This is the third article, in our three-part series on ‘Decoding Capria’s Impact.’ Read the first article, The Theory and Goal – that talks about how we use the logic model to define our impact strategy. Read the second article, The Framework – that outlines our comprehensive evaluation criteria for fund managers.
One of the many challenges faced by fund managers starting impact funds is to define impact and develop a framework to measure that impact. As part of Capria Accelerator, we have a number of modules dedicated to impact. We work with fund managers to address the following aspects of impact assessment.
1. Evolving the impact thesis
Once we have ascertained that the fund manager has thought through integrating impact in their investment philosophy, we brainstorm with each team to identify elements that will help streamline their impact thesis.
Vakayi Capital from Zimbabwe and Ida Capital from Turkey, Cohort 1 and 2 participants respectively, began their journey with us with a non-traditional perspective of impact. We worked with them to include a social and environmental impact strategy that would change the lens with which they make their investments.
2. Sampling impact for individual pipeline deals
Beginning with the first intensive, Capria works with fund managers to review opportunities for either warehousing or co-investments. Through the process, we support teams to collectively analyze impact of the pipeline companies.
3. Creating frameworks
As the first two steps evolve, we then determine the broad framework that will guide fund managers in future investments. This allows fund managers to act independently and define, quantify and monitor impact for each of their investments, with precision.
4. Assisting with impact
To complete the circle of impact measurement, we support fund managers with performance tracking, understanding the types of business decisions that can be made based on impact, reporting to various stakeholders, and marketing the fund to build social capital. For fundraising. we work with fund managers to include their impact strategies along with their investment strategies as part of their pitches.
Applying our core principles still further, there are some investment strategies, regardless of location or timing, that we would most definitely not consider as having positive impact. These include investments in businesses that do marked social or environmental harm, or primarily serve middle and upper income populations. For example, and with some degree of exaggeration to make the point most clearly, we would not embrace fund managers pursuing –
- Environmentally friendly production, packaging, and distribution of cigarettes or alcohol
- Mass rural job creation via coal mining
- Local manufacturing and distribution of ultra-low-cost firearms
- Tech investing in established entrepreneurial areas in middle income countries
- Manufacturing that creates jobs with poor working conditions and serves export markets
- Building hospitals that primarily serve high income people in low income countries
This is the third article, in our three-part series on ‘Decoding Capria’s Impact.’
Read the first article, The Theory and Goal – that talks about how we use the logic model to define our impact strategy.
Read the second article, The Framework – that outlines our comprehensive evaluation criteria for fund managers.