As the year draws to a close, let’s pause to consider what took place in the world of social enterprise and impact investing. Here are five noteworthy happenings.
Impact investing activity keeps growing, with healthy returns. According to the Global Impact Investing Network’s (GIIN) most recent Annual Investor Survey, the size of the global impact investing market doubled in a year, from $114 billion in assets in 2017 to $228 billion in 2018. (That’s a conservative number, since the survey included 229 investors who are largely focused on private investments). A subset of 82 long-time respondents reported a compound annualized AUM growth rate of 13% a year, with a total of $50.8 billion in assets in 2017, up from $30.8 billion in 2013. Also, over 50% of survey respondents made their first impact investment in the past decade, underscoring the participation of new players. And respondents that focus on both impact and conventional investments are making more of the former.
On another note, KKR announced the creation of a $1 billion global impact fund, following the lead of Bain Capital and TPG, among others. An additional sign of investor demand for impact investing: A new impact-investing oriented professional designation for financial advisors.
A focus on refugees becomes more of a thing. A growing number of social entrepreneurs started addressing the global refugee crisis. Example: Miller Center for Social Entrepreneurship’s Social Entrepreneurship at the Margins (SEM), a six-month accelerator for for-profit and nonprofit social enterprises which serve or are led by migrants, refugees and human trafficking survivors. The structured curriculum taps Miller’s already existing Global Social Benefit Institute (GSBI) Online program. The first program’s 21 enterprises ranged from 1951 Coffee, which provides job training and employment to refugees, while educating the surrounding community about refugee issues, to Makers Unite, which runs talent development and matchmaking programs for refugees in The Netherlands.
Activity continues in accelerators and incubators. SEM is by far not the only noteworthy accelerator. Techstars Impact Accelerator, the first Techstars startup accelerator for social enterprises, got off the ground with 10 tech-based businesses, with operations situated in a variety of countries, from the U.S. to Nigeria. The three-month, Austin-based accelerator, accepts enterprises with a business model that is linked inextricably to their mission. The cohort included such startups as Base Operations, a platform that visualizes crime in heat maps for teams in emerging markets, and Haven Connect, which has software for streamlining the affordable housing application process. Another example: In Sheffield, Mass., the Impact Inside initiative, which aims to form social enterprise incubators for ventures focused on the UN Sustainable Development Goals (SDGs). Located at various universities and co-working sites—there’s also an option for entrepreneurs working remotely—they will tap impact investing and entrepreneurial incubator tech platforms, providing not only incubation resources, as well as educational, networking and investment tools.
The GIIN publishes a roadmap. At the end of March, the GIIN presented its Roadmap for the Future of Impact Investing. In it, the GIIN laid out a framework for not only speeding up the development of the impact investing market, but also creating systemic change throughout global financial markets—a new paradigm where impact investment decisions play a part in all investment decisions and everyone can participate. To that end, the roadmap detailed six categories of action needed to make it all happen, with specific steps required—for example, “design tools and services that support the incorporation of impact into the routine analysis, allocation, and deal-making activities of investors” and “develop products suited to the needs and preferences of the full spectrum of investors, from retail to institutional and of various types of investees”. Also it described the parties best equipped to take the lead and a timeframe.