Impact investees are businesses that are intentionally seeking to harness investment capital to meet pressing social challenges and that measure whether or not they are succeeding. Impact investors are those that “intentionally seek to target both societal and/or environmental objectives along with a financial return and measure the achievement of both”.
The impact continuum, put forward by the Social Impact Investment Taskforce, features the spectrum of impact capital ranging between sustainability and philanthropy. It shows that impact investment is a strategy that can be applied across a variety of asset classes, including impact private equity and venture capital. The spectrum also reflects the diverse opportunities for the private equity and venture capital sector to invest in impact-driven organizations.
Sir Ronald Cohen, Chair of the Social Impact Investment Taskforce established by the G8 and one of the founders of the BVCA, offers his perspective on social impact investing, which he calls “the next big thing” – as big and lucrative as the venture capital revolution was some 40 years ago.
There is widespread acceptance that “profit with a purpose” is a worthy objective and that the number of players interested in participating in this sector is increasing and could rise further.
The infographic below provides an overview on the state of the UK social investment market. One of the key findings is that the primary motivation for traditional investors to allocate capital to impact investments is because they are a part of their commitment as a responsible investor (Source: 2014 impact investor survey by J.P. Morgan and the Global Impact Investing Network).
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