VENTURE PHILANTHROPY AND SOCIAL IMPACT INVESTMENT PRACTICAL CASES FROM EUROPE AND LATIN AMERICA Webinar, 20 May 2020 SPEAKERS | LATIMPACTO & EVPA TEAM CAROLINA SUÁREZ ALESSIA GIANONCELLI CEO Head of Knowledge Centre LatImpacto EVPA SPEAKERS | EXPERIENCED PRACTITIONERS OLIVIER DE GUERRE PIETER OOSTLANDER NATÁLIA LEME PEDRO CASTILLO PhiTrust Shaerpa and SI2 Fund Arymax Foundation Promotora Social Mexico France Belgium Brazil Mexico GOTOWEBINAR | TIPS & TRICKS • You are able to Open and Hide your Control Panel. The control panel will collapse automatically when not in use. To keep it open you can click the “View” menu and uncheck “Auto-hide Control Panel”. • You can address questions in written form to our panelists during the webinar or the Q&A time. • Since the number of participants in this webinar is very high, we are keeping everyone muted. • This session is recorded. • If you have technical issues during the webinar please send an email to Arnau Picon at [email protected] AGENDA OF TODAY WEBINAR INTRODUCTION By Carolina Suárez INTRODUCTION TO EVPA GUIDE TO VENTURE PHILANTHROPY AND SOCIAL IMPACT INVESTMENT By Alessia Gianoncelli PHITRUST: INVESTING FOR IMPACT IN EUROPE By Olivier de Guerre SI2 FUND: INVESTING FOR IMPACT IN EUROPE By Pieter Oostlander QUESTIONS FROM THE AUDIENCE ARYMAX FOUNDATION: INVESTING FOR IMPACT IN LATIN AMERICA By Natália Leme PROMOTORA SOCIAL MÉXICO: INVESTING FOR IMPACT IN LATIN AMERICA By Pedro Castillo QUESTIONS FROM THE AUDIENCE CLOSING By Carolina Suárez INTRODUCTION By Carolina Suárez PATHWAY TO IMPACT We are the Latin American community of philanthropists and social investors that connects and mobilizes capital (human, intellectual, and financial) committed to achieving more and lasting positive social and environmental impact by promoting the exchange of knowledge on the most innovative and effective models of social investment, management, and impact measurement and by facilitating connections for greater collaboration and co-investment. We belong to the family of VP Networks Connected by With the support of OUR GUIDING PRINCIPLES PRINCIPLE #5 PRINCIPLE #1 • A global • Diverse types • collaborative of • movement • investors PRINCIPLE #4 PRINCIPLE #2 •Independent • Disciplined •organizations • investment •focused on •serving their own regions PRINCIPLE #3 •Investment •along the full •continuum of •capital Diversity in PRINCIPLE #1 the types of investors Attract and connect providers of capital Professional Universities, Service Government Research, Corporates Firms Family Foundations Investors Think tanks Offices related Foster learning, collaboration and accountability Capture and disseminate Connecting actors and fostering Wide array of value-added knowledge regional and local collaboration services Enable access to knowledge, assets of global community Multiply positive social and environmental impact Latimpacto brings together diverse parties with capital (financial, human and intellectual) seeking social impact Investment Along the PRINCIPLE #3 Full Continuum of Capital PROMOTING & STRENGTHENING VENTURE PHILANTHROPY APPROACH + CONNECTING CONTINUUM OF CAPITAL Investing for Impact Investing with Impact (Venture Philanthropy) (Impact investing) - Social purpose that will Social purpose organizations Social purpose organizations Traditional businesses ESG Compliant never be with a potentially financially traditional with a proven financially with intentional social financially/self – self- sustainable business sustainable business model impact businesses Traditional investing investing Traditional making making Traditional grant Traditional sustainable model Profit first as a Only Social Impact Social Impact as a Priority Priority Our strategy emphasizes de value of Venture Philanthropy and Social Investment along the continuum of capital, as a catalyst that complements and enables impact investment * Source: Adaption from EVPA PRINCIPLE #5 A Global Movement The yellow dots are those countries where Latimpacto is starting to have presences. The purple dots are the ones where our sisters have members. We are diverse peoples with synergistic perspectives, experiences and skills –and shared passion and zeal to improve our world. MISSING GAP A Platform that will collaborate with existing ecosystem players to 1 2 3 4 5 Connect the entire Connect providers of Connect seamlessly to Operates fully at a continuum of capital capital across all the largest community of Latin American level Promote the most “silos” global social investors From philanthropic effective investment Based in the region grants to full market approaches to achieve From foundations to 1000+ organizations with leadership and rate return impact “impact first” corporates, investors, who are members of governance from the investment, including family offices, EVPA and AVPN, which region talent and intellectual professional services, gives access to cross- capital academia and public border learning and to sector actors foreign-based capital INTRODUCTION TO EVPA’S GUIDE TO VENTURE PHILATHROPY AND SOCIAL IMPACT INVESTMENT By Alessia Gianoncelli THE EVPA PRACTICAL GUIDE (1/3) • Overview of all the key practices and activities of investors applying the venture philanthropy approach • Point of reference for introducing the concept of venture philanthropy and social investment to new comers or to organisations that are exploring the possibility to join the impact space • 4th edition in 2018, following: the 1st edition, which was a working paper in 2008 the 2nd edition in 2010 the 3rd edition in 2016 THE EVPA PRACTICAL GUIDE (2/3) • It includes all the insights and knowledge gathered by the EVPA Knowledge Centre throughout the years, thanks to the exchanges with members and practitioners, including data collected and frameworks developed by EVPA • It includes practical cases from EVPA members • Three sections: 1. Setting up a VP organisation 2. Investment strategy 3. Investment process THE EVPA PRACTICAL GUIDE (3/3) Thanks to the collaboration with LatImpacto Now also available in Spanish and Portuguese! 1. SETTING UP A VENTURE PHILANTHROPY ORGANISATION Funding model • Grant-making / Social investment (through loans, equity, hybrid financial instruments) Organisational structure • Background of the team (balance in between investment sector / social sector) • Role and level of engagement of the board (e.g. management-driven model, mixed model, investor-driven model) Fundraising • Where the resources come from (e.g. own endowment in case of foundations, corporations, governments, High-Net-Worth individuals, institutional investors, etc.) 2. THE INVESTMENT STRATEGY Investment focus • Social sector choices • Geographic choices Type of social purpose organisations to support • Legal structure • Business model • Stage of development Tailored financing and the different types of financial instruments Non-financial support • SPO’s social impact related skills (theory of change / impact strategy / impact measurement) • SPO’s financial sustainability (fundraising / revenue strategy / financial management) • SPO’s organisational resilience (human capital support / governance support) Co-investment policy Start making considerations on the exit strategy 3. THE INVESTMENT PROCESS 3. THE INVESTMENT PROCESS The first step of the appraisal process is a preliminary screening procedure of the investments opportunities available (deal flow), followed by a knock-out screening of the applicants that do not meet the standard application criteria (first screening) 3. THE INVESTMENT PROCESS Detailed screening, which will usually be performed (at least in part) through the analysis and validation of a business plan 3. THE INVESTMENT PROCESS Including: • Preparing the non-financial support plan • Choosing the best financial instrument • Discussing the exit plan 3. THE INVESTMENT PROCESS When the investment is actually managed. The EVPA Guide includes insights of management: • At portfolio level • At the SPO level 3. THE INVESTMENT PROCESS After having previously assessed the different exit possibilities, the VP organisation executes the exit, choosing whom to exit to (e.g. follow-on investors), balancing its own financial and social impact return expectations. 3. THE INVESTMENT PROCESS The investor for impact, after the exit, can continue to provide non-financial support in different forms, such as: • Providing access to networks • Helping the SPO look for follow-on investors • Keeping a seat on the board PHITRUST INVESTING FOR IMPACT IN EUROPE By Olivier de Guerre INTRODUCTION • History: • A meeting with Ashoka being launched in France in 2005, • Realising that Social Entrepreneurs needed Capital to develop their business and that classical funds/foundations, wil not provide it, • We launched Phitrust Foundation in 2006 to support and mentor Social Entrepreneurs, • We launched our first Social Investment fund in 2007 “PhiTrust Partenaires”, • We decided to apply Private Equity philosophy to support not for profit & for profit ones, • Our team in France, one of the first to adopt “VP philosophy” and EVPA vision, being convinced that we had to “reinvent” the way social organisations were financed and mentored, • Our vision is “Impact first” meaning that we aim at a social mission and that economic sustainability is a “mean” to develop impact: • It obliged us to change the way we develop capital into those social organisations, • It pushed us to develop a close mentoring, • We developed our own tools for measuring Impact (philosophy that European Investment