Outlook

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Impact Tech Opportunity Series (Pt. 4): Health

By Tasha Seitz and Chris Wu

As active impact investors, we’ve had the privilege of meeting hundreds of entrepreneurs doing incredible work across each of our four areas of focus: education, health, economic empowerment and resource efficiency. We’ve learned a lot about what opportunities exist to leverage technology for good and how various companies are solving these problems. As we celebrate our five year anniversary, we thought it would be valuable to share some of our observations with the broader impact investing field.

Part four in the series is an overview of what we’ve seen in the world of digital health. US healthcare spending overall represents 18% of GDP, and improving healthcare utilization by disadvantaged communities is an enormous opportunity to reduce costs and improve patient outcomes. The trend towards accountable care is driving investment in technology innovation, and we see many attractive and impactful investment opportunities in this space. We have observed four broad themes in the health sector.

Accessibility

The timely use of health services plays an important role in achieving the best patient outcomes. However, patients face many barriers to accessing services, including high costs, lack of insurance coverage, and lack of available services. Inadequate access to care can result in unmet physical and mental health needs, increased financial burdens, and preventable hospitalizations. Unfortunately, disparities in access persist along race and ethnicity, socioeconomic status, and geographic lines.

One of our portfolio companies, ConsejoSano, is deeply committed to breaking down barriers to adequate preventative and primary healthcare services for the 41 million native Spanish speakers in […]

By |October 26, 2017|
  • ITOS- ED

Impact Tech Opportunity Series (Pt. 3): Education

By Tasha Seitz and Brandon Boros

As active impact investors, we’ve had the privilege of meeting hundreds of entrepreneurs doing incredible work across each of our four areas of focus: education, health, economic empowerment and resource efficiency. We’ve learned a lot about what opportunities exist to leverage technology for good and how various companies are solving these problems. As we celebrate our five year anniversary, we thought it would be valuable to share some of our observations with the broader impact investing field.

Part 3 of this series provides insights into current trends we’ve seen in the education sector, the main drivers of those trends, and opportunities we see for impact.

Teacher Empowerment & Personalized Learning

Not long ago, a common solution to the problem of having a class with students’ proficiencies at different grade levels was simple, but ineffective. If a third of the class is performing above grade level, a third at grade level and a third below grade level, the most measured approach was to teach to the middle. While striking a seemingly fair balance, it effectively eliminated the attention of two-thirds of the class who thought it was moving either too quickly or too slowly, resulting in only one third of the class growing and learning. As technology has proliferated in classrooms across the country (almost half of classrooms use a digital device every day), teachers now have the increased ability to meet each student at current level of learning and help them grow from there. At the same time, there is increasing […]

By |September 29, 2017|
  • ITOS- RE

Impact Tech Opportunity Series (Pt. 2): Resource Efficiency

By Tasha Seitz and Alex Frederick

As active impact investors, we’ve had the privilege of meeting hundreds of entrepreneurs doing incredible work across each of our four areas of focus: education, health, economic empowerment and resource efficiency. We’ve learned a lot about what opportunities exist to leverage technology for good and how various companies are solving these problems. As we approach our five year anniversary, we thought it would be valuable to share some of our observations with the broader impact investing field.

Part two in the series is an overview of what we’ve seen in the world of resource efficiency. Because Impact Engine is focused on software and data-driven companies, it can be challenging for us to find companies that are a fit, but we have made two investments over the past year and hope to make many more in years to come. Below, we’ve identified three broad themes we’re seeing.

Water

Regional droughts and water shortages, as well as aging infrastructure in places like Flint, MI, have cast a spotlight on clean water access and increased the urgency for farms and government agencies to find more efficient solutions. There is also a growing need for more innovative sewer system and stormwater management tools. To put things in perspective, the annual revenue for products and services in the water industry exceeds $600 billion. In this sector, we’ve found that water-focused startups have one of three major end goals: conservation, improvement of water quality (either for drinking or for wild sources like rivers, lakes, oceans) or improvement of […]

By |July 31, 2017|
  • ITOS- EE

Impact Tech Opportunity Series (Pt. 1): Economic Empowerment

By Tasha Seitz and Elizabeth Coston

As active impact investors, we’ve had the privilege of meeting hundreds of entrepreneurs doing incredible work across each of our four areas of focus: education, health, economic empowerment and resource efficiency. We’ve learned a lot about what opportunities exist to leverage technology for good and how various companies are solving these problems. As we approach our five year anniversary, we thought it would be valuable to share some of our observations with the broader impact investing field. This overview of what we’ve seen in economic empowerment is the first of what will be a four-part monthly series where we will cover each of our focus areas in turn.

We have identified five broad themes in economic empowerment.

Access to Jobs

One of the biggest issues we’ve noticed is a gap in the middle skills labor market, which requires education beyond high school but not a four-year degree. Candidates are being left behind, while some companies struggle to fill positions due to a mismatch of need and talent. Millions of Americans struggle to find jobs that meet their skill sets and only 25% of high school graduates feel they have the skills needed in the workplace. 98% of CEOs identify the skills gap as an urgent concern to business. In a market where $72B is spent on recruiting, $55B is spent on continuing education, $475B is spent on higher education, and $164B is funneled into corporate training, there is a huge opportunity for startups to address the skills gap.

We’ve seen many startups using technology to identify core competencies for job roles, to test candidates, and to provide learning modules […]

By |June 28, 2017|
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What Does 100% Impact Look Like?

By Jessica Droste Yagan

Last month, Impact Engine hosted breakfast with Richard Muller of Toniic Network, a global action community for impact investors from over 22 countries. Muller shared results from the T100 Project, a multi-year study of the portfolios of Toniic Network members who are committed to investing 100% of their portfolio for impact. The T100 project came out of a need for quantitative and qualitative data as a way to inspire and enable others to accelerate their impact investing journeys as well as to demonstrate a growing market for impact products and services. To date the group has deployed $2.6 billion of $4 billion committed to impact. The study reveals new insights from over 50 portfolios and highlights the various paths towards 100% impact (to read the entire report, click here). Below we’ve shared key takeaways from the report and answer the question: what does 100% impact look like?

100% impact portfolios are achievable today.

Early findings from 51 Toniic portfolios committed to 100% impact are promising: impact investments making up an average of 64% of all portfolios, with one-third of portfolios with over 90% deployed into impact. These impact investments include 36% thematic investments (see below), 19% sustainable investments (investments integrating environmental, social and governance factors into the decision-making process) and 9% responsible investments (investments screened for conflicts or inconsistencies with personal or organizational values, codes of practice, or other impact performance criteria). For thematic investments, Toniic shows the breakdown of the following impact areas on average across portfolios, including 32% environment, 12% poverty alleviation, 9% financial system, and 7% health.

100% impact portfolios can be constructed across all asset classes.

Another […]

By |June 1, 2017|
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Philanthropy as Risk Capital: How Foundations are Supporting Impactful Startups

By Tasha Seitz

For those of you interested in how foundations are thinking about impact investing, we highly recommend checking out the Mission Possible Series from Stanford Social Innovation Review, a 10-week series that recently concluded with the announcement that the Ford Foundation will commit $1 billion from its endowment to impact investing. Many leading foundations are thinking about their funding as having the potential to play a catalytic role in providing risk capital, allowing organizations to gather “proof points” and attract other types of capital. This is true of across all types of impact investing, including the very early stage. In the words of Clara Miller, President of the Heron Foundation and a pioneer in impact investing, “success requires a chorus rather than a soloist,” and in that spirit we wanted to share ways that our portfolio companies have benefited from philanthropic capital.

Grants for Product Development

Most foundations will provide grants that award money to support the development of a specific tool or product. Unfortunately, most still limit applicants to 501(c)3 organizations, but some are branching out to support for-profit social entrepreneurs. ThinkCERCA, a member of Impact Engine’s portfolio, was awarded a $250k grant from the Bill & Melinda Gates Foundation through the Literacy Courseware Challenge. This initiative awarded $6 million to 29 organizations focused on building tools to help students in grades 4 through 8 improve their reading and writing skills. ThinkCERCA was already building an online platform for creating personalized critical thinking lessons and utilized the grant money towards expanding their online resource and lesson library. In this case, ThinkCERCA’s mission and pre-existing software platform was well aligned with the […]

By |May 1, 2017|
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Measuring Impact for Social Entrepreneurs

By Tasha Seitz

Financial investors weigh risk, return and liquidity in their investment decisions; impact investors weigh all of these factors, plus impact. Intentionality and measurement are fundamental aspects that define impact investing, yet impact measurement is an extremely difficult challenge.

Impact can be defined in many ways, and different investors may have very different goals and interests. Some types of impact may be “easy” to measure (i.e. how much have unbanked or underbanked customers saved by using this fintech service vs. incumbent solutions?); others much more difficult (i.e. how has this advocacy platform influenced public policy?). Counting “lives touched” is unsatisfying, yet the cost of conducting randomized control trials that serve as the “gold standard” for measurement can be lengthy and prohibitively expensive. And given the variety in the types of impact across a portfolio, and across funds, how do you “roll up” impact measurement in any kind of meaningful way?

The challenges are many, and measurement has been an important discussion in the field of impact investing for many years. In a recent articlein the London School of Economics Business Review, Brian Trelstad, Partner at Bridges US, argues that impact management — articulation of an investor’s impact objectives — is an important precursor to effective measurement.

At Impact Engine, we sit down with entrepreneurs during our due diligence process to talk about the impact they hope to achieve, the target populations they want to serve, and how they might measure and report on the impact they’re having, both now and in the future. We often see a […]

By |April 4, 2017|
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The Future of Term Sheets

For those of you less familiar with the venture capital world, a term sheet is a document detailing agreed-upon terms under which an individual or firm will invest in a startup. Traditionally, this document describes the economics of the deal, control provisions, information rights and provisions for investor liquidity. Today, as investors and entrepreneurs are increasingly interested in the social and environmental impacts of their businesses, we are seeing the term sheet evolve in parallel. In particular, we are starting to see investors requiring alignment of values or commitment to specific impacts.

In January, Obvious Ventures announced its “World Positive Term Sheet”, a concerted effort to help entrepreneurs articulate their values so entrepreneurs and investors are aligned and those values can drive business decisions. This term sheet challenges entrepreneurs to describe their companies’ policies in four main categories: core values; diversity, equity & inclusion; sustainability; and pledging & giving. While each term sheet will be tailored to the individual company, Obvious Ventures emphasizes the need for companies to outline specific statements for each category. For example, will your company create an equitable corporate structure or become a B Corp? Can your product or service be manufactured more sustainably? What are your company’s policies on recruiting for diversity or equitable benefits for maternity/paternity leave? The World Positive Term Sheet is an important anchor for companies, and a way to root business practices in values and ethics that can serve as a litmus test for both entrepreneurs and investors down the road.

A year ago, Kapor Capital launched the Founder’s Commitment, a “road map for startups to create a culture of diversity and inclusion […]

By |February 27, 2017|

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