There is no doubt that our species face an existential crisis in the 21^st century. Climate change effects are accelerating around the world, affecting billions of lives and exacerbating existing inequalities. The migration crisis, pandemics, famines, political instability – the list of symptoms is quite long indeed.

Governments, businesses, and most important of all, billions of people around the world realise the need for a change in the status quo. And millennials and the younger generations, whose future is at stake, are starting to demand more action.

This change in attitude is also reflected in the realm of investing – there are many “buzzwords” in the mainstream media to reflect this zeitgeist of ‘do good’ investing. They include terms such as impact investing, ESG investing, and SRI/ethical investing.

While they may share a common desire for “change,” there are significant differences, some subtle, others quite drastic. In this article, I hope to shed some light on these differences and provide you with a better understanding of impact investing, and its position in the evolving world of investments.

The basic features of impact investing

The Global Impact Investing Network (GIIN) defines impact investing as – “investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.”

Impact investing has four defining characteristics:

• Intentionality – the investor must have a clear intention to create positive change in society/environment
• The expectation of returns – the investments should be capable of generating a financial return on capital, or at the very least, a return of capital.
• A wide spectrum – investments can be in any asset class – VC, private equity, fixed income, cash equivalents or others, with targeted returns that range from below market to risk-adjusted.
• Impact measurement – the investor should be committed to transparency and accountability, in measuring and reporting the actual positive impact generated by the investment.

As a result, impact investing is more exacting and has a tighter focus – instead of looking at larger corporations, its focus is often on smaller projects and startups with transformative potential in specific locales and communities.

Also Read: Why is impact investing suddenly so hot?

What makes impact investing differs from philanthropy is its expectation of financial returns on top of creating positive social/environment impact, whereas philanthropy focuses on the latter with no expectation of financial returns.

At first glance, impact investing may even seem like taking on the role of public services or NGO, which makes one wonders if it brings any distinguishable benefit? The answer is yes and it lies on self-sustainability and efficiencies.

The operating model of public enterprises and NGO are not created to be financially self-sustainable – they rely on continued financial supports from government findings and ultimately taxpayers monies to support its philanthropic causes.

For the case of efficiencies, it is widely known that the public sectors do not share the same level of efficiencies compared to a business enterprise. In part this is due to incentive structure – businesses have an incentive to be efficient because increased efficiency means greater profitability for the businesses which then leads to greater compensation for the mangers.

Impact investing, on the other hand, is based on a model that fits economic reality as allows the invested enterprises to be financially self-sustainable and profitable, while bringing positive impact to its desired causes with businesslike efficiencies.

Impact investing v/s traditional investing

In traditional investing, there is only one prime motive – generating positive financial returns, no matter the negative externalities. If a stock is profitable, you invest in it regardless of its impact on society or the environment. The sole purpose of the company looking though the lens of traditional investing is to maximise shareholder value.

Impact investments are also expected to generate positive financial returns – they are not philanthropic investments. But unlike the traditional model, impact investing plays a huge emphasis on generating positive change in society/environment alongside a financial return.

Also Read: [Update] Denmark’s 3B Ventures launches new US$60M fund for impact investing

Impact investing v/s socially responsible investing (SRI)

Also called ethical investing, SRI arose primarily in the 1950s and 1960s. It is based on the idea that some businesses can have an overtly harmful impact on people and society and should be avoided. Investors avoid such “sin stocks” – alcohol, tobacco, gambling, weapon manufacturers, and others – on religious, moral, or political grounds.

Both SRI and Impact Investing share a desire to generate positive ROI, but beyond that, the intentions are quite different. In SRI, the investor desire is to avoid supporting companies or industries that pose harm to people, society, or the environment. There is no intention or attempt to proactively induce a positive change, which is a core tenet in impact investing.

Understanding the basics of ESG investing

ESG, which stands for Environmental, Social, and Governance, gained credence in the early 2000s as a buzz-word in the investing world, particularly after the publication of “Who Cares Wins” in 2004 by the UN Global Compact. Global Sustainable Investment Alliance (GSIA) and The Forum for Sustainable and Responsible Investment (US SIF) are the main proponents of ESG. Funds that follow and integrate broad ESG principles to some extent are valued at over US$45 trillion by JP Morgan in 2020.

ESG shares the basic rationale behind SRI – avoiding certain stocks due to their negative repercussions for society/environment. What ESG does differently is in redefining the perception of “risk” to include other factors besides financial risk. For example, an oil spill or chemical leak would be an environmental risk. Racial discrimination, gender inequality, and pay gaps would fall under governance risk.

All these factors have the potential to create negative PR and drive down the value of the company in the stock market. Integration of ESG ratings allows investors to make an educated choice when selecting stocks – avoiding high-risk ESG stocks, opting for stocks that either has a low risk or even rewarding companies that actively try to improve their ESG issues.

Impact investing v/s ESG investing

ESG does have the potential to create a positive impact on the environment and society. As more investors incorporate ESG risk factors into their portfolios, companies are incentivised to address these issues.

But it is also plagued by a lack of clarity and precision – there is no single unified ESG rating system. There are multiple agencies like Vigeo Eiris, Oekom, and MSCI – they all have their leanings towards Environment, Governance, or Social end of the spectrum.

Also Read: Ecosystem Roundup: UOB’s VC firm makes 1st close of its impact fund at US$60M; Indonesian startups raise US$1.9B by Q3 2020

And to make things worse, there is no established reporting paradigm for companies to follow. For instance, it is completely voluntary for companies in the US to make ESG disclosures. When the ratings are based on inadequate data, it also significantly reduces the chance for the positive impact that an ESG investment can have.

Impact investing fares somewhat better in this aspect. Since ESG factors are imprecise/vague, Impact Investing is closely aligned with the UN Sustainable Development Goals (SDGs). Investments are channelled towards initiatives that have clear potential in contributing towards SDGs.

Reporting is still a challenge, as the business world is still in the early days of creating universally accepted tools for measuring the non-financial impact of investments. But as reported by Harvard Business Review, new metrics like Social ROI and Impact Multiple of Money (IMM) have shown a lot of promise.

But the main thing that sets impact investing apart from ESG is the intentionality – there is a desire for proactive action to generate change through impact investments. This is lacking in ESG, which is still based on the avoidance principle.

Currently, the size and scale of ESG market dwarfs impact investing by a huge margin at US$45 trillion and US$715 billion, respectively. This is understandable, given the tighter focus of impact investing – far fewer stocks would be in a position to fulfill its requirement criteria.

Both have their limitations, but are also vital in the quest for a sustainable future. There is abundant space for the growth of both these forms of investing, particularly in Asia, home to nearly 60% of the human population.

It is already a global hotspot for impact investing with a CAGR of 23% between 2015 and 2019 (second only to Europe at 25%), according to GIIN. ESG investments are also on the uptick among fund managers in the region, a knock-on effect of strong performances in Europe and North America.

With the ongoing crises and increasing public awareness, I would expect both impact investment and ESG investment will have a massive role to play in the coming years, but in their own unique ways.

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The United States Agency for International Development (USAID) and RTI International, through its partner Villgro Philippines, has named the winners of a virtual hackathon to find new solutions to long-standing family planning (FP) and teen pregnancy challenges.

The winning team Aster Alliance was awarded PHP1.5 million (US$31,200) in award subsidy while runner-up teams Yaka.ph and Edukasyon.ph received PHP750,000 (US$15,600) each.

Twenty-one participating teams went through the various stages of design thinking to ideate and create prototype solutions. Over the course of 48 hours, the teams took turns meeting 20 innovation mentors, refining their ideas, and developing their pitch to win.

“Teenage pregnancy rate in the Philippines remains high and the pandemic has made it more difficult for Filipino women and girls to access FP information, commodities, and services. This is a great time to create new, innovative solutions to address these issues,” said USAID/Philippines Office of Health Director Michelle Lang-Alli in her event opening message.

Also Read: Meet the 10 startups selected for Habitat for Humanity’s ShelterTech accelerator

Aster Alliance, formed by four engineering students from the University of the Philippines, is a direct-to-consumer adolescent and youth reproductive health platform that enabled smarter family planning.

Yaka.ph is a unified platform for reproductive health tracking, online counselling and prescription deliveries, while Edukasyon.ph utilises a personalised Artificial Intelligence chatbot and study materials to address the lack of sexual and reproductive health education among youths.

In addition to closing a Series A funding round, Edukasyon.ph has recently named Grace David as its new CEO.

The winners will receive three months of incubation support from Villgro Philippines to help develop the innovations and connect with partners who can lend further support.

“We were thrilled by the innovations we witnessed unfold during the Innovation Challenge hackathon. We look forward to working with the winners to further refine and develop their solutions over the next three months,” said Priya Thachadi, Co-founder & CEO of Villgro Philippines.

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Image Credit: Joey Pilgrim on Unsplash

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If there’s one major impact that the pandemic has brought in 2020, it is how people communicate. With reduced opportunities to physically interact with each other, people have started utilising tech in work like never before. From Zoom meetings to virtual coffee to online conferences, the list goes on.

Since communication is such an important part of my role as a writer in e27, a large portion of my year went towards experimenting with strategies to network effectively with people.

In the process, I discovered that I was suffering from an illness widely known as the Zoom fatigue.

This is characterised by periods of exhaustion as a result of meetings lined up on one’s Google Calendar. I think we can all safely say that we have been a victim to that at least once during 2020.

While some may argue that vaccines have started to roll out, and with that, mankind has found a way out of virtual meetings, chances are high that the new working normal will likely continue throughout 2021.

I say this because tech giants such as Twitter, Google and Facebook have already announced the continuation of their work from home policies to the next year, and many other companies are likely to follow their lead. Also, many nations are yet to figure out a way to roll out the vaccine extensively.

Also Read: Work from home risks every employer needs to be aware of

While initially, I was experiencing moments of mental explosion by hopping on two-to-three calls a day as I had to finish cooking my meal on the side and take my dog out for a walk, I have truly started embracing the process now.

Here are four tips to improve your virtual networking experience:

1. Creating your own “power spot”

This is something that I learnt from Japanese author and lifestyle guru Marie Kondo in her book Joy at Work which I personally found to be very effective.

Kondo encourages working professionals to have their own “power spot” which consists of items that they love –-a personal space that is aimed to bring a joyous vibe.

For example, if someone loves plants, they can create a spot in their home filled with greenery. The very fact that the spot is filled with everything that one deeply loves can automatically be therapeutic in nature.

In my case, I attempt to fill my power spot with music. Keyboard and speakers in the room helps me unwind and relax my mind after every short meeting.

2. Making a good virtual impression

Remember how you used to dress up smart for any networking events so that you make a good impression? That rule still applies during virtual video calls with people.

Also Read: This is the only work from home advice that you need to read

As we near the end of 2020, the bar has been raised and people are now investing in professional setups for their video engagements to make a good impression.

To avoid making a bad impression during a virtual networking session that includes a shoddy background, dark lighting and cluttered background, one can always invest in low-cost products to build a great first impression with your virtual network.

Some of the things you can use: a selfie ring (for brightness), a plain white background and Krisp.ai for effectively cancelling the noise around you.

3. Keep it short

Making small talk is out while brief and focussed conversations are in.

Since people have more fixated time slots to communicate, respecting people’s time and keeping the meeting focussed on discussion points will go a long way.

To do this, I make a note of the topic of discussions during the interview so that I know exactly when a conversation is going off-track and can effectively reroute it.

Also Read: 7 tips for even the most timid entrepreneurs to succeed at networking events

But keeping it short also doesn’t mean we are completely robot-like and fail to ask people meaningful questions like how their day was.

4. Secret weapon

One of my best findings this year has been a chrome extension called Crystalknows, an extremely effective tool in networking effectively with people outside of your work/country.

Crystalknows uses a technology called personality AI that makes use of machine learning and AI to predict someone’s personality using their online footprint. Since building a good rapport is such an important quality of networking, this software can help you do just that with people you have never met before. The software even tells you how you can handle conflict or please your interviewer. Creepy, but useful.

Hope these tips helped, even if you pick just one out of the four I can guarantee you that you will enjoy the process of virtual networking.

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Image Credit: Abbie Bernet

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Skuad, a digital payroll platform for remote teams, has secured US$4 million in a seed funding round, led by Singapore-based VC firm BEENEXT and venture investment platform Anthemis Group.

Other investors in the company included Alto Partners Multi-Family Office and Rohan Monga, CEO of Zenius Education.

With the new funding, Skuad intends to develop its remote employment infrastructure and scale its growth team across multiple geographies.

The idea for Skuad sprouted into the minds of the three co-founders –Sundeep Sahi (former CPO at Brand Networks), Naman Singhal (former CEO of AppStreet) and Dave Fall (former CEO Brand Networks)– after they experienced the pains of running a remote team with their previous companies. This included setting up legal entities and ensuring remote compliances for each country.

Since every country has its own unique requirement, the trio decided to come up with one “global employment platform” where companies can hire remote employees without setting up subsidiaries or local infrastructure in other countries.

Skuad employers are able to pay their remote workforce seamlessly on one platform. Beyond automating global payroll, local compliance and taxation, the platform also manages benefits for remote employees across the globe. In order to use these services, employers have to pay a flat fee per employee they hire via its website.

Also Read: The beginning of the decentralised office — are you ready for a remote working future?

In addition to these services, Skuad also helps working professionals find the right kind of remote working opportunities.

“We started building Skuad pre-COVID-19 with a vision of a flat world where great talent can have an amazing and fulfilling career in their own city or country while working remotely for thriving companies that would love to hire them. The pandemic reinforced further this idea across the globe and we are already seeing a significant uptick on this demand in various corridors,” Sahi told e27 in an email interview.

“We are a platform that simplifies the global team hiring by standardising employment contracts for various countries, digitising global payroll and compliances as well as automating payments to remote employees to pay them in their local currencies. We charge a flat fee per remote employee per country to hire, pay as well as manage their local compliance and taxation,” he further explained.

Skuad’s platform for hiring has been used by many large companies such as Indonesian tech giant gojek and Indian telecom giant Airtel.

As of now, it has over 90 people in its team, distributed across four continents.

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Image Credit: Skuad

 

 

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DRVR, a fleet analytics software provider for logistics and passenger vehicles, announced today that it has raised an undisclosed amount of funding from Smart Axiata’s Digital Innovation Fund.

With the funding, the company wants to expand its services into Cambodia and hire across the board, DRVR co-founder and CEO David Henderson told e27 in an interview.

The Bangkok-based startup was founded in 2014 by Henderson (CEO), Yevgen Peresada (Chief Architect), and Damien Williams (CFO).

The way it works is that vehicles that use the DRVR technology are attached with sensors that transmit data into the DRVR app. The application then processes and analyses the collected data, and turns the information gathered into actionable insights that shows fleet performance metrics.

“Suppose you have a fleet of trucks delivering goods. As soon as a truck leaves your warehouse, you lose the visibility of it. You don’t know where exactly the truck is, how it’s being driven, or if someone is pinching your cargo or valuable fuel, etc. What if you could make a digital clone of the truck and put that on the internet? You could suddenly see in real-time information about the way it is being driven,” Henderson said.

Also Read: News Roundup: Co-living operator Hmlet expands in Japan, appoints new CFO, CTO

“This is what we do. We can also help you predict if it’s going to break down and help you service it. We take this raw data and we transform it into actionable knowledge,” he continued.

In addition to sharing its latest funding announcement, Henderson also shared the struggles that the startup has faced recently in growing its company.

Two years ago, DRVR faced a major setback when it lost its largest customer. While there were other reasons behind it, one of the main ones was because its client wanted DRVR to build a product that was not aligned with its focus.

“In 2018, we lost our then-largest-customer because they wanted us to build a new product for them, and this simply did not align with our plans. A choice had to be made; we decided not to go in that direction but focus our efforts in another area (AI Fuel). These kinds of painful decisions sometimes have to be made,” he said.

“We had hoped that we might be able to keep them as a customer and move in our own direction, but you can’t have your cake and eat it too. You can’t be all things to all people or you end up being nothing,” Henderson stressed.

The pandemic has not been easy for the startup as it faced challenges. It had to pivot from implementing a direct sales model to a partner sales model; this helped to improve its growth in the last nine months.

Also Read: From 30 to 400: TNG Fintech Group founder and CEO Alex Kong shares how to grow your human capital

Nevertheless, the startup has been undeterred by its setback to hit its target of having six times more growth in revenue by April next year.

In 2018, DRVR secured US$450,000 from an undisclosed group of investors and had earlier secured a small round of funding from an angel investor group in Hong Kong.

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Image Credit: DRVR

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