Scaling Impact: Finance and Investment for a Better World

About the Author
Acknowledgements
Preface
Contents
List of Figures
1 Introduction
	The global challenges we confront daily can feel overwhelming
	Is capitalism failing us? Does it need to be reimagined?
	Yet real and measurable progress is being made
	Example of progress: Expanding energy access to improve livelihoods in emerging markets
	Impact investing is still far too subscale
	Systems can change
	Capitalism is still the best solution, but we can do better
	Notes
Part I Seek Financial Health, Not Financial Access
2 Reassess the Financial Inclusion Revolution
	Hypothesis 1: Fintech serves a large total addressable market (TAM) in emerging markets
	Hypothesis 2: Fintechs are growing faster than traditional financial services segments
	Hypothesis 3: Fintechs attract even greater investor interest due to their dynamic growth
	Hypothesis 4: Fintechs serve base-of-pyramid populations and small businesses
	Hypothesis 5: Fintech products are superior to those of traditional finance providers
	Hypothesis 6: Fintechs demonstrate impact on customers’ lives
	Summary of key messages from this chapter
	Notes
3 Design Services That Build Financial Health
	Segment to understand customer value
	Prioritize underserved segments, such as female clients
	Be holistic
	Create pathways for customer growth
	Listen to customer voices to assess performance
	Measuring financial health
	Summary of key messages from this chapter
	Notes
4 “Measure Impact with Client Voices”—An Interview with Sasha Dichter
	Notes
Part II Provide Patient Capital, Not Venture Capital
5 Better Understand the Diverse Needs of Enterprises
	The growth and limits of the Silicon Valley venture capital model
	The Missing Middles
	A new way of segmenting enterprises to better understand their financial needs
	Four families of small and growing businesses12
		High-Growth Ventures
		Niche Ventures
		Dynamic Enterprises
		Livelihood-Sustaining Enterprises
	Differentiating the four families
		Lens 1: Product Innovation vs. Market Scale Matrix
		Lens 2: Growth Curves
		Lens 3: Entrepreneur Behavioral Profiles
	Summary of key messages from this chapter
	Notes
6 Explore Alternative Approaches to Better Serve Enterprise Needs
	A new paradigm of enterprise financing
	Five alternative approaches to closing financing gaps2
		Open-ended capital vehicles
		Blended capital structures
		Customized financing products
		Post-investment technical assistance
		Responsible exits
	Limitations
	Summary of key messages from this chapter
	Notes
7 “Reimagine Approaches to Provide Capital”—An Interview with Chris Jurgens
	Question 8: What are you focusing on now with respect to reimagining capitalism?
	Notes
Part III Be an Impact-First Investor, Not an ESG Investor
8 The Difference Between ESG and Impact Investing and Why It Matters
	The ABCs of ESG versus Impact Investing
	Avoiding “impact washing”
	ESG and impact on a spectrum
	Achieving impact alpha
	Putting it into practice
		Step 1: Define impact thesis and identify associated performance metrics and targets
		Step 2: Develop an impact rating tool to classify and diligence investments
		Step 3: Drive value through performance improvement plans
		Step 4: Design relevant impact monitoring and reporting frameworks
		Step 5: Evaluate and reinforce impact at exit
	Is it working?
	Summary of key messages from this chapter
	Notes
9 Raising the Bar on Impact Management and Measurement
	Redefine value
	Incorporate broader stakeholder perspectives
	Increase standardization of impact measurement
	Improve transparency and rigor of measurement where standardization is not appropriate
	Integrate financial and nonfinancial performance
	Make high-quality impact reporting mandatory
	Summary of key messages from this chapter
	Notes
10 “Mainstream Impact Management”—An Interview with Olivia Prentice
	Notes
Part IV Offer Catalytic Finance, Not Just Blended Finance
11 Unleashing Private Capital for Global Development
	The opportunities and challenges of financing SDGs
	Potential to mobilize private capital
	Making blended finance more “catalytic”
		#1: Demonstrate the potential of a new investment thesis
		#2: De-risk to better serve the needs of difficult to serve social ventures
		#3: Enhance the impact potential of investments with technical assistance
	Summary of key messages from this chapter
	Notes
12 Scaling Blended Finance Effectively
	Overview of blended finance
	Blended finance in practice
	Archetypes of blended finance
	When to Use blended finance
	Determining the right blending archetype(s)
	Choosing how to structure a blended finance vehicle
	Defining the level of concessionality
	Understanding financial and nonfinancial additionality
	Summary of key messages from this chapter
	Notes
13 “Challenge the Development Finance Status Quo”—An Interview with Joan Larrea
Part V Measure Success Based on  Results, Not Activities
14 The Unrealized Potential of Results-Based Finance
	Charting a new path forward
	The rise of results-based financing
	A menu of results-based financing options
		Impact Bond: Social and Developmental
		Social Success Note (SSN)
		Outcomes-based contracts
		Outcomes-linked pricing
		Social Impact Incentives (SIINC)
		Challenge funds
		Awards and prizes
		Auctions
	Mainstreaming results-based financing
	Summary of key messages from this chapter
	Notes
15 When, How, and Why to Use Impact Bonds
	A hammer looking for a nail
	How do impact bonds work?
	Five myths about impact bonds
		Impact bonds are not bonds
		Impact bonds do not crowd in new money
		Impact bonds are not the only type of results-based finance
		Impact bonds are not suited to all organizations
		Impact bonds can work even when external risks are large and hard to manage
		An impact bond success story
	Summary of key messages from this chapter
	Notes
16 “Link Financial Incentives to Impact”—An Interview with Bjoern Struewer
Part VI Provide Capacity Building, Not Just Capital
17 Enhancing Impact with Capacity-Building Services
	Making the case for capacity-building support
	Not all capacity-building support is equal
	Types of capacity-building services
	Capacity-building delivery models
	Digitalization21 of capacity building
	Summary of key messages from this chapter
	Notes
18 Fulfilling the Potential of Capacity-Building Services
	Select the right enterprise to support
	Charge enterprises to improve performance
	Address problems: focus on group-based problem-solving approaches to learning
	Learn by evaluating enterprise performance
	Lead by example
	Summary of key messages from this chapter
	Notes
19 “Scale Based on Evidence of Effectiveness”—An Interview with Nicholas Colloff
20 Conclusion—What We Can Do to Scale Impact
Glossary
Selected Bibliography