We are pleased to share with the impact community our review of 150 impact investing platforms, networks and organizations that promote, support or convene investors in the impact finance area.
Prompted by our own experience as investors, technologists, and system designers, we were interested in better understanding prevailingbusiness models and motivationsfor sharing (or hoarding!) data, innovations, and investors.
35 platforms (25%) participated in a detailed online surveyabout their technical, operational, and business specifications.
In addition, we spoke at length with 17 key informants who represent various platforms, pertinent networks, and / or prospective partners in a collaborative next phase to build a more effective global impact infrastructure.
Not surprisingly, of the platforms we reviewed, at least 5 are no longer in business.
Our analysis builds on ongoing work to design and develop an interoperable, global, modular, distributed, and democratic infrastructure for mobilising data, innovations, and capital at the volume and velocity required to achieve the Sustainable Development Goals.
Our purpose, in addition to providing an overview of the platform landscape, is to:
- Identify opportunities for alignment of prospective partners around the strategy, design and implementation for such global impact infrastructure; and
- Explore scenarios for collective action.
We thank all of those who took the time to respond to the survey and agreed to be interviewed. We appreciate their time and insights!
We invite your feedback, and look forward to working with interested parties on the next phase(s).
The study confirms that there is widespread duplication of effort, fragile business models, and similarity of value propositions. In particular:
Impact Finance platform data is not shareable:
Taxonomies for deals, impact metrics, and meta-groupings such as the SDGs are inconsistent at best, and incoherent at worst.
Platforms are not sufficiently interoperable:
Only 32% of platforms responded ‘yes’ to having an Application Programming Interface(API).
Platforms are not replicable:
47% have custom built technology, and only 32% have a licensing model.
Platforms are not generally viable:
53% cannot cover their operating expenses, and 61.5% are funded by grants.
Without exception, platforms surveyed are constrained by outmoded ideas of data ownership, and are at imminent risk of disintermediation. Further, underperforming and failed platforms evidence a number of consistent patterns, including:
- Transaction-fee models cannot achieve sufficient volume, despite having solved the complexities of regulation and compliance.
- Contextually focused membership models cannot achieve sufficient volume to meet the high costs of curation
- Universal impact finance platforms underestimate trust as the essential currency for achieving efficient scale in an online-only platform.
The survey results suggest that platform stakeholders understand the altruistic and commercial imperative to collaborate, but are functionally or financially incapable of advancing this understanding.
Market fragmentation is not only ineffective, it is unconscionable; and the path to rationalisation and course-correction is binary - centralise, or federate.
Regardless of which path is chosen, the desired outcomes are essentially the same, moving us more rapidly toward an effective approach to the SDGs through:
- Increased innovation liquidity
- Increased deal liquidity
- Increased operational effectiveness throughout the sector
Despite these observations, the survey highlighted a desire for increased collaboration, especially in the areas of technology, pipeline development, and compliance.
Collaboration is a core value.
The survey response rate of 23% is significantly higher than industry average of 10-15%, suggesting a willingness to work together.
Collaboration is highly desirable.
A significant majority of respondents (91%) indicated a willingness to explore deeper interoperability.
Collaboration is highly actionable.
In addition to existing licensors, 32% are leveraging external platform data, and 50% are preparing to, or willing to use it.
Advancing beneficial outcomes is the entire focus of the impact finance ecosystem. So it inevitably begs the question, is there a more effective way to harness the skills, resources, and talents within it to greater effect?
Connecting the various platforms into a more cohesive whole will have the following key benefits:
- support finance seekers in attracting funding more quickly
- connect funders directly to opportunities that match their investment thesis
- help existing platforms to refine, focus, and leverage their unique offerings.
Our prototyping around SDG6 suggests that platforms are willing to share data as long as the value proposition is clear.
This means aggregating, curating, refining, and sharing every deal, with every prospective funder on the planet.
And doing so in a manner that supports global regulatory compliance, deal syndication, and appropriate sharing of fees.
NO MORE PLATFORMS
What it does need, as apparent from the study we have undertaken, is a concentration on the connective tissue that defines and enables interoperability between platforms.
There is great evidence of a desire to be interoperable from both the survey and the interviews we have undertaken. There is not, however, much evidence of ‘doing’, likely because the implications in terms of cost and revenues are unclear in a fragmented market where financing for building technology is a challenge and resources are scarce.
A lack of market discipline and coherent feedback from a collective of systems has created a situation where messaging is unclear, and patterns as to who has built which part of the continuum are hard to discern among the noise.
Communication between platforms in the ecosystem appears to be challenging.
There are some very strong financial-first players ready to collaborate, who could be a significant part of an emerging, improved impact infrastructure, essentially cross-subsidising the technology we need with their mainstream channels.
There is an affliction related to idiosyncratic lingo. Many are doing the same thing and using different words to describe it. This creates confusion and mixed signals that does not serve the collective.
There is a very real demand for technology development resources, as well as for regulatory and compliance support for operating platforms. The answer does not lie in a shiny new interface, but in a deeply layered process and tech infrastructure that enables true collaboration.
centralise or federate?
The binary choice before us is that between a centralised vs a federated solution.
In the centralised approach, one would acquire and otherwise merge all the platforms into a single global platform (“the one platform to rule them all”), enforcing strict standards and protocols throughout the sector. We give this approach a low likelihood of success.
In the federated approach, one would develop a distributed data model that operationalises ownership of deal data to the venture seeking financing, increasing interoperability of deal data, and fosters the development of complementary business models that replace data ownership with other value-added offerings. We give this approach a high likelihood of success.
We have comprehensively described what needs to be built in From Billions to Trillions, and there are a number of practical scenarios for how to advance a global, distributed, democratic infrastructure for mobilising data, innovations, and capital at the volume and velocity necessary to successfully address the SDGs.
These scenarios are not mutually exclusive, and alone or in combination advance the needed infrastructure:
- Develop data federation protocols
- Support the rationalisation of the impact industry
- Focus on a sector, specifically SDG6, where there is traction with other funders and stakeholders.
Create federation protocols
Design, develop and deploy a federated data structure, characterized by an open data standard and architecture, API documentation, process and adherence protocols. By putting the venture in control of their deal data, the market mechanism of competition between funders will increase overall market effectiveness and efficiency.
Rationalise existing platforms
Consider consolidating, merging, and streamlining existing systems to create a standard for the impact investing industry. This could include the creation of a transition fund to move existing platforms to more sustainable and compliant service-centric business models.
Focus on SDG 6 - Water & Sanitation
Partner with the Bill & Melinda Gates Foundation and other key players ready to co-create a focused, multi-sided distributed Market Network capable of engaging multiple platforms and stakeholders. The goal is to achieve data, innovation, and capital liquidity via development of a distributed technical and process infrastructure, focused on the water and sanitation space, SDG6.
In addition to the three scenarios we have put forward, are there others that we should consider?
Please get in touch and share your ideas!
We believe there is an opportunity to harness the talent, creativity and ingenuity evinced by the platforms we surveyed, and to overcome the fragmentation of the impact industry by taking a collaborative approach to building better digital, legal, and financial infrastructure.
Why Collaborate across Platforms?
In isolation, the 150+ platforms serving the impact industry will continue to struggle to get to scale at a moment in history when we urgently need to unleash more capital, more quickly, into the solutions for achieving the SDGs. So what’s the upside of collaboration for each of us?
- As investors, we want to see more relevant deals that are right for our flavor of capital.
- As platform operators, we want to provide more value to our customers, members, and users.
- As entrepreneurs, we want an easier time finding the funding and partners we need to scale our solutions.
- All of us want to achieve the SDGs more quickly and effectively.
Put simply: It’s time. After 10 years of trying to emulate the Silicon Valley way of building global platforms, and doing so badly, it’s time for the impact industry to build its own infrastructure that’s fit for the purpose of accelerating social change.
Please get in touch if you are interested in collaborating!
The list of impact platforms below includes all platforms that formed part of this survey (marked with an *), as well as additional platforms collated by OPIC. This is by no means a comprehensive list of impact finance platforms, but potentially represents one of the most detailed contemporary lists to be published in one location.
Access and eXchange for Impact Investment and Sustainability (AXiiS)
Admiral Capital Group*
agir & co*
Artha Networks Inc*
Asian Venture Philanthropy Network (AVPN)
Ask the Circle*
Aspen Network of Development Entrepreneurs (ANDE)
Big Issue Invest
California Global Innovation Exchange (CAGIX)
Caspian Impact Investments
Financing Agency for Social Entrepreneurs*
Global Development Incubator
Global Impact Investing Network (GIIN)
Global Innovation Exchange*
Global Steering Group for Impact Investing (GSG)
Grand Challenges Canada
Hult Prize Foundation*
Impact Base (GIIN)*
Impact Investing Hub*
Impact Investor Landscape*
Impact Platform Germany*
Inclusive Business Accelerator*
Inclusive Business Action Network*
Inter-American Development Bank (IADB)
International Development Innovation Network
International Finance Corporation (IFC)
Invest with Values*
Kentucky Science and Technology Corporation
KL Felicitas Foundation
La Bolsa Social*
Liquid Net for Good
MaRS Centre for Impact Investing*
Max Impact Ecosystems*
Misssion Investors Exchange*
MyC4 (Debt, Africa)*
One Planet Crowd*
Open Society Foundations*
Organisation for Economic Co-operation and Development (OECD)
Peer Water Exchange*
Refugee Investment Network*
Rockefeller Philanthropy Advisors
Safe Water Network*
SASIX/ KASIX (Africa)*
Seed Stars Summit*
Social Capital Markets (SOCAP)
Social Stock Exchange*
Tech4Impact Seed Fund*
The Ground Up Project*
The Hub Exchange*
The Investment Integration Project (TIIP)
The Legacy Funds*
Total Impact Capital*
Transformational Business Network
UBS / Align17*
World Startup Wiki*