Social Impact Ventures & Raising Capital: B Corps and the Social Venture Connexion By: Joyce Sou
May 08, 2015
Social Impact Ventures & Raising Capital: B Corps and the Social Venture Connexion ! By: Joyce Sou!
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Agenda
Impact Inves<ng and MaRS CII
Social Ventures – B Corpora<ons
Funds – Raising capital through the SVX
Ques<ons
Background: Impact Inves5ng What is impact inves.ng?
An impact investment is an investment in a project, business, or financial vehicle with the explicit inten<on to create a posi<ve impact and generate a financial return.
******** Impact investors seek to move beyond “doing no harm,” and towards inten<onally deploying capital in businesses and projects that can provide solu<ons to societal problems.
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$5.3B
$100B
$400B -‐ $1T $30B
WORLD WORLD CAN CAN
2012 2022
Key Sectors: Clean technology, sustainable agriculture, affordable housing, and barrier-‐breaking enterprises.
Background: Impact Inves5ng
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Background: MCII
Community Finance Solutions
Social Impact Bond Incubator
Venture and Capital Programs
Education and Knowledge
Creation
Policy and Development
Research reports, educating and engaging prospective
talent, ventures, and investors, disseminating
knowledge.
Catalyzing funds, connect investors and ventures and
developing capital initiatives.
Advancing recommendations of the Task Force, including
legislative reforms & tax regs, and outcomes-based financing.
Greed is good.
Only charity and government can do good.
“[T]here is one and only one social responsibility of business - to use it’s resources and engage in activities designed to increase its profits...”
Maximize Shareholder Value
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73% of consumers care about the company, not just the product when making a purchasing decision. <1% of consumers trust
company advertisements or statements on packaging
80% of Millenials expect to work for a company that has a positive social impact
Certified B Corporations are a new type of corporation which uses the power of business to solve social and environmental problems.
What is a B Corporation?!
video
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What is a B Corporation?
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Environment
Workers Governance
Community
Redefining Success
Workers: The lowest paid hourly worker receives 46% above the living wage Community: Contributed >5,000 hours of community service 45% of COGS goes towards investing and supporting small scale suppliers Donated >5% of profits to charity Environment: Offset >50% of emissions with certified carbon offsets
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>990B Corporations 60 Industries 30 Countries >110 Canadian B Corps
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Access to Capital – GIIRS/B Analytics
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Invest for impact.
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Maximize Shareholder Value
We won’t have a new economy without a new type of corporation.
More than just a standard…
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20th Century: Shareholder Capitalism
21st Century: Stakeholder Capitalism
Maximize shareholder value almost exclusively
Create social and shareholder value simultaneously
We hold these truths to be self evident: That we must be the change we seek in the world. That all business ought to be conducted as if people and place mattered. That through their products, practices, and profits, businesses should aspire to do no harm and benefit all.
To do so, requires that we act with the understanding that we are each dependent upon another and thus responsible for each other and future generations.
SVX is a new impact inves<ng plaPorm connec<ng impact ventures, funds, investors, and service providers to catalyze debt and equity investments that generate social and/or environmental impact alongside the poten<al for financial return.
MaRS VX, the parent company for SVX, is an nonprofit organiza<on, incorporated in Canada.
Access to capital and investors
Raising capital is costly
Problem A growing group of social entrepreneurs and impact investors, but...
There is an uncoordinated impact inves5ng marketplace.
Finding quality deals and co-‐investors
Due diligence is costly and 5me consuming
Ventures Investors
Impact Investing +!A single access point for impact ventures and investors Solu5on
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Features & Benefits How does SVX work?
Ventures What is the target profile of SVX issuers?
Inclusion
Co-‐ops
Clean Technology
Nonprofits & Chari5es
Community Infrastructure
Health and Wellness
For-‐profit businesses
Sustainable Food
Educa5on & Social Tech
Loans I Bonds I Co-‐op and Common Shares I Limited Partnerships
Target Issuers
Impact ventures and funds (<$25M revenues) including nonprofits (including charities), co-operatives (nonprofits and for-profits), and for-profit businesses looking for $25K - $10M.
Who are the target ventures and funds?
Target Issuers
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Who are the target ventures and funds?
Two Cohorts of Issuers
Investors What is the target profile of SVX investors?
Founda5ons
Family Offices
Financial Ins5tu5ons
Angel Investors
Venture Capitalists HNWIs
Alterna5ve Financial Ins5tu5ons
Impact Funds
Accredited Investors
Pla[orm
Public frontend to aZract poten<al customers alongside private, secure, password protected plaPorm
Custom built by The Working Group on Ruby on Rails with following func<ons: Online applica5on and progress tracking with tool
<ps to answer customer ques<ons Keyword and Category Search Directory Private Deal Rooms with document sharing and
interac<on Clean profile views with feature plugins including
YouTube and Slideshare Full user management (Delete/Approve/Create
users) and content management Venture tools and templates (e.g. term sheets,
pro-‐forma projec<ons)
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How does the online plaAorm work?
Access Requirements What is the process for accessing the SVX?
Governance & Management
• Ontario incorporated • Strong governance structure • Evidence of relevant exper<se within
management and/or directors • Disclosure of any current or past legal ac<ons
against management and/or directors
Impact
• Ontario-‐focused impact • Five (5) Key Performance Indicators (IRIS-‐
based if possible) • GIIRS, 3rd party ra<ng (or B Corp), for social
purpose businesses • Impact narra<ve
Financials
• Revenue-‐genera<ng ($50k -‐ $25M annually) • No<ce to Reader financial statements • Pro-‐forma projec<ons • Adequate current assets, fixed assets, or cash
reserves • Ownership informa<on, including past and
current sources of capital
Other
• Complete business plan • External, professional references • Auditor/reviewer & legal counsel contact
informa<on • Debt &/or equity capital need ($25k-‐10M for
ventures, $2-‐50M+ for funds) • IP & R&D informa<on (if necessary should
venture not meet revenue requirements)
Four Stages: Registration, Application, Review and Matching
How does SVX work?
Process