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 ›
ImpactOntario & SVX: Connecting Capital to World Changing Ventures
Social Venture Connexion (SVX) and ImpactOntario connect impact investors with local ventures
A seismic shift is occurring in how the world approaches both problem solving and investing.
A growing group of social entrepreneurs is building business models to tackle our most pressing problems, from poverty to climate change. We see these innovative approaches through enterprises like Bullfrog Power, d.light Design, Oliberté and Turnaround Couriers. Unfortunately, many of these ventures have difficulty securing financing to grow or scale their impact beyond family and friends.
A growing group of investors are seeking both a financial return and measurable means of knowing their capital is going to support a better world. From foundations and family offices to major financial institutions and , these investors are choosing to invest in affordable housing, renewable power, sustainable food, and enterprises employing persons facing barriers to employment.
They are employing an approach known as impact investing based on a simple premise: investments and enterprises can be both socially beneficial and profitable. By supporting social or environmental ventures with private capital, we can produce reasonable financial returns, sometimes even market-beating returns, and achieve change beyond that which is possible with strictly philanthropic giving or traditional investment models.
The concept is simple. But the marketplace is fragmented. There was no single access point for these ventures and investors to connect in-person and online. Until now.
Filling the Impact Investing Market Need
With an overflowing tap of innovative approaches to societal challenges, and interest in impact investing on the rise, there is no shortage of opportunity.
On the investor side, a range of angel investors, capital funds, fund managers, asset managers and foundations are actively scouting out mission-related investment opportunities. And on the venture side, nonprofits, co-operatives and social purpose businesses are seeking mission-aligned capital.
But one thing has been missing in the effort to mobilize private capital for public good: a designated gateway between impact ventures and investors. Busy investors often do not have the time to fully research innovative new ventures they would like to support. Meanwhile, the individuals running impact ventures also lack time and resources to identify all potentially interested investors.
This sense of need is exactly what inspired MaRS Centre for Impact Investing to collaborate with TMX Group and the Ontario Ministry of Economic Development, Trade and Employment in creating North America’s first impact investing platform, Social Venture Connexion (SVX). This single access point connects local investors looking to make a positive impact with social enterprises that have a proven social, cultural or environmental impact—as well as potential for financial return.
The platform allows investors to learn about and connect with screened investment opportunities, reducing the time and costs of conducting due diligence, and providing ventures with increased access to capital and financial expertise. I like to think of it as matchmaking for investing in a better planet.
A Calculated Approach to Investor-Venture Connections
From the very beginning stages of research in 2007, we knew that a strong platform—and fully vetted opportunities—would be necessary to attract the financial resources. We met with local government, leaders in social innovation, capital market experts, and strategists pursuing similar work in other countries. We put together a team of expert advisors in everything from securities law and regulations to social finance.
By the time we launched this September at the Toronto Stock Exchange, SVX had already identified and conducted due diligence on a variety of small and medium social ventures and impact funds, each with a clear mission, earned revenues and proven impact. These Ontario-based organizations are working towards a range of goals, including affordable housing, employment services, food security, education, renewable energy, sustainable agriculture, water and waste reduction. Each has less than $25 million in revenues and is looking for $100,000 to $10 million in debt offering and/or private equity financing.
All of these qualified impact opportunities are accessible to SVX-registered, Ontario-based investors accredited under the Ontario Securities Commission (OSC) regulations, including foundations and endowments, asset managers, wealth advisors and high-net worth individuals who meet securities regulations.
The Value of a Local Approach
With Canada’s impact investing sector expected to grow from $5.3 billion to $30 billion over the next decade, Ontario, Canada was a natural location for this new initiative.
The region itself was more than ready, having recently found high-profile success in impact investing with the $1-billion Regent Park Revitalization Project. This ambitious plan by the Toronto Community Housing Corporation to provide more than 6,000 mixed-income housing units and other facilities to thousands of residents was partly financed by $450 million worth of market-rate bonds sold to institutional investors. Regional investors saw the very real possibility of earning a market rate financial return coupled with demonstrated social impact.
In other parts of the world, there are a growing number of regional impact markets in development or already open, including the Asia Impact Investment Exchange in Singapore, the London Social Stock Exchange and the Kenya Social Investment Exchange. The need and interest is out there. So our plan is to build and perfect a scalable social innovation in Ontario, which can then become viable in other provinces, states and nations.
Beyond the Online Platform
With the platform now up and running, the region has a new conduit for directing capital to climate change, poverty, economic transition and other challenges.
But we cannot achieve all of our goals solely online.
We need to bring investors and ventures together in-person to effectively catalyze capital and achieve change. ImpactOntario achieves this objective as a landmark conference that brings world-changing Ontario ventures together with world-leading investors and intermediaries. Designed to support deal flow and impact investing opportunities through private and public pitch sessions, one-on-one meetings, and insightful panels, Impact Ontario aims to increase capital directed to profitable ventures with a scalable, sustainable impact. The event will spotlight ventures across a variety of sectors including: Health and Wellness, Sustainability, Education and Technology, and Inclusion. There will be great networking opportunities, a strong venture pipeline pitching for capital through open and closed pitch sessions, and outstanding content.
This is only the beginning. As the impact investing movement grows, and stakeholders realize the value of linking capital with social ventures, our collective success and impact will only grow.