Impact investing tools in europe IV Spring Meeting on Social Entrepreneurship, Social Finance and Depopulation in Europe 9th may 2018

Index What is EVPA? Challenges in the social investment market Hybrid Finance: a way to address these challenges Innovative solutions: hybrid financing vehicles A European Commission initiative

OUR COMMUNITY AND THE VP APPROACH 1. WHAT IS EVPA OUR COMMUNITY AND THE VP APPROACH How many, type of members, countries, support what type of orgs, provinding what whit which approach + 3 strategic objectvise: Increase funding and expertise coming into the Venture Philanthropy and Social Investment space Increase the effectiveness of Venture Philanthropists and Social Investors Co-create a well-functioning ecosystem for societal impact

CHALLENGES for VPO/SIs 2. CHALLENGES IN THE SOCIAL INVESTMENT MARKET (1/2) FROM THE VPO/SI‘s POINT OF VIEW CHALLENGES for VPO/SIs Lack of investable opportunities for VPO/SIs Difficulty in launching sizable social investment funds High transaction/structure costs

2. CHALLENGES IN THE SOCIAL INVESTMENT MARKET (2/2) FROM THE SPO‘s POINT OF VIEW (Source: Bolis et al. 2017) 

3. HYBRID FINANCE: A WAY TO ADDRESS THESE CHALLENGES (1/2) THE DEFINITION

3. HYBRID FINANCE: A WAY TO ADDRESS THESE CHALLENGES (2/2) THE OBJECTIVES

HYBRID CO-INVESTMENT FUND FOR EARLY-STAGE SOCIAL ENTERPRISES 4. INNOVATIVE SOLUTIONS: HYBRID FINANCING VEHICLES (1/2) THE EXAMPLE OF FASE HYBRID CO-INVESTMENT FUND FOR EARLY-STAGE SOCIAL ENTERPRISES In Germany, the Financing Agency for Social Entrepreneurship (FASE) is setting up a hybrid co-investment fund to serve a specific segment of the VP/SI market: early-stage social enterprises. The fund would provide moderate financial returns (i.e. 2% to 5% across different investment tranches).  The volume foreseen for the fund is € 20 million to support about 80 social start-ups over a five-year investment period. Mezzanine capital and/or equity over the duration from 5 to 6 years will be the financial instruments deployed through the fund. The fund will have a multi-layered structure, which will combine hybrid capital: bringing philanthropic, public and social investment actors together. One important characteristic of the SEs that the fund also takes into account is the maturity or development stage. Young start-ups with an initial proof of concept of both the business and the impact models, which have to scale their product or service to gain a foothold in the market, need between € 100k and € 500k in capital. Mature start-ups already successfully persisted in the market in both the business and impact dimensions, typically require above € 1 million to continue growing. More info at: https://www.mckinsey.de/files/170109_report_impact_investment_hybrid_fund.pdf

4. INNOVATIVE SOLUTIONS: HYBRID FINANCING VEHICLES (2/2) OTHER EXAMPLES IN OUR REPORT http://bit.ly/F4SocImp

AN EC GRANT TO SUPPORT SOCIAL INVESTORS 5. A EUROPEAN COMMISSION INITIATIVE UNDER THE EaSI ROGRAMME TRANSACTION COST SUPPORT FOR SOCIAL ENTERPRISE FINANCE AN EC GRANT TO SUPPORT SOCIAL INVESTORS The grant serves as an incentive for making investments of below EUR 500k in social enterprises, covering some of the transaction costs incurred by intermediaries e.g. travel expenses, lawyers' fees, due diligence and business development support-related costs. 1st pilot call for proposal, launched in 2017  2 projects selected so far, further applications are under currently evaluation 2nd call for proposal is planned to be launched during 2018 (Source: DG EMPL, 2018) 

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Thank you for your aTtention agianoncelli@evpa.eu.com