The Emerging Ecosystem of Entrepreneurial Social Finance in Asia (2013) (original) (raw)
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Underlying socio-economic challenges; slow economic growth; coupled with the COVID-19 global pandemic, have increased the need for resourcefulness, manifesting in a greater demand for social entrepreneurship innovations, and consequently impact investment capital, across the African continent. Social entrepreneurship is the act of employing traditional entrepreneurial behaviours, such as innovativeness, proactiveness, risk-taking and venture creation among others, to create social value by addressing social needs or challenges. The growing need for social entrepreneurship, in combating these socio-economic burdens, has made it essential to understand the reasons that motivate impact investors (the primary funders of social enterprises) to invest in social impact ventures, over conventional investments. An understanding of the underlying motives of impact investors will help to illuminate the types of social impact ventures they choose to invest in and the level of financial investment in these ventures. Studies made in the field of impact investing have not sufficiently examined the varying motives of impact investors. Therefore, a more focused study is required, on the motivations that influence the impact investor’s decision to invest in social impact enterprises, especially in South Africa - a social entrepreneurship under-researched context. An understanding of the funder’s motives or objectives is crucial insight for social entrepreneurs, as this can guide them in structuring social venture investment opportunities that successfully attract much-needed impact capital. The purpose of the study is to determine the extent to which the decision to invest in a social impact venture is driven primarily by the (i) social impact, (ii) financial return, (ii) social impact and financial dual-return, or (iv) signalling (pseudo altruism) objective of the impact investor. This study employed a positivist philosophical paradigm, accompanied by a complementary quantitative research methodology. By means of the convenience and snowball sampling techniques, 78 South African impact investors (from a population of 178) consented to participate in the study, through completing a self-administered online survey. The main findings of the study revealed that the social impact motive has no influence on the impact investor’s investment decision. The dual-return and signalling motives did not contribute to the findings of this study. Ultimately, the financial return expected from an impact investment was found to be the most significant determinant of the decision to invest in a social impact venture. The use of financial return as a key decision criterion by impact investors can be attributed to the fact that the majority of these investors (respondents) were investing on behalf of a client, and thus bound by fiduciary duties to seek investment opportunities that preserve or grow their client’s wealth. It is expected that through this study, researchers, social entrepreneurs, impact investment practitioners and policymakers may gain a better understanding of the role of impact investing in establishing a mature social entrepreneurship industry that meaningfully contributes to the domestic economy. This study will enable social entrepreneurs to understand how investors evaluate social investments. This will highlight the categories of social enterprises, missions or firms that are most preferred i.e., investment-ready opportunities. Using the results of this study as a guide, it is envisaged that social entrepreneurs can better structure their ventures to be more attractive, in terms of both social impact and financial return, to impact investors. Key words: Entrepreneurship; Social Entrepreneurship; Impact Investing; Venture Financing; Investment Decision-Making.
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Purpose This paper aims to explore the emergence and nature of impact investment in Australia and how it is shaping the development of the social enterprise sector. Design/methodology/approach Impact investment is an emerging approach to financing social enterprises that aims to achieve blended value by delivering both impact and financial returns. In seeking to deliver blended value, impact investment combines potentially conflicted logics from investment, philanthropy and government spending. This paper utilizes institutional theory as a lens to understand the nature of these competing logics in impact investment. The paper adopts a sequential exploratory mixed methods approach to study the emergence of impact investment in Australia. The mixed methods include 18 qualitative interviews with impact investors in the Australian market and a subsequent online questionnaire on characteristics of impact investment products, activity and performance. Findings The findings provide empiric...
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Aalborg University, 2021
Purpose: This study aims to explore the characteristics behind an emerging impact investing marketplace in Denmark. This will be combined with examining related or- ganisational strategising within an institutional context of Danish development policy and strategy. Motivation(s): As an industrial PhD project, the research builds on a collaboration between four supporting project partners, the World Wildlife Fund Denmark, Dan- ish Red Cross, Access2innovation and Aalborg University, with the aim to shedding light on the opportunities in impact investing, related strategies, and the drivers behind investing for impact. The study has explored and supported project partners' impact investing-related strategising, through the research period from 2018 to 2021. Here project partners motivations guide the research aims to explore the emergence of impact investing in Denmark at an institutional level. This is combined with understanding project partners responses and related strategising, within the context of Danish development at an organisational level. Conceptual framework and research design: Impact investing is often referred to as an investment strategy with the intent to contribute to measurable social and environmental real-world outcomes, alongside a financial return.Overall, interest and activity around impact investing in Denmark have increased significantly in recent years. De- spite the enthusiasm, the emergence and characteristics of the impact investing mar- ketplace, combined with interpretations, motives and adoption of strategies, remain largely unexamined. To explore how impact investing is structured in Den- mark and explore project partners related strategising, this study presents a concep- tual framework combining institutional theory and strategy as practice theory. 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However, public actors could face tensions and trade-offs when promoting blended value that caters to institutional capital needs, while balancing investment logic and development objectives. The findings also provide empirical evidence on Danish financial interpreta- tions, motives, and practice with impact investing. The study derived the segmenta- tion of financial actors by categorising them according to their interpretations of impact investing and understandings of investing with impact. The segmentation shows how financial actors interpret and adopt different strategies depending on their organisational characteristics and institutional ends-means. On the one hand, one segment of actors (referred to as Type A actors, primarily con- sisting of asset owners and few managers) emphasises value-alignment (i.e., views im- pact investing as an extension of values) and/or impact-generating (i.e., aiming to generate or accelerate new projects or impacts) to bring about value-creation. 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Here, marketplace segmentation is discussed to better understand actors approaches to investing with impact through their ends-means, motives, and practices. This is combined with discussing a reconceptualisation of impact investing, from having one uniform definition to instead building a typology for how actors can invest with impact and address real-world issues. The study shares insight into project partners' motives, responses, and interactions shaping strategy-making at an organisational level. The study follows the World Wild-life Fund Denmark strategy-making on bankable nature-based solutions, Danish Red Cross commitment to innovative finance, and Access2innovation initiatives on impact financing. Findings are based on project partners strategy-making within im- pact investing related areas and underpin the emerging challenges when project part- ners seek to strategise or adopt a new practice outside core institutional means. 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John Hailey and Mark Salway defined Social Impact Investment (SII) model as the use of repayable finance to deliver social impact as well as financial return. In their paper on New Routes to CSO Sustainability, they described how SII brings new sources of funds to civil society organisations. In this Op-Ed, the writer explores how CSOs can adopt and benefit from the SII Model
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Interest and activity around impact investment have increased significantly in recent years as businesses, governments and communities seek new solutions to enable an inclusive and sustainable society in the face of social and environmental challenges. Philanthropists, charitable foundations and institutional investors have been among the early adopters in implementing impact investment strategies and developing the field. Despite the initial enthusiasm for impact investment, many investors raise concerns as they begin to explore the practicalities of impact investing. This paper responds to these concerns by providing empirical insights on how leading institutional investors and charitable foundations have begun to develop impact investment strategies and overcome various trepidations. The findings reveal four main themes: a focus on financial-first investments; the importance of using established due-diligence processes; the opportunity to align mission and values; and, the value of networks and collaboration.
ISIRC-MILAN, Proceedings, EGEA, 2022 , 2022
This paper aims to identify key topics that an equity capital provider with an investment focus on for-profit businesses shall consider while defining an impact investing strategy. Critical questions stand at the origin of this research, such as how can investors combine financial return and impact return? More specifically, what topics take priority when designing an impact investing strategy? To catalyse resources from different kinds of potential impact investors, managers can design different strategies and can set up various forms of investment vehicles, such as venture capital funds or venture philanthropy organisations. The research methodology was based on empirical and qualitative analyses carried out during the period of 2019-2021. The research arrives at outcomes by testing empirical evidence by using qualitative methods such as of observations, assessing web-based data and information regarding key topics for impact investing strategies, organising one-to-one meetings, and networking during sector conferences. A selected panel of impact-investing players encompasses 96 players, including 79 impact capital fund and 17 network organisations. The funds selected are mainly registered in Europe, the USA, and the Middle-East and North Africa (MENA) region, but all predominantly invest in emerging and developing countries. Preference was given towards analysing the investment vehicles partnered with institutional investors, and which are therefore primarily committed to financial returns alongside a serious mandatory commitment to impact topics and measurable impact return. Publications, reports, and data provided by global networks of impact investors were taken into considerations, together alongside the review of the literature on impact investing and venture capital in emerging countries. The key topics identified as significant for outlining impact investing strategies are the following: theory of change; contribution to sustainable development goals; criteria to identify impact business models; capacity-building support to portfolio companies; geographic focus; thematic sectors; time horizon and exit strategy; methodology to measure and manage impact. In conclusion, the paper offers more guidance towards the question of how to code impact returns, as well as a good path towards addressing investors and investment managers to design impact investing strategies aimed to generate financial return while simultaneously serving the common good.
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