Impact Investing in Action Takeaways

Last week we participated in Agora Partnerships' Impact Investing in Action conference held at Georgetown’s business school. Planting Empowerment was invited to pitch as one of the “top early stage, for-profit companies creating social value around the world”. 

It was heartening to see more investing and actions being taken to support startup social ventures. The 21 companies presenting were collectively pursuing more than $50,000,000 of investment to further scale their businesses. Interestingly, the Inter-American Development Bank was heavily represented, mostly because the conference’s focus on Latin America. However, they’re investing very little into the companies that presented (but are investing indirectly through already established funds).

The topic of measuring impact continues to be a focus and a favorite of many. All of the companies that went through Agora’s accelerator came with a GIIRS score. While admirable, not one investor asked about a GIIRS score during the deal room presentations we attended. This makes us think that measuring impact still seems like an ivory tower proposition for most companies and potential investors. It’s important, yes, but is it worth the extra costs and time commitments for an entrepreneur to do if it doesn’t make their companies more attractive?

While most impact funds are looking for deals between $500,000-$5 million, there does seem to be slightly more capital flowing towards enterprises looking for less than $500,000. We expect that the growth of equity crowdfunding will increase support for SMEs at the startup level, and hopefully bridge them to mezzanine-level, where there seems to be plenty of capital looking for deals.

Live Forbes Google+ interview

Interested in social enterprise and free tomorrow at 10:30am ET? We'll be talking with Devin Thorpe of Forbes and Archana Verma of ennovent about social entrepreneurship and impact investing in sustainable forestry.

Join us live on Google Hangouts tomorrow to watch the interview and contribute your questions. We will update this page afterwards with a video of the interview. 

A Report Card for Impact

The Gonzales family in Nuevo ParaisoFor social enterprises and organizations engaged in impact investing, quantifying impact has become increasingly important to them and their investors and donors. In the same way that traditional investors scrutinize a company’s financials before deciding to invest, responsible investors increasingly want to see that their investments are producing the social good that they set out to create.

Quantifying impact basically means attempting to measure the change that the organization intends to create. For example, an organization dedicated to the preservation and expansion of affordable housing might measure the number of affordable housing units developed over the past year, or the number of low income people housed.

Planting Empowerment cultivates tropical hardwoods and crops for financial return, but also to produce real social and environmental returns for our partners in Panama. From a reporting perspective, it’s easy to measure the number of trees we plant, or the amount of land we have under cultivation, or the number of plantains we’ve produced. We can even measure the increase in incomes of our partners because of their working with us.

But it’s harder to measure how that work translates into longer term sustainable management of natural resources by our partners, or the amount of rainforest we’ve conserved because of our work. Both of those imply that we’ll have changed the mentality of our partners. So how do we measure that?

Measuring impact has become a hot topic over the past several years. Both responsible investors/performance-focused donors and impact investing associations and organizations offering these types of investments are trying to agree on how to truly measure “impact”. There are industry-specific certifications such as the Forest Stewardship Council’s Forest management certification, but there is no standard definition of impact that cuts across all industries. Even when an organization understands what its long term term impact goals are, it’s difficult and costly to measure progress against those goals.

Against that backdrop, the Global Impact Investment Network launched its Global Impact Investment Rating System (GIIRS) to standardize social and environmental performance metrics for organizations engaged in impact investing. It is intended to enable investors to compare impact investments across industries by capturing not only financial performance data, but also the social and environmental benefits that an organization proactively creates. GIIRS uses a standard reporting language called IRIS (Impact Reporting and Investment Standards) to capture relevant performance data from companies and funds.

We recently decided to adopt the IRIS language for our own reporting purposes. While we’re still unsure as to whether companies and funds will have a competitive advantage by holding a GIIRS rating (which is a paid certification based on the IRIS taxonomy), using IRIS standards does make sense for Planting Empowerment for a few reasons:

  1. It's a way to hold ourselves accountable to the goals we laid out in our recent strategic plan: the amount of capital we need to raise and the number of hectares of trees we’re aiming to plant, among others.
  2. Once we've captured all the relevant metrics, we'll be able to more more tangibly communicate our work to prospective shareholders and our peers in the industry.
  3. This further differentiates us from traditional forestry companies because it will reinforce Planting Empowerment’s long term goals of social and economic empowerment of our partners.
  4. GIIRS certification may make sense for larger/institutional investors once we reach larger scale. The GIIRS assesment is based on the IRIS reporting language, so we would be ahead of the game.

As Planting Empowerment continues work with more partners and plant more trees, we need to be able to track and communicate our business’s financial, social and environmental impacts. Adopting the IRIS reporting standards gives us a smart way to do that.

8 Tips for Social Business Plan Competitors


When Planting Empowerment was just a wee company, we participated in social business plan competitions at several universities including Notre Dame, University of Texas Austin, and Yale. While we never came away with a first place, they were an excellent way for us to gain valuable (and yes, critical) feedback about our business plan and become more comfortable pitching our concept. We even earned a little money which helped us get off the ground. These days, we stay involved through judging and mentoring roles, and have seen a lot of different business plans. Below we present a few suggestions on how to improve your chances at these competitions.

Have your product/service already developed. The judges see hundreds of business plans, and your amazing idea is competing with all the other amazing ideas. Having something already in production, or even a working prototype, signals that you’re serious about your business and are actually making it happen. Include photos of the product. Photoshop it being used. Include a positive testimonial from someone who has actually used your product or service (be honest, of course). Judges want to be known for choosing something that is already a reality or is well on its way, not an idea that may become reality.

Use real numbers. Assumptions won’t get you too far. Do your research and cite your sources for the assumptions you are using to develop your numbers. This is especially important for sales numbers. If you’re going to quantify your social impact, use the New Economic model system. A 568% SROI or $1-$10 cost-benefit ratio will raise eyebrows because the analysis probably isn’t accurate. Run it by one of your friends who is studying economics.

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William James Foundation’s 2012 Social Entrepreneurship Gathering

Planting Empowerment is honored to participate in the William James Foundation’s annual gathering this Friday held at the World Resources Institute in Washington, DC.

We’ll be speaking on the “Launching and running a business across continents” panel, which explores how social businesses operate multi-nationally.

Planting Empowerment competed in the WJF’s Social Enterprise Competition in 2007, and has served as a judge for the competition for the past five years.

The William James Foundation connects for-profit social entrepreneurs to industry experts and impact investors to help scale those entrepreneurs' ideas into sustainable ventures.