Mobilsing private capital for impact
How it works and what the public sector and philanthropy can do?
In order to achieve the Sustainable Development Goals (SDGs) an investment of about 4 to 6 trillion Euros per year globally will be required. Only the smaller part of this capital requirement will be bridged by public or philanthropic funding leaving the majority of the gap to be covered by other sources of capital. And the challenge is not only about the quantity but also the quality of capital required: innovative social start-ups and impact driven enterprises find it particularly difficult to raise the amount and type of capital they need to grow and scale their impact.
Internationally, innovative financing mechanism in which public and philanthropic funders use their capital catalytically to mobilise much needed additional (private) capital for impact have been applied for quite some time. For example, KfW Development Bank in Germany has been one of the pioneers of structured funds in emerging countries and philanthropic funders and development agencies around the world have been providing outcome funding to incentivize impact and make investment in impact attractive to more commercially oriented investors.
In 2020, a partial risk guarantee backed by the European Union and implemented by the European Investment Fund EIF was granted for the first time to an impact fund in Germany, the European Social Innovation and Impact Investing Fund (ESIIF). ESIIF has been initiated by the Financing Agency for Social Entrepreneurship; it is managed by Avesco Management GmbH Berlin and investments have been made by the Investment Bank Berlin (IBB), GLS Bank, private individuals, family offices and institutional investors. Beyond ESIIF; at IBB and IBB Ventures new financial products have been developed or are under development to cater to the specific needs of social enterprises in Berlin including a new investment fund that targets growth-oriented Berlin based impact enterprises.
We will start with impulses from Brandenburg, Markus Lehmann, IBB Ventures and Oliver Hagedorn, Avesco (TBC) and Jörg Jurkeit, Ministry of Economic Affairs, Labour and Energy (MWAE) .
We would like to discuss with you what is required to make investment in impact enterprises attractive to mainstream investors who in the past for several reasons have steered clear of investing for impact. In view of the upcoming elections in Germany, we will explore what the public sector but also the philanthropic sector could do to increase the quantity and quality of additional private resources for impact in Berlin and beyond.
We welcome participation from the Berlin Senate, German Federal Ministries, political parties, promotional banks, foundations, financial intermediaries, development finance practitioners, social entrepreneurship representatives - and anybody with an interest in engaging in a lively debate on the use of catalytical capital in investing for impact.
The contribution by speakers will be made in German but participants are welcome to make their contributions during the discussion in English, if easier!
Impact for Breakfast is hosted by Anja König, EVPA/Social Impact Markets and René Wienholtz of Loom Impact.