Dimensions to Investment Patterns

Hedda Pahlson-Moller is a Business Angel focusing on Social Investing. Hedda currently holds board positions with the European Venture Philanthropy Association (EVPA) and the European Business Angel Network (EBAN), leading the Impact Investing Committee. She is Vice Chairman of the Luxembourg Microfinance and Development Fund (LMDF) and co-directs Chameleon Invest (CHI) seed capital fund and the women’s angel investing program, Rising Tide.

Hedda represents Ashoka in Luxembourg. Hedda is Adjunct Professor of Entrepreneurship at Sacred Heart University’s Executive MBA program and lectures for the University of Luxembourg on Social Enterprise & Social Innovation. OMSINT/TIIME (www.tiimeisnow.org) is an Impact Solutions organization providing Advocacy, Advisory and Investment services. Hedda co-founded and is Vice Chairman of the Impactory, a non-profit offering community-based support and working space for entrepreneurs and social entrepreneurs – which has evolved into NYUKO.lu

Hedda has an MBA from Copenhagen Business School, an M.A. in Political Economics from Lund University and an undergraduate degree from Brown University. She is an Executive Fellow with Essex University.

What is changing in the field of impact investing?

Impact Investing had been relegated as a niche – an ‘alternative’ product for a small target market, which wealth managers and philanthropists alike viewed with skepticism. But we have seen an unambiguous and steady increase in amounts invested alongside a solid track record of results. Buffered by growing public awareness in the social impact space, a new ecosystem is developing and spilling over into ‘mainstream’.

…and who are the main actors?

This are first and foremost the experienced elite of impact investing who have produced results validating the asset class. While social investing may be more ‘patient capital’ than their traditional counter-parts, the performance of funds specialized in impact investing have captured the attention of the financial service and corporate sectors.

Further development comes from new players on the emerging financial ecosystem addressing the needs of social impact projects – from ‘social’ Business Angel groups specialized in early stage capital to social stock exchanges. A steady flow of financial innovation with hybrid financing models, unique financial vehicles (like social impact bonds) and cross-sector collaborations contributes to the increasing fascination with impact investing.

Even the most unusual of suspects – the commercial banks and corporates – are developing their own products and solutions adapting social impact strategies’. Companies have gone beyond CSR and foundations to dabble in ‘corporate impact venturing’.

Finally, it is impossible to miss the ‘bottom up’ factor of inspirational stories from social entrepreneurship hitting social media waves, with the so-called ‘millennials’ being a catalyst of values-based organizational growth and their respective investments.

We are, in effect, watching a new dimension to investment patterns developing that will no longer remain a ‘niche’ asset class, but rather an entire new investment approach for private and institutional investors alike.

Can you describe best practice examples for successful corporate strategies with a special focus on Corporate Impact Venturing?

The most effective corporate impact strategies have both provided positive social impact while contributing to growing their business and even increase profitability – by attracting and retaining the right people, adopting relevant innovations and growing into new market segments.

EVPA’s study on corporate impact solutions provides 3 categories: Inclusive Business models, Corporate Impact Venturing and Strategically Aligned Corporate Foundations. Companies can one or a combination of these strategies in order to fuel growth and innovation, build an enabling eco-system for future business, attract and retain top talent, strengthen brand value and to improve supply chain efficiency.

Examples of social impact venturing included Danone’s funds (three – totaling 200 million euro), covering Communities (addressing poverty and last mile distribution), Ecosystem for sustainability improvements across its value chain and Livelihoods. ADIDAS has a green energy fund as well as an investment arm for ‘sustainable consumer brands’, or Renault with its 5 million venture company that invests in sustainably mobility solutions.

The most successful projects have exhibited collaboration across sectors and leveraging relationships with experienced social investment players. A wonderful example of that is the commercial bank, BBVA’s ‘Momentum’ project.

What are important preconditions and corner stones to foster the trend of applying Corporate Impact Strategies?

Preconditions necessary to foster the trend of effectively delivering a corporate impact strategy generally share five key conditions: a common agenda, shared measurement systems, mutually reinforcing activities, continuous communication, and the presence of a team committed to the outcome of the project.

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