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Can we put a dollar value on impact? Reactions to the Rise Fund’s ‘impact multiple of money.’ When TPG Growth’s Rise Fund acquired a big stake in the educational technology company EverFi two years ago, the private-equity firm calculated not only expected financial returns, but the dollar value of social benefits driven by EverFi’s products and services. The expected results: More than a half-billion dollars of social value in the form of alcohol-related deaths reduced, sexual assaults averted and student debt burdens lowered. In the private-equity firm’s new parlance, the EverFi investment is expected to deliver a 5X “impact multiple of money.”
The Rise Fund, and its measurement consultant Bridgespan, laid out the methodology behind the calculation last month in Harvard Business Review and an excerpt in ImpactAlpha. The case study fudged actual numbers to preserve confidential information (the case study cited a $100 million investment, while the original announcement pegged Rise’s stake in EverFi at $120 million). The Rise Fund has generally been applauded for making explicit its approach to impact measurement. Other high-profile “world positive” funds, such as Obvious Ventures and Steve Case’s Rise of the Rest fund have eschewed impact measurement as too big a burden on entrepreneurs.
- Not everyone is convinced. Though Rise Fund has apparently trademarked the term “Impact Multiple of Money,” impact investors and others have been calculating the economic value of social and environmental returns for decades. Jed Emerson, who pioneered methods to measure “social return on investment,” sounded a warning about the limitations of the Rise Fund’s methodology. “Monetizing impact should not be our end-goal in assessing its value,” Emerson told ImpactAlpha. Such a focus “side steps the opportunity we have to invest in funds and firms that address larger, systemic challenges.”
- Added rigor. Maoz Brown of the Wharton Social Impact Initiative told ImpactAlpha the Rise Fund’s approach “demonstrates how investors can use secondary research to build rigorous impact projections.” Investors can go further, “by using research findings to improve, not just predict, impact performance.”
Read, “Can we put a dollar value on impact? Reactions to the Rise Fund’s ‘impact multiple of money’,” by Dennis Price on ImpactAlpha.
Dealflow: Follow the Money
African Leadership University secures $30 million to train Africa’s future leaders. Mauritius-based African Leadership University, or ALU, is a for-profit university with an ambitious goal of teaching three million African students by 2035. ALU, launched in 2004 as an elite high school program in South Africa, has expanded to undergraduate, graduate and workforce training. Students can cover the costs of their education through income share agreements in which they repay a percentage of their income for a fixed period of time. The $30 million Series B financing, led by Danish billionaire Anders Holch Povlsen, will help ALU expand its post-graduate leadership and technical training. Learn more.
Sky7Ventures backs Abita Healthcare to streamline India’s health services. India’s healthcare system is well-known as overburdened, under-staffed by physicians and health specialists, and costly for the majority of the population that pays out of pocket for healthcare costs. Gurgaon-based Abita helps automate services at dental clinics and other specialized services in India’s second-tier cities. Michigan-based early-stage investor Sky7Ventures provided an undisclosed amount of capital. Abita is eyeing expansion into new markets, including the U.S. and U.K. Read on.
Nonprofit Finance Fund makes loan to impact-tech marketplace TechSoup. San Francisco-based TechSoup has helped more than a million nonprofits and charities acquire almost $2 billion in donated or discounted hardware and software. The Nonprofit Finance Fund’s $4 million loan is TechSoup’s second round of financing from NFF. The organization is also fundraising via a direct public offering on impact investing platform SVX.US. Here’s more.
Agents of Impact: Follow the Talent
Follow the talent. New California Gov. Gavin Newsom named Lenny Mendonca as the state’s chief economic and business advisor and director of the office of business and economic development… Eve Tetzlaff joins Opportunity Zone venture fund The Pearl Fund as a partner… Kanini Mutooni, ex- of the East Africa Trade and Investment Hub, comes on as Toniic’s managing director of Europe, Middle East and Africa.
Seize the opportunity. Acumen is spinning out Lean Data as 60 Decibels, with a global team of 30 in the U.S., U.K., India and Kenya (see, ImpactAlpha’s Measure Better series).* The new for-profit firm is hiring a director of finance based in New York… MaRS is recruiting a director of public sector advisory and other roles in Toronto.
* Editor’s note: Acumen is in the process of spinning off Lean Data, a process the firm expects to complete by end of Q1, 2019. A previous iteration of this post incorrectly suggested the spinoff was complete.
— January 8, 2019.