investing with purpose practice & experience

Investing with PurposePractice & Experience

Richard Biggs, D3JubileeApril 16th, 2013

What is a Social Enterprise?

What is a Social Enterprise?

What is a Social Enterprise?

What is a Social Enterprise?

What is a Social Enterprise? Many definitions

For Profit / Non-profit

What is a Social Enterprise? Many definitions

For Profit / Non-profit Local / Global

What is a Social Enterprise? Many definitions

For Profit / Non-profit Local / Global Impact Intrinsic/Extrinsic

What is a Social Enterprise? Many definitions

For Profit / Non-profit Local / Global Impact Intrinsic/Extrinsic

In Common:

What is a Social Enterprise? Many definitions

For Profit / Non-profit Local / Global Impact Intrinsic/Extrinsic

In Common: Seek improvement for the Most Vulnerable

What is a Social Enterprise? Many definitions

For Profit / Non-profit Local / Global Impact Intrinsic/Extrinsic

In Common: Seek improvement for the Most Vulnerable Innovative

What is a Social Enterprise? Many definitions

For Profit / Non-profit Local / Global Impact Intrinsic/Extrinsic

In Common: Seek improvement for the Most Vulnerable Innovative Market-based Solutions

Why is Vulnerability important?

Why is Vulnerability important? Exposure to external shocks

Why is Vulnerability important? Exposure to external shocks

Financial crisis/misfortune Education fees Critical illness Death

Why is Vulnerability important? Exposure to external shocks

Financial crisis/misfortune Education fees Critical illness Death

Environmental crisis Natural Disaster Famine etc

Why is Vulnerability important? Exposure to external shocks

Financial crisis/misfortune Education fees Critical illness Death

Environmental crisis Natural Disaster Famine etc

The BibleIsaiah 58:6-7

Is not this the kind of fasting I have chosen: to loose the chains of injustice and untie the cords of the yoke, to set the oppressed free and break every yoke?  

Is it not to share your food with the hungry and to provide the poor wanderer with shelter - when you see the naked, to clothe them, and not to turn away from your own flesh and blood?

Why is Innovation important?

Why is Innovation important? Philanthropy vs Corporations

Corporations Philanthropy

Why is Innovation important? Philanthropy vs Corporations

Corporations PhilanthropyObjective Profit maximisation Impact

maximisation

Why is Innovation important? Philanthropy vs Corporations

Corporations PhilanthropyObjective Profit maximisation Impact

maximisationConsumers Want Need

Why is Innovation important? Philanthropy vs Corporations

Corporations PhilanthropyObjective Profit maximisation Impact

maximisationConsumers Want NeedAbility to pay Yes No

Why is Innovation important? Philanthropy vs Corporations

Corporations PhilanthropyObjective Profit maximisation Impact

maximisationConsumers Want NeedAbility to pay Yes NoBusiness Model For-profit Non-profit

Why is Innovation important? Philanthropy vs Corporations

Corporations PhilanthropyObjective Profit maximisation Impact

maximisationConsumers Want NeedAbility to pay Yes NoBusiness Model For-profit Non-profitFunding Capital Markets Foundations, Govt

Why is Innovation important? Philanthropy vs Corporations

Corporations PhilanthropyObjective Profit maximisation Impact

maximisationConsumers Want NeedAbility to pay Yes NoBusiness Model For-profit Non-profitFunding Capital Markets Foundations, GovtGrowth Strategy Demonstrate

revenue & profit generation

Demonstrate need

Why is Innovation important? Philanthropy vs Corporations

Social Entrepreneurs need to find Market-based solutions to situations where Customers may be Unable to Pay, and secure funding from Non-Traditional sources

Corporations PhilanthropyObjective Profit maximisation Impact

maximisationConsumers Want NeedAbility to pay Yes NoBusiness Model For-profit Non-profitFunding Capital Markets Foundations, GovtGrowth Strategy Demonstrate

revenue & profit generation

Demonstrate need

What is a Social Enterprise? A For-profit company that creates social

impact which is intrinsic to the business model

Miracle Company

Profit-focused SE

Soci

al Im

pact

Profit

Impact-focused SE

Financing Social Enterprises

Financing Social Enterprises For companies to grow, they need Capital

IMPACT INVESTING

Financing Social Enterprises For companies to grow, they need Capital

IMPACT INVESTINGImpact Investing is the process of actively placing capital in businesses and funds that generate social and/or environmental good and at least return nominal principal to the investor.

(Monitor Institute)

Financing Social Enterprises For companies to grow, they need Capital

IMPACT INVESTINGImpact Investing is the process of actively placing capital in businesses and funds that generate social and/or environmental good and at least return nominal principal to the investor.

(Monitor Institute)

Impact

Principles of InvestmentWarren Buffett’s rule#1: Don’t lose money.#2: Don’t forget rule #1.

Financing Social Enterprises For companies to grow, they need Capital

CAPITAL FLOWS

Financing Social Enterprises For companies to grow, they need Capital

CAPITAL FLOWS

Investors

Financing Social Enterprises For companies to grow, they need Capital

CAPITAL FLOWS

Investors

Entrepreneurs

Financing Social Enterprises For companies to grow, they need Capital

CAPITAL FLOWS

Investors

Entrepreneurs

CAPITAL

Financing Social Enterprises Many Barriers to Capital Flow

Investors

Entrepreneurs

CAPITAL

Financing Social Enterprises Many Barriers to Capital Flow

Investors

Entrepreneurs

CAPITAL

Scale

Financing Social Enterprises Many Barriers to Capital Flow

Investors

Entrepreneurs

CAPITAL

Scale Sophistication

Financing Social Enterprises Many Barriers to Capital Flow

Investors

Entrepreneurs

CAPITAL

Scale Sophistication

Commitment to Profit

Financing Social Enterprises Many Barriers to Capital Flow

Investors

Entrepreneurs

CAPITAL

Scale Sophistication

Commitment to Profit

Financial Viability

Financing Social Enterprises Many Barriers to Capital Flow

Investors

Entrepreneurs

CAPITAL

Scale Sophistication

Commitment to Profit

Financial Viability

Governance

Financing Social Enterprises Many Barriers to Capital Flow

Investors

Entrepreneurs

CAPITAL

Scale Sophistication

Commitment to Profit

Financial Viability

Governance

Commitment to Impact

etc

Financing Social Enterprises Need to Remove Barriers

Investors

Entrepreneurs

CAPITAL

Scale Sophistication

Commitment to Profit

Financial Viability

Governance

Commitment to Impact

etc

Financing Social Enterprises For Impact Investing to become a sustainable

channel for funding social enterprises…

Financing Social Enterprises For Impact Investing to become a sustainable

channel for funding social enterprises…

Barriers to Capital Flows must be removed

Financing Social Enterprises For Impact Investing to become a sustainable

channel for funding social enterprises…

Barriers to Capital Flows must be removed

HOW?

Financing Social Enterprises1. Investing is about TRUST

Financing Social Enterprises1. Investing is about TRUST2. Trust involves RISK

Financing Social Enterprises1. Investing is about TRUST2. Trust involves RISK3. Risk is about UNCERTAINTY

Financing Social Enterprises1. Investing is about TRUST2. Trust involves RISK3. Risk is about UNCERTAINTY4. Uncertainty can be overcome with

INFORMATION

Financing Social Enterprises1. Investing is about TRUST2. Trust involves RISK3. Risk is about UNCERTAINTY4. Uncertainty can be overcome with

INFORMATION

Investment Barriers can be removed through

PROVISION OF INFORMATION

Mainstream Financial Markets

Mainstream Financial Markets Same problems:

Trust, Risk, Uncertainty, Information

Mainstream Financial Markets Same problems:

Trust, Risk, Uncertainty, Information

Evolved a comprehensive Ecosystem to provide information and mitigate uncertainty

Mainstream Financial Markets Capital Markets Ecosystem

1. Differentiated Funding Sources

Mainstream Financial Markets Capital Markets Ecosystem

1. Differentiated Funding SourcesRi

sk (

Unc

erta

inty

)

Size

Startup

Mainstream Financial Markets Capital Markets Ecosystem

1. Differentiated Funding SourcesRi

sk (

Unc

erta

inty

)

Size

Startup

Venture

Mainstream Financial Markets Capital Markets Ecosystem

1. Differentiated Funding SourcesRi

sk (

Unc

erta

inty

)

Size

Startup

Venture

Established

Mainstream Financial Markets Capital Markets Ecosystem

1. Differentiated Funding SourcesRi

sk (

Unc

erta

inty

)

Size

Startup

Venture

Established

Public

Mainstream Financial Markets Capital Markets Ecosystem

1. Differentiated Funding SourcesRi

sk (

Unc

erta

inty

)

Size

Startup

Venture

Established

Public

Angel Investors

Mainstream Financial Markets Capital Markets Ecosystem

1. Differentiated Funding SourcesRi

sk (

Unc

erta

inty

)

Size

Startup

Venture

Established

Public

Angel Investors

VC Funds

Mainstream Financial Markets Capital Markets Ecosystem

1. Differentiated Funding SourcesRi

sk (

Unc

erta

inty

)

Size

Startup

Venture

Established

Public

Angel Investors

VC Funds

Private Equity

Mainstream Financial Markets Capital Markets Ecosystem

1. Differentiated Funding SourcesRi

sk (

Unc

erta

inty

)

Size

Startup

Venture

Established

Public

Angel Investors

VC Funds

Private Equity

Mutual Funds, Institutional

Mainstream Financial Markets Capital Markets Ecosystem

2. Accounting / Auditing

Mainstream Financial Markets Capital Markets Ecosystem

2. Accounting / Auditing Audit of company accounts & financial statements Generally Accepted Accounting Principles (GAAP) CPA certification Big 4 accounting firms

Mainstream Financial Markets Capital Markets Ecosystem

3. Ratings Agencies

Mainstream Financial Markets Capital Markets Ecosystem

3. Ratings Agencies Research all aspects of an organisation’s finances Assign a rating to the ability to repay debt Moody’s, S&P, Fitch etc

Mainstream Financial Markets Capital Markets Ecosystem

4. Regulatory Bodies

Mainstream Financial Markets Capital Markets Ecosystem

4. Regulatory Bodies Determines the regulatory framework for investment Organisations are held accountable - enforcement

Mainstream Financial Markets Capital Markets Ecosystem

5. Fiscal Incentives

Mainstream Financial Markets Capital Markets Ecosystem

5. Fiscal Incentives Tax breaks for some Tax surcharges for others Subsidies Taxes/Subsidies approximate to +ve/-ve externalities

Mainstream Financial Markets Capital Markets Ecosystem

6. Financial Intermediaries

Mainstream Financial Markets Capital Markets Ecosystem

6. Financial Intermediaries Connect Investors and Entrepreneurs 2 major forms: Buy-side (fund), Sell-side (advisor) Facilitate capital flows through aggregation

Database Pooling Specialisation Best Practice

Initiates capital flows through deal creation

Mainstream Financial Markets Capital Markets Ecosystem

Investors

Accounting

Ratings

Regulation

Government

Intermediaries

Impact Investment Ecosystem

Impact Investment Ecosystem The Impact Investment Ecosystem

Needs all the players in the Mainstream ecosystem

Impact Investment Ecosystem The Impact Investment Ecosystem

Needs all the players in the Mainstream ecosystem

PLUS: Impact Assessment Mentoring/Consultancy

Impact Investment EcosystemInvestors

Accounting

Ratings

Regulation

Government

Intermediaries

Mentoring/Consulting

Impact Assessment

SocialEnterprise

s

Accelerators

Impact Investment Ecosystem Some Players

1. Investors

Impact Investment Ecosystem Some Players

1. Investors

2. Ratings/Assessment

Impact Investment Ecosystem Some Players

1. Investors

2. Ratings/Assessment

3. Accounting/Taxonomy

Impact Investment Ecosystem Some Players

1. Investors

2. Ratings/Assessment

3. Accounting/Taxonomy

4. Government/Regulation

Impact Investment Ecosystem Some Players

1. Investors

2. Ratings/Assessment

3. Accounting/Taxonomy

4. Government/Regulation

5. Intermediaries/Accelerators

BREAK

Impact Investment in Korea

Impact Investment in KoreaInvestors

Accounting

Ratings

Regulation

Government

Intermediaries

Mentoring/Consulting

Impact Assessment

SocialEnterprise

s

Accelerators

Impact Investment in KoreaInvestors

Accounting

Ratings

Regulation

Government

Intermediaries

Mentoring/Consulting

Impact Assessment

SocialEnterprise

s

Accelerators

Impact Investment in KoreaInvestors

Accounting

Ratings

Regulation

Government

Intermediaries

Mentoring/Consulting

Impact Assessment

SocialEnterprise

s

Accelerators

Impact Investment in KoreaInvestors

Accounting

Ratings

Regulation

Government

Intermediaries

Mentoring/Consulting

Impact Assessment

SocialEnterprise

s

Accelerators

Impact Investment in KoreaInvestors

Accounting

Ratings

Regulation

Government

Intermediaries

Mentoring/Consulting

Impact Assessment

SocialEnterprise

s

Accelerators

Impact Investment in KoreaInvestors

Accounting

Ratings

Regulation

Government

Intermediaries

Mentoring/Consulting

Impact Assessment

SocialEnterprise

s

Accelerators

Impact Investment in KoreaInvestors

Accounting

Ratings

Regulation

Government

Intermediaries

Mentoring/Consulting

Impact Assessment

SocialEnterprise

s

Accelerators

Impact Investment in KoreaInvestors

Accounting

Ratings

Regulation

Government

Intermediaries

Mentoring/Consulting

Impact Assessment

SocialEnterprise

s

Accelerators

Impact Investment in Korea A Long way to go

Impact Investment in Korea A Long way to go

But we have also come a long way

Impact Investment in Korea A Long way to go

But we have also come a long way

Entrepreneurs

Impact Investment in Korea A Long way to go

But we have also come a long way

Entrepreneurs

700+ govt certified SE

Impact Investment in Korea A Long way to go

But we have also come a long way

Entrepreneurs

700+ govt certified SE+ hundreds more

Impact Investment in Korea A Long way to go

But we have also come a long way

Entrepreneurs

700+ govt certified SE+ hundreds more

Investors

Impact Investment in Korea A Long way to go

But we have also come a long way

Entrepreneurs

700+ govt certified SE+ hundreds more

Investors

Government

Impact Investment in Korea A Long way to go

But we have also come a long way

Entrepreneurs

700+ govt certified SE+ hundreds more

Investors

GovernmentFoundations

Impact Investment in Korea A Long way to go

But we have also come a long way

Entrepreneurs

700+ govt certified SE+ hundreds more

Investors

GovernmentFoundationsCorporates

Impact Investment in Korea A Long way to go

But we have also come a long way

Entrepreneurs

700+ govt certified SE+ hundreds more

Investors

GovernmentFoundationsCorporates

HNW Individuals

Impact Investment in Korea A Long way to go

But we have also come a long way NEED to get the Capital Flowing!!

Entrepreneurs

700+ govt certified SE+ hundreds more

Investors

GovernmentFoundationsCorporates

HNW Individuals

CAPITAL

D3JubileePractice & Experience

D3JubileeMISSION: To foster the growth of Social Entrepreneurship in Korea and beyond

D3Jubilee

Two-pronged approach

MISSION: To foster the growth of Social Entrepreneurship in Korea and beyond

D3Jubilee

Two-pronged approach1. Build up Entrepreneurs

MISSION: To foster the growth of Social Entrepreneurship in Korea and beyond

D3Jubilee

Two-pronged approach1. Build up Entrepreneurs2. Build up Investors

MISSION: To foster the growth of Social Entrepreneurship in Korea and beyond

D3Jubilee Building up Entrepreneurs

D3Jubilee Building up Entrepreneurs

Corporate Advisory Services Essentially comes down to raising capital

D3Jubilee Building up Entrepreneurs

Corporate Advisory Services Essentially comes down to raising capital

Research Reports Necessary for potential investors

D3Jubilee Building up Entrepreneurs

Corporate Advisory Services Essentially comes down to raising capital

Research Reports Necessary for potential investors

D3Jubilee Building up Entrepreneurs

Corporate Advisory Services Essentially comes down to raising capital

Research Reports Necessary for potential investors

Financial Consulting Speak the language of Investment

D3Jubilee Building up Entrepreneurs

Corporate Advisory Services Essentially comes down to raising capital

Research Reports Necessary for potential investors

Financial Consulting Speak the language of Investment

Business Mentoring Many SE come from NPO backgrounds Some are very young

D3Jubilee Building up Investors

D3Jubilee Building up Investors

Creating an Angel Investor Community for Impact

D3Jubilee Building up Investors

Creating an Angel Investor Community for Impact DIIN Roundtable

D3Jubilee Building up Investors

Creating an Angel Investor Community for Impact DIIN Roundtable

The D3 Impact Investor NetworkHeld every 3 months

10 Entrepreneurs PresentedOver 150 guests

14 Impact Investors created5 SEs invested

USD 2.5 million raised

D3Jubilee D3Jubilee Impact Companies

D3Jubilee D3Jubilee Impact Companies

D3Jubilee D3Jubilee Impact Companies

D3Jubilee D3Jubilee Impact Companies

D3 Cleantech Fund (US)

D3Jubilee DIIN Investor Profile

Mostly High Net Worth Individuals Experienced Investors Keen to see Impact

D3Jubilee Long-term Objectives

To support the creation of a sustainable ecosystem for impact investment

To raise “Superstar” social enterprises To build a stable base of committed impact

investors Investing Locally and Overseas

Thank You!