think and I’d agree with you like putting impact measurement
imagine the concrete examples like segmentation is helpful to win the
business case it’s any saintly this shift to using the word management has
helped with us when we’re advocating for these principles because if they are
there to provide information that helps with management decisions people are
more likely to see the value doing it and actually I started conversations now
saying you’re actually all doing impact management and because I’ve never met
anybody who works for a sexual focused organization who doesn’t care a lot
about improving their organization all social entrepreneurs are
constantly innovating and making decisions to potentially improve their
service or product and so I say take that culture and that mindset and that
is impact management if you’re making decisions to try and improve it now how
can we create a framework that allows you to make more decisions and then I
say there’s sort of principles give you that framework and normally that gives
people the confidence go okay I’m not starting from scratch I’m actually
already making a lot of them and management decisions but this framework
here if that helps me engage better with stakeholders and understand what is
really valuable and that can really be a really positive thing to embed in the
organization yeah okay so this is that lively discussion I want to really
switch gear to live with more practical use cases and so I would like first to
the timidly to first give a more perspective but what si2 does today and
then would like to doubt him talk about you know a cool example on how they are
using a server for scaling the business and also the one interesting question
that I have personally is their how do you ensure the financial proxy and what
is the process that he used in setting up some of the decisions you made with
some of the social businesses and you yeah welcome to share the name if you
want to if not that’s fine you can keep it more general but allowed to have
somebody walk you through the whole journey how the process work for you for
some of the social enterprises yeah okay let me briefly scan through the slides
presenting a site to friend because I think that’s might illuminate how we
approach the measurements measurement of impacts of campaign as well I will as a
few slides on how we embed I am I am M in our investment process so I’ll come
to that so I say to fund basically a pioneer in bed funds started 13 2013
with folk on the Benelux Regent region and
adjacent country with the hope with a drive and the mission to tackle the most
pressing societal problems we have in society with solutions that are
innovative that are impactful and that can be scaled and sustainable in the
long run so our mission is to support words and help entrepreneurs could have
impacts address those problems in an effective way but also build companies
that can thrive over time so the next slide it’s a 17 million euro fund
provided by a series of a group of families and foundations
it’s a closed-ended front of a period of ten year ten years and what we do is
providing we provides capital to social businesses in a scale up phase typically
from 250 to 1.5 million for a period of seven to eight years and we take
minority stakes the whole purpose not being to take control of companies but
rather to be a partner of the founding team of the company and really have a
skin in the game as well so if we if we look at the yeah our mission and the way
we communicate what we do we like to use the InP framework to explain like in few
words our approach to creating impact through our investments so we do you
might know this investor contribution framework with the six different
strategies and so whereas I to find fund finds itself is in the six six strategy
because we provide flexible capital to early-stage companies as social
businesses that that do operate in in markets that might be under capitalized
so we’re where the flow of capital is insufficient today to to really scale
solutions we are a very active investor so next to the money we provides we’re
hands-on we have an handsome investment team we’re gonna sit every week with our
entrepreneur we’re gonna help with on different
aspects like business management impact management etc oh yeah this is a good
slide yeah we’re gonna work on with with interpreters on operation strategy we’re
gonna work on we’re gonna connect intrapreneurs with our networks it only
provides connect them with other investors etc etc it’s really yeah we we
work very closely with it with all entrepreneurs and and one thing that
distinguishes us from a lot of investors is our impact management approach
because we do not only embed slag impacts within our contracting and
investments in the investment objectives but we do also really provides hands-on
supports to help the entrepreneurs adopt a very evidence-based approach to
measuring impact but also then steering them the impact performance over time we
are board members and we require or at least we expect on a quarterly basis to
have discussions also not only on the financial side of the business also on
the impact size of the business and being able to look at the different
bottom lines – yeah to see that we optimize and maximize three bottom lines
so this comes to what I said earlier I think about why measuring impacts for us
it should not be a luxury it should be a must F to properly contact social
enterprise to probably run a social enterprise the traditional Pro which to
measuring impact is very it’s very top-down based it’s very investor push
investors have these have these set of metrics that they would like the
companies to measure often an output level and it’s purely well mainly from a
reporting and compliance perspective our view is a bit more pragmatically we’d
like to we obviously understand the value of doing that and I think for the
steam back investing sector it’s critical that we get to a base of a
comparable impact data so that we can allocate resources in a smarter way
but for our practice we think it’s very important to be more bottom-up so really
look at state specific outcomes of stakeholders of each of our portfolio
companies try to measure outcomes and and try to really spots identify those
pockets of value that can be tapped into at at the end of the day impact
measurement so how can that be inform the management team of the company to to
take better business decisions so your question and mesh because I’m this is
sry why we do we do it obviously it survives not the only
method and we are not advocating for adopting one methods for anyone I think
each method has its merits and we do use a server but we also combine it with
storytelling we also like to use how to keep the eyes it’s it’s very like we
don’t think it’s it’s necessary to push any methodology accompanies it
the methodology should be adopt adapted to the specifics of a project or a
company that being said we we do it all – Sara why and why we do so yeah you can
go to the next slide at all so the advantage of a Sur why we mentioned it’s
currently in theory of change thinking it’s obviously very valuable to to
really help the entrepreneurs frame their intention intentions and things
throughout the whole different steps of the theory of change and then and then
starts measuring testing the theory of change in practice by measuring results
with stakeholders it allows you to really listen and creates like contacts
and relationships with your stakeholders because you need to interview them to
know what’s happening you look not only at the positive effects which we also
look at the negative effects so it’s not only looking at the intention but also
at the unintended impacts which is very valuable many entrepreneurs forgets that
hell is paved with good intentions and that you can have the best intentions in
the world but they’re probably some negative things happening as well on the
roads it’s good to be aware of that maybe measure its and manage it so yeah
I would say that’s this that’s light is how we embed
impacts measurements into our investment process we quickly go through it so in
the very first foot face when we meet Sandra pandora’s we’re gonna we’re not
gonna measure anything we would like to see intrapreneurs come up come with
arterial change with their impact measurement framework but in most cases
that doesn’t happen as I said in the beginning it’s it’s not mainstream for
social nurses to measure their impact so we need we need to still bring that
education and we’re like raise awareness about why it’s important but we’re gonna
test like we’re gonna look through our due diligence at the different the five
impact dimensions designed by the impact management project and then try to
already formulate an idea of what outcomes what are the most material
outcomes for the most material stakeholders we’re gonna do that either
by interviewing stakeholders having calls or by inviting a group of experts
it can be the management team combined with an academic with a lot of knowledge
a lot of knowledge etc and can be yeah association dealing with stakeholders
etc in order to have a first like idea forecast of where what the social value
of a company can be it’s not yet a measurement that can be assured or
anything it’s really a rough idea of where we going in and do we feel
confident that we can prove that we can proceed with the investments that we
think we can achieve it but though we go to the contracting the contracting there
will be some milestones defines we we try to integrate impact milestones as
well so if you want to raise more capital with us as you will need to
achieve those outcomes those levels of outcomes with those stakeholders and
something we track it’s important to to really keep the intrapreneurs
incentivize to maximize impact but it’s a sensitive thing to do because you need
to Steve different bottom lines and you need to make sure that one mile
milestone indicator does not there’s not pervasively effect the other one so it’s
a it’s difficult exercise but so once we once we agree on the
investment contract and we go forwards we with our team we’re gonna really
support the entrepreneurs with forecasting their impact over the next
next couple of years we’re gonna do that either with the help
of the consultants sometimes we just sent our intrapreneurs team to a
training to an SPI training and they’re gonna and they’re gonna work out their
plan for their forecast but also their measurement plans with for testing the
assumptions we don’t know support them with it the important thing is well to
mention is assurance of evaluations obviously all like it’s it’s important
to have the impacts framework reviewed by external party parties sometimes to
have an independent person coming in and and really asking the tough questions
checking the way outcomes are being measured are the outcomes the most
important ones for stakeholders are you not missing anything critical so we do
we try to have every two years for each of our portfolio companies reports
assured by SVI to make sure that we yeah also to
communicate in a transparent and more reliable way to our tools or on our own
investors within the funds so speaking a lot here but this is this is in short
the process how we and bits and that impact within our within our portfolio
and obviously as shareholders of the companies who come we’re gonna be
working with the intrapreneurs in the board meetings but also in separate ad
hoc meetings on how we can how we can increase the business value by by
leveraging the insights from the impact measurements so that’s also a very
important thing that we we are working on all right this is excellent
walkthrough of your internal thought process and why you
and this is also this is some other question but I want to also assess
promise I won’t give enough attention to I want to make it very collaborative and
make sure that we address audience questions I’m gonna start with some in a
chat first and then you can look at one which is in a Q&A which is a little bit
longer the two of the questions are for Timothy so then you can read they’re
brown grass gives a low boil question which is very important question sro I
said to be very time-consuming process and I agree to some extent but there are
values to that as well but another theory is Timothy called out and so is
this is a reality well it is a reality where many ovations are using it but do
you have simple examples I think what would you like to say about that
Tim I can M crap site I get asked this quite a lot how long does it take to do
an SRO I isn’t quite time-consuming the answer is how long is a piece of string
it depends how how rigorous you need to conduct an SSRI and and this is the
beauty of the approach we say and apply the principles which is proportionate to
your resources well more to the point proportionate to the level of decision
making that you need we use a very catchy phrase and training enough
precision for the decision in Timothy’s had that one before he worked with Adam
he always says so you need enough precision and confidence and the data to
support whatever decision you’re making so if you your decision is to invest in
an enterprise and the investment is significant amount of money say a
million euros a million dollars then the precision will need to be high and the
social return investment analysis should take a long time to do but at the same
time there may be decisions with less significance that you’re making
about how to improve your service and in which case the principles don’t need to
be applied to the same level of rigor so we say that it’s a flexible approach and
an SSRI doesn’t have a fixed way of being applied and it can take a long
time but it can also the principles can also be applied in a shorter sense if I
found make sense yeah I I do entirely subscribe to what
you say Ben and I yeah I would say two points like I think scoping of the
project is key in the beginning of each like deep dive into the impact of an
organization it’s very important to really define the scope in the
perspective of what what kind of decisions you need to take in deeds so
it’s very fine to start with a couple of stakeholders a couple of outcomes and
and gradually built up built up the measurement over time also important to
mention many many enterprises are already evidence-based before even
measuring their impacts so they have a lot of stakeholder data they have they
have those interviews in place so also a way to make sry more lean is to is to
start from an exist so starts looking at what data do we have today that we can
leverage to inform the impact of the carpet and a points worth mentioning as
well here because we’re now is host by so packed I think technology is a big
role to play as well the most time-consuming part of an asura is the
stakeholder collection data collection phase where you have to go out and talk
with everyone the more efficient the leaner you can do this and technology
can help with that’s the better I think the more scalable your solution can be
so that’s also why we say to friends to have adopted like have you used so
backed four for one of our investments because it’s it’s very like a very
efficient way of turning around a stakeholder data into outcome metrics
and dashboards to analyze like the evolutions so yeah those are
finally I sir like measuring it but it can be seen as a cost and it is a cost
but it should also be seen in terms of the benefits and that’s why I make it
and a link with my initial points if we can prove there is a value into in doing
it then the costs the costs is not like a net cost anymore it can become a net
benefit okay we have ten minutes and we have a six questions to go through it
and see whether we can try to squeeze most of them we might go couple of knees
if you want anybody who’s very excited they can stick around we are aware of
the time limit so hope if you find this topic very interesting please stick
around welcome to a business drop after an hour so but maybe Tim sorry Ben maybe
you’re reading the first question from teamers scribe I don’t know how to say
his name maybe you can read the question unless you want to read it it’s long
question obviously so I really the same question I obviously have tons of
question that’s the one I see quite a few questions are about um the outcomes
and we count comes other ones to measure and I just like to pick up on Tim’s
point really the he’s absolutely right the the lengthy price says in doing a
good a thorough by applying the principles is
identifying the outcomes because the principle of involving accountability
framework is about amplifying the voices of people stakeholders that are often
heard so that’s where the time-consuming that is as Timothy said having
conversations open conversations with questions that are allowing people to
reveal what are the most relevant outcomes to them it’s not and the SVI
approach is about understanding what is relevant significant from the
stakeholders perspective and it’s interesting because that may be
different to what is relevant to the organization
this is where I sort of have a question to Tim about outcomes because the SVI
framework is very much about giving a voice hearing from fisheries and stay
close what the outcomes that matter to them are how do you handle that disease
if what you hear is slightly different to what your objectives as an investor
because this is a lot of a challenge that a lot of investors have they have
they have goals they have objectives and the other outcomes and they would
encourage their investees to reporting what happens when there’s a discrepancy
yeah so I think the first way of answering that question is from from
defense perspective from sa different perspective we haven’t we haven’t plants
or and we don’t have specific metrics that we want to achieve for instance we
don’t want we don’t have in our goals to save so many tons of co2 emissions so we
don’t have any to create any specific amount of employment for vulnerable
groups or population we do have a promise to our investors
that our goal is to generate an srry in excess of – across our portfolio
so that’s ambition allows us well doesn’t makes like doesn’t put us in a
corner if the company does not actually achieve the metrics that we internet2 it
to be it can still create a social value on other metrics and that can still be
found within our commitment I think that’s that’s a way to to respond to it
D on the other side as I said we we help our entrepreneurs understands the impact
and we often tell them what you think is happening is probably not hundred
percent accurate there are probably and intended positive
and negative outcomes with your bit that you have with your business and we are
very like open to and really looking forward to help the intrapreneur
recapture those things because because yeah I mean it’s it’s often full of
surprises the top-down thinking of often a top-down
thinking is is full of assumptions biases which if we can if you talk with
stakeholders you can challenge and eventually get to a much better view of
what are the real frustrations what are the real sources of value of the
intervention for them and eventually if you know that even if it was unintended
it can be a very strong way I mean source of innovations for innovation for
the company it could be a source for like a way to create a new products like
a D trigger for developing a new service a product can be a trigger for finding
new payers in the model or whatever so yeah yes we’re we’re not afraid of
identifying unintel things no no I just am i think that’s really encouraging
because and it’s a it’s quite a unique approach and I may be wrong but I like
the flexibility that that offers you as an investor to kind of support positive
change without being too prescriptive about what the outcomes are and
recognizing that we live in a world which is messy and unpredictable and
actually if an investment is creating value in another way with different
outcomes to what was intended that’s okay you know I think I think I like
that bridge it’s great to hear he’s my favorite topic for Timothy this is from
Julianna kind of a debate so I’m saying in the last name we go but do you
allocate the money for the funds to help startups and entrepreneurs to measure
the impact yes part of the share of the capital we invest in a company is
dedicated to setting up reliable impact measurement system so it’s its partner
it’s part of the investment is part of the contract as well
the entrepreneurs know that one of the post-closing obligations is
to set up an impact measurement system in place within the next six months and
a specific budget is foreseen for that and that budget serves the purpose of
yeah we what we’re paying any consultants identified to do the job it
can be to covered the software costs for for collecting in and I was analyzing
the stakeholder data yeah so or sending people of a team to the training a
training of SVI so yeah it needs part of our investment
and from my experience I’ve seen and not seen any investor who’s been as saira as
Timothy I decided to run altogether so I can attest to that 109 next question the
next question is from Brian at Aram do you find correlation between social
impact and Business Excellence do we find a correlation positive correlation
between social impact and Business Excellence yeah yeah I mean depends on
the model but for instance we decide to fund we do we do focus our efforts on
those interventions and business models where we’re in the impacts components
and sources of social value are really intrinsically embedded within the
business model so as GP who have that correlation in place the more revenue
the more the more products or services you will sell presumably the more impact
you’ll create we typically refrain from investing in companies where those two
aspects are really disconnected from each other where there’s actually a
trade-off either you make revenue or profits or you make impact but the one
is not supportive of the other and so so yeah we have if you look at our
portfolio I think I think 90% of the companies have a model where we’re both
both the revenue impact are positively correlated do you know if your phone or other funds
are open to investing in stored ownership companies does the governance
play the role in the review process and the steward ownership seems to be a
great strategy to ensure the mission stays with company and no matter who the
owners are this question about exits like post investments impact is
preserved in the governance after investing or let’s see the Cyrus is
still on call you can have her talk about it don’t see her right now but we
can back this question for lists next move to the next one is a name first
funder how does si two ferns handle the situation where social innovators toc
doesn’t focus on the most readily cast of a particular issue right that’s a
that’s an interesting one and I guess it’s also something Ben can respond
because I I think one of the one of the aspects of of measuring impact using the
survey is that you will very much focus your questions on how much value you
create for a specific stakeholder does that mean that that value reflects how
important it is for society not per se can be like the I think from what I
think I think the SRO I won’t necessarily lead you to identify
outcomes that are top priority for the world like it can be disconnected from
each other and so and so while while we starts and we consider any investment
from perspective starting with looking at the problems and like the root cause
of a problem and the consequences of it if the solution is found to not address
a problem very well I guess we as impact investors will we will reconsider
continuing investing in a company or not like we will we might start looking for
an exit opportunity for a company sell sell sell our stake if we find there’s a
complete misalignment between the initial big like the pressing problem we
we hadn’t identified a type of solution that we we support that being said we
haven’t had any case like that today so so far so I account stock from practice
it’s more like a theoretical assumption but maybe then you can complement yeah
and I think I understand the question correctly goes back to what we were just
talking about a few moments ago which is about alignment between the outcomes
that an investor is prioritizing or things are the most strategic and the
outcomes that an enterprise might be recognizing in reality in practice and
sometimes those there is a discrepancy and in that situation it takes an honest
conversation between investor on in their seats they look we thought that
this was the theory of change but actually having spoken to stakeholders
we realize this is actually what’s happening and is the alternative theory
of change a positive one and one still worth investing in
yes great continue if not then decisions have to be made maybe we scale back
maybe we stop the activity completely because resources could be more
effectively applied elsewhere so yeah that’s like that’s I think I hope there
an answer to that question I have to be apologize and say that I have a train to
catch now so I’m gonna have to drop off that the call but unfortunately yeah I
would I love this topic I would carry on talking about this for a lot longer if
you have any further questions I’d be happy to answer and on a forum or going
forward and so yeah thank you thank you Ben
your time thank you thank you so much and really appreciate it we’ll see you
in Timothy and I will see you and social value international conference in Taiwan
so those of who are interested in this topic please join social Valley
international Taiwan conference I would like there’s still quite a few
people on line so then if you want to log off that’s fine but Timothy if you
can say maybe there are a lot of questions for you so if we can go a
little bit longer and address some of the questions that people have for you
so do your social entrepreneurs develop their own TOC or is it part of your due
diligence process who diversity yeah so the theory of change is is typically
typically elaborated in full terms during the due diligence so we have to
the audience we have a workshop with a intrapreneur to walk through the change
they intend to bring for the key stakeholders and yeah an outcome of our
due diligence is to have a theory of change in place with a view on the
outcomes the forecast outcomes and the the metrics that we could use to measure
those outcomes post investments post closing at me yeah yeah
the quick question I think you kind of addressed it what are the typical size
of projects in US dollars yes so we suppose yes so the investments tickets
the average investment ticket is 800 K in euros we can go up to 1.5 million we
saw at 250 K the typical size of the company it’s a company that has has
passed the market validation phase so they have they have a revenue they have
revenues in excess of let’s say one or two hundred K they have yeah they have a
stable source of revenues and they are ready for accelerating this scaling of
the company they’re not piloting every week anymore instead next one Tim can you give a please cues
example of you using existing investment companies on how s our impact on
generating new revenue stream and increase revenue I think it’s kind of a
lot of things been discussed before but maybe have you seen some example of
increased revenue because of you so a very very practical example we have a
company called justice for two they’re building a platform helping divorcing
couples do divorce in a more healthy and less negative way so in order to protect
for instance the children from parents being in conflict or angry at each other
so they have a platform with a lot of advice step by step approach to to help
him help them empower them and help them settle their agreements together like
without the involvement of a lord of two lawyers that will fight each other
instead anyways one of the impact questions that we had for that company
was an contribution question like a contribution meaning like who else could
have contributed to the change it’s it’s one last step of DIY approach not last
question that you asked and when asking that question we identified that’s more
than 50% of the clients actually actually called psychologists during the
divorce process to help them out with the mental stress they were experiencing
so that was a big thing like 50% of the time client population using the the
platform also externally calling for psychologists for for helping him out
with mental stress so that insights actually push the entrepreneur the
founding team of justice for to to set up or to design integrate in the bat
form a way for people to connect with reliable peer reviewed psychologists to
get access to their services it’s basically an extra little source of
income a commission based income but they’ve been able to add that to the
based on the insights from measuring additionality it’s one example I noticed
that we have still 10 myths about the time and there’s still half of the
people you are still hanging out so that means you are still interested in this
very deep and interesting topic and learning more about this from him so we
will continue as long as you find this information useful next question is from
Julianna after exits which which is the which approach I decide to use to follow
them in pack up the projects so can you there was a bad connection
after exists which is which approach do you use to how do you follow up with the
projects that has been Excel to the exhibit if not process for the new exits
yeah so if we sell our stake or shares in a company we don’t have anything to
say anymore that’s just how the world works what we do to prevent scaling
companies that eventually do do drift from their initial mission mission
completely after we’ve exited the company and maybe after they have
attracted a new larger investor on board is to first ensure that we invest in
what I said earlier in like companies with an integrated impact business model
so we’re truly it’s it’s impossible well it’s it’s very hard to scale the company
and its revenues without killing the impacts looking for a positive
correlation from day one from the moment you invest it’s actually also a way to
prevent mission drift after you’ve sold your stake and after you yeah you you
quit the company so that that’s a prevention mechanism it doesn’t like
it’s not perfect but it’s already something and I guess when we look for
an exit partner investor that could bring the company to next stage we
obviously obviously as often the main investor look for partners in whom we
trust that they won’t sag like it won’t suck the core model like they won’t they
won’t they don’t buy the company too put it down or poor to change compete in
the model just to use its technology for instance we really make sure that in the
in the terms of the exits conditions preserving also the the decor model and
the source of current revenues and impacts are preserved so that’s yeah we
can only influence that to the extent we have a negotiate negotiation power
depends on in what situation the company is at moment of exits if it’s in a very
good shape very attractive I guess more negotiation power if it’s a company like
a cell where there are reasons to negotiates heavily of the valuation for
instance I guess we can yeah we have less as investor we have less power to –
yeah – to embeds impacts protection terms in the contract so I think grass
last question and really appreciate all of you to be listening so attentively
when after 15 minutes after the call so with that I’m going to wrap up this
thing but this is very exciting and let me ask you the last question do either
of you utilize outside data sources to support the organization’s impact I
assume when working with the startups and early adopters there is no data to
support their mission I think it’s more in your case you your business is how to
cultivate those data I suspect right I mean so I’m not sure that you are really
since your businesses are quite unique I even doubt that there are any external
source is available for you to even benchmark all together yeah I mean the
whole so on the data sets yes we do look at the common data sets because I think
it’s it’s our duty as impact investors to make sure that we gradually builds a
data layer that is that allows for benchmarking comparison and stuff that
being said that’s not the main purpose of why we’re doing it so
we rather prefer to really talk with the stakeholders of an organization listen
to what outcomes what outcomes are really important to them and then find
the best metrics for measuring that that that could be inspired from the data
sets it’s often not inspired from a data set can be from literature it can be
from simply critical thinking within the expert group how we could best capture
that but yeah so it’s so come aggregation and comparability is a noble
cause it’s something we should try for but it’s not our day-to-day priority we
we are more pragmatic in the way we approach impressions excellent so with
that I would like to say we will we are really appreciating your attentiveness
all of you to join here we would love to invite you to the another exciting topic
we’re coming up on December 17 which is about the getting ready for 2024 impact
in ecosystem this is really about iris plus impact management project and how
to use SDG impact so it’s a it’s a very strategy and very important topic that
most people in impact investing ecosystem was really trying to figure it
out so hope you will join that with that I really appreciate timothy for spending
his time in guatemala and really answering all the questions and giving
you much much deeper insights to the everyone in the in the in the call so
Timothy would you like to say closing statement well yeah I would say I think
we should have more conversations like this I think if we don’t want the impact
investing sector to grow to grow and explodes like a bubble I would which I
really think we need to have more deep deep dives into why and how we approach
impact measurements in in impact investing and I’m really glad to to be
able to contribute to this discussion today
thanks for inviting me and to all the participants who are still online I
really invite you if you have any more question or or comments I’m really happy
to hear them you can reach out on LinkedIn or or retire email but thanks
for your attention thank you everyone and on behalf of sabacc team and
everyone who joined today so I really appreciate thank you for your time and
stay in touch thank you bye

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