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  • 1.  Figuring out funding sources for impact driven initiatives

    Posted 07-09-2023 15:01

    Hi, everyone, such a pleasure to join this community. I'm Ed Morata, banker / asset manager converted into sustainability advocate and practitioner, having founded ForFuturing some years ago to advise entities on how to transition from old-styled management into responsible / impact management, having through it got involved in a series of projects aimed at raising funding for companies / projects, having recently managed two rounds of funding for DEEP ESG, a start up that developed solutions to automate gathering of data of environmental (mainly) and social footprint of businesses; being part of the investment committee of funds to invest in carbon credits; and developing a plan to advise a to-be-launched fund to invest in climate offenders and support their transition into sustainable practices. 

    I'd love to learn more about innovative initiatives of fund raising that you might have got introduced to, and to share how our experience has been on the cases I mentioned and more. 

    I look forward to hearing from you all, warm regards, be well, Ed



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    Edvaldo Morata
    Executive Director
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  • 2.  RE: Figuring out funding sources for impact driven initiatives

    Posted 07-09-2023 16:09

    Hi Ed,

    So great to see you here! Welcome.
    Look foward to seeing other member's thoughts here



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    Aya Pariy
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  • 3.  RE: Figuring out funding sources for impact driven initiatives

    Posted 07-09-2023 18:56

    Edvaldo 

    Some thoughts that might be helpful although as you have been in the space for a while maybe things you have already reflected in your work.

    Attracting funding for Impact driven Initiatives

    It is crucial to define what you are delivering with the initiative seeking funding and to then target funders seeking to drive those non-financial outcomes in  addition to matching their financial risk return objective. 

    In practice this is a complex task; financial returns are themselves uncertain but the outcome has a common currency.  However in the ESG, Sustainability and Impact space the meaning of words and terms are local, context and user dependent.  Even data points are similarly context dependent in attributing value and significance or materiality to any data point.  

    Funders can be: Impact agnostic, harm adverse (Responsible), place financial value on impacts (where there is a narrative to long term return enhancement or intangible asset built), or explicitly value and seek to contribute to "public good" either global/systemic (as in GHG emissions) or local ( social,nature or human capital building).  As in all fund gathering or raising the product or initiative needs to have a good, articulated and robust customer fit.  

    Targeted financial returns and high level metrics can meet technical hurdles which may be the limit of some investors' engagement.  However in the impact world a narrative and evidence of material impact outcomes will be needed. Given the complexity and variability of methodologies, basic metrics comparing dissimilar investments are likely to have limited value when only single points in time.  If data is consistently tracked over time and verified a trend showing a positive impact dynamic can be useful at investment and portfolio level. The latter will only evolve with time. Proof of Concept for metrics and building a positive reputation and trust in data sources.  For more engaged funders with their own definitions and opinions of what impact is and how it offsets financial return a qualitative, philosophical as well as quantitative should be essential in attracting investment.

    Third Party validation of Impact can be achieved by attracting high due diligence funders with specific outcome focus.  So Blending development funding, grants and philanthropy involvement can be helpful and these funds then leveraged with more financial plus impact orientated funders.

    David



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    David Manuel
    Partner
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  • 4.  RE: Figuring out funding sources for impact driven initiatives

    Posted 11-09-2023 15:22

    Dear David, 

    Thank you for your message. Indeed, we've been through some of the processes you mention, be it when raising capital for a fund to invest in carbon credits and for impact-driven start-ups. 

    Our experience, having worked most of the time with innovative concepts / products - by coincidence rather than plan - has been one where "educating" the potential investors was key to success, and having clarity about the metrics to be used being at the core of it. 

    Best, 

    Ed



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    Edvaldo Morata
    Executive Director
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