I'm excited about the prospects of using private financial capital to fund impactful initiatives in areas that would in most cases be to risky. This can be done by seeing the high-risk areas a place for R & D, CSR, or a way to mitigate reputational risk. The problem is its complex. There are a couple examples here about trying to make this vision a bit simpler to understand without lying through simplistic propositions.

1. Impact Investing?
Venture Philanthropy?
Social Finance?
Patrick Keenan
me@patrickkeenan.me
Slides from:
Acumen Fund
Arthur Wood
Hope Consulting

2. The Spectrum of Social Capital Investment - created in 1888 / 1944 –
“essentially pre modern capitalism” – the Gap
no financial return below market return market return
High risk
Low risk
Grants
$400bn
50%
Programme-related
investments
Venture
philanthropy
Mainstream
“For Profit”
Investments
Investment plus
Social Responsible
Investment
circa $4trn
Corporate
Engagement incl
CSR
”
NO INDIVIDUAL OR SYSTEM
MECHANISMS – THE GAP

3. Value Chain Financing – Sanitation
Grants Recoverable Grants
Investment Plus
Mainstream
Investments
no financial return below market return market return
Scale (GAVI) & Synthetic Profit (Corporate
incentive)
Increase the credit quality of social capital markets ie. Leveraging - Microfinance / DB Eye fund model
Incentivising Innovation / Collaboration at the bottom of the pyramid – Social Entrepreneurship
Enables a Range of Financing options; incentivising corporates, banks, civil society;
integrating “ for profit” and “not for profit” players
Based on “Foundations and Social Investment” Margaret Bolton 2005 and Bates Wells & Braithwaite
Legal Process
– ie L3C / CIC
Financing Mechanisms incentivising Community and Corporates Carbon / Vouchers / Fertiliser / Power
Programme
Related Investment

4. WHAT DO I DO IF I AM A BANK OR GOVERNMENT ?
Paul Martin - Former PM of Canada
“The question I would put to you is quite simple” – Nov 2007
“If we are prepared to use these kinds of (tax / legislative)
incentives to enable business entrepreneurs to tap capital
markets for the betterment of the economy, why would we
not provide similar incentives to social entrepreneurs as they
seek to tap capital markets for the betterment of society.
• Financial experts ought to be developing new cutting edge
instruments to make funding available to social entrepreneurs
• Tax experts ought to be thinking about mechanisms that can
support social enterprise in a meaningful way.
• Legislators should encourage an environment that allows
foundations to become more imaginative in support of social
enterprise”.

5. 55
Patient Capital for long term social impact
Financial
return
expectation
No return
Traditional venture capital
Maximize financial return
Maximize
Social impact
expectation
No explicit concern Maximize
Capital
only
Traditional philanthropy
Maximize
social impact
Patient Capital
Blending social and financial
returns for
long-term social impact

6. 66
Early stage
Scale up
Exit at Scale
Recycle
returns
We invest money and time to grow real businesses that
alleviate poverty, and then recycle our returns
8-10 years
Invest grant
funds in start
up equity or
debt
Grow businesses
focused on social
impact and
sustainability
Recycle
returns into
more
businesses
1 2 3

7. 77
An investment in water delivery…
• PROBLEM Government policy of free water has failed
• SOLUTION WHI sells affordable clean water
– Innovative technology works with unreliable power
– Costs covered by user fees + local govt subsidies
– Started with 1 plant in Andhra Pradesh, India in ‘05
• INVESTMENT Acumen Fund investment in 2004:
– $675k equity + $2M in subsequent loan guarantees
– Hands on management support to launch business
• IMPACT By end-2009, WHI had:
– 286 plants serving ~300k customers
– 220 more plants on order by State government
– Raised $22M in follow-on equity and $24M in
commercial debt facilities

8. 88
…is catalyzing an entire industry to serve the poor
0
100
200
300
400
500
600
700
800
900
1,000
2004 2005 2006 2007 2008 2009
Others
BV
Naandi
WHI
Number of private rural water plants in India
WHI and Naandi
start JV
• Over 700 plants
inspired by the
WHI model
• ~900 plants serving
~ 1M people across
India
• State governments
now passing
legislation to
enable large scale
replication
Private sector
replacing the public

9. The process
FIND
Amazing
Entrepreneurs
SCREEN
Breakthrough Idea,
Sustainability & Impact
INVEST
$, Expertise &
Patience
∞IMPACT
LIVES CHANGED
Unleashing a person’s full potential
= infinite growth
SUSTAINABILITY
Businesses that keep on going and going;
Returns are recycled
SCALE
Shifting mindsets, catalyzing a
sector, public sector partnerships,
inspiring others to do the impossible
DONOR

13. Value Chain Financing – Sanitation
Grants Recoverable Grants
Investment Plus
Mainstream
Investments
no financial return below market return market return
Scale (GAVI) & Synthetic Profit (Corporate
incentive)
Increase the credit quality of social capital markets ie. Leveraging - Microfinance / DB Eye fund model
Incentivising Innovation / Collaboration at the bottom of the pyramid – Social Entrepreneurship
Enables a Range of Financing options; incentivising corporates, banks, civil society;
integrating “ for profit” and “not for profit” players
Based on “Foundations and Social Investment” Margaret Bolton 2005 and Bates Wells & Braithwaite
Legal Process
– ie L3C / CIC
Financing Mechanisms incentivising Community and Corporates Carbon / Vouchers / Fertiliser / Power
Programme
Related Investment

20. Thanks!
Patrick Keenan
me@patrickkeenan.me
Slides from:
Acumen Fund
Arthur Wood
Hope Consulting