What’s the social value of a new app that connects me to the best pizza in town? Or a gadget that can help me talk to a fellow gamer in China? Maybe the answer is zero, but maybe not. There is a new investment trend in town and it’s called Impact Investing. While the East and West Coasts of America are already familiar with the term Impact Investing, the Middle East is not. But you know some Impact companies already: Tom’s Shoes. Ben and Jerry’s ice cream.
Doing good for people and planet are known themes in the eco world. But investors haven’t caught up. They may have followed on the clean tech bandwagon, and got burnt from solar, but since that’s fallen out of fashion, what’s next?
Aligning language with practice is a new organization in Israel called Impact Investing Israel with a mission to motivate investors and startups to connect to that place, grounded in reality, where society impacts made by companies can be tangible, measurable and real. You can find Impact Summits from Chicago to New York to San Francisco and now Israel is getting its first.
What can Impact Investment mean? A new startup that 3D prints artificial limbs? A device to help people grow food more sustainably? An app that saves people’s lives from malaria?
The idea of Impact investing seems to have been a natural knock-on effect of what’s been happening in the world of sustainability over the last 15 years where die-hards follow the Triple Bottom Line: People, Planet, Profits. Impact loosely follows the spirit, and is guided by organizations like the B Corp in the US which helps develop criteria for Impact investors to know – what kind of company will have a measurable impact on society?How can we judge and predict a startups’ future Impact?
Over in Israel, investors and entrepreneurs will explore the theme and opportunities at the country’s first Impact Investing Conference taking place on Monday, March the 16th.
I’ve been covering the startup scene in Israel for nearly 15 years. There are so many Israeli companies in biotech and cleantech that could easily be branded as Impact companies, a good idea now that the word clean tech is out since solar energy investments, and investments in biofuel, even promising electric car ventures went belly up. Impact is less specific and gives more room to breath. This is my assessment but I am sure I have lots to learn.
Getting to Know Impact
Ronny Faivelovitz, the founder of Impact Investing Israel tells me that the event is a primer, a way for the Israeli investment community to “get to know Impact Investing. There is a lot of talk and buzz about investing in this field,” she says, “but not everyone knows about how to do it right.
“The conference is about aligning this information,” Faivelowitz stresses. Coming from the sustainability world and now charged with the goal of impacting Impact, “I want to give all the information knowledge and techniques to Israeli investors and startups so they can assign to global standards. We will show case studies and ways to learn from experience.”
In the past Faivelowitz best describes her work with startups in the areas of “clean tech, water solutions, social businesses.”
She saw that Israel has a lot to offer and that Israeli companies have great ideas that can make an impact on society. And no, Impact isn’t just about Africa and feeding the poor, she stresses: “Companies need to know how to build a business plan and an Impact plan. That’s what an Impact Investor will want. They can’t just want to change the world, but need a sound ROI strategy in a global language standard,” she tells Green Prophet.
As for who’s on target for Impact, the event will showcase 11 Israeli startups that have demonstrated a measurable effect or potential for greatly influencing the health of society. But this is more of an event for investors: “The main subject we are dealing with is not from the side of startups,” Faivelowitz urges.
“We want to talk with VCs, private investors, philanthropists. We want to show them how and hold their hand as they take their first steps out in the field.”
Countering notions that Impact companies take longer for the Big Exit or IPO, Faivelowitz shrugs this off. “It’s not that all companies take more time. Each one is different. Most startups from the outset will not make an exit.”
What she does want to do is encourage traction in this investment area, because it’s worth it: “Investors should take it on as a professional field and strategic move. Research has shown that if you invest in these companies they will be more sustainable, and there is less of an investment risk over all because they are built according to regulation. And most can be profitable,” Faivelowitz says.
Consider this: “If you are building a company by definition as Impact it can actually help you with the next funding round because there are a lot of big institutes now already courting publicly their investments in Impact companies,” she concludes.
The event next Monday expects to bring out 300 people, mainly investors.
Who’s got it right? There is an Israeli company called Keepod that provides makes a small computer on disk on key, or a flash drive, for $7.
When you buy one the company also sends one to someone else in Africa. Like the Tom’s Shoes model. It all goes back to eco in the end. But I am going with the flow and believe Impact will be a much more sustainable direction than the eco brand or green, at least in terms of semantics. If not practice.
Among the speakers at the Impact Investing Conference will be:
- Sir Ronald Cohen, Social Impact Investment Taskforce
- Abigail Noble, World Economic Forum
- Eitan Stiva, Vital Capital
- Chemi Peres, Pitango
- Danny Almagor, Small Giants
- Robert Rubinstein, TBLI
According to the Impact Investing Israel group Israel has more “high tech start-ups and a larger capital industry per capita than any other country in the world. Now, an increasing number of Israeli innovators and social entrepreneurs are focusing their attention on solving some of the world’s greatest social and environmental challenges, from addressing issues of food security through agricultural technologies to providing sustainable energy and health solutions.”
Let’s wait and see what sort of Impact investments will be coming out of Israel.