From dealflow to a lack of education, this week leaders in social finance addressed some of the key barriers preventing the UK market from flourishing. Last month Antony Bugg-Levine, the chair of the Global Impact Investing Network, told delegates at London’s Critical Mass conference that in the world of social finance there were “hypers, haters and […]Read More ›
Impact is what matters
An intrepid group of social entrepreneurs from around the globe gathered five years ago to talk about social stock exchanges.
In meeting to discuss this common goal, they realized their ideas were stunningly similar. After a few days of meetings and sharing their respective plans, these former bankers and community developers parted ways and undertook the painstaking task of building their individual models: convincing regulators, developing technology, attracting funding, and maintaining interest in an unproven idea.
The news died down when immediate success proved impossible. But there has been an uptick in coverage over the past few months about the official launch of a number of these players on the impact investing scene.
A recent story in the Guardian picked up on this trend. The article provides a good opportunity for dialogue and clarity on “social stock exchanges” in Canada and beyond, and to highlight several important points of discussion.
There are many different models in operation around the world.
From London to Singapore to Toronto, there are many different “social stock exchange” models from private platforms to public gateways for new and existing investment opportunities. These models reflect market needs, the state of regulatory environments, and the relatively early stage of evolution of these initiatives.
In Canada, MaRS Discovery District’s Social Venture Connexion (SVX) is an online impact investing platform connecting ventures, investors, funds and service providers to catalyze debt and equity investments that generate social and environmental impact alongside the potential for financial return. The private platform is a single access point for new primary investment offerings. SVX is a capital markets innovation; however, it is not a stock exchange. An exchange has a very precise definition, and significant, complex operational requirements. SVX is registered as a Restricted Dealer with the Ontario Securities Commission (OSC), a capital markets registration with strict rules and requirements. The platform is closer in form to CircleUp or AngeList.
In Singapore, Asia Impact Investment Exchange (IIX) has a range of associated features, functions, and platforms. One of its platforms is Impact Exchange, a partnership with the Stock Exchange of Mauritius (SEM) that is the world’s first public trading platform dedicated to connecting social enterprises with mission-aligned investment. All technicalities and registrations aside, this is what many folks are searching for in impact investing. It is a tremendous leap for the sector.
Social stock exchanges are not rivals.
Although it makes for a far more interesting headline, these platforms are not engaged in a battle for world domination or a race to be “first.” SVX is not a rival of the London Social Stock Exchange or the Asia Impact Investment Exchange (AsiaIIX).
[NB. As I took the screenshot, I was actually listening to Songza. And what was playing? The Imperial March…No joke.]
We cannot afford to compete with one another. In our early days, we are simply too busy with the day-to-day of operating fledgling enterprises. In fact, we need to call on our collective strength to continue our advance at such a rapid pace.
There are many firsts for “social stock exchanges.”
There is a great deal of focus on and a lot of noise around who is first. Indeed, these platforms have broken a lot of new ground:
- London Social Stock Exchange Ltd. is the first platform to profile publicly listed impact investment opportunities;
- Asia IIX has co-created the world’s first public trading platform for new impact investments; and,
- SVX is the first independently registered investment platform, and the first platform of its kind in North America.
These are all important issues, but they do sail past a few key points. It is not about regulatory status, rivalry, or the glory of being first.
Across the globe, “social stock exchanges” are collectively experiencing tremendous momentum and success. These platforms provide a crucial pipeline for investors to access impact investment opportunities, and increase access to capital for impact ventures and funds.
It is vital that we keep our focus, and the accompanying spotlight, on our mission to mobilize private capital towards public good. We should be held to task for the amount of capital raised, impact ventures financed, investors engaged, and value created for the impact investing marketplace. And ultimately, impact is what matters. Are we moving the yardsticks on our most pressing problems?
Finally, it is not easy to start and operate a social stock exchange. We should applaud those intrepid entrepreneurs like Pradeep Jethi from London and Durreen Shahnaz from Singapore (and their teams) who have remained committed to the cause and have followed through with their vision. They are now realizing success after years of incredibly hard work. We must continue our collective support of each other. There is still much work to be done.