Impact Investing has been seen as the magic bullet to solve social issues while being financially sustainable, if not profitable. Beyond the expectations and hype, performance – financially and socially – remained elusive thus far. Recently, the Global Impact Investing Network (GIIN) and Cambridge Associates published the “Impact Benchmark”, which aims to track a set of funds quarterly and hence establish actual financial performance data. At AVPN, we were excited to see first data and dug into the specificities. Overall we wondered how this advances our ability to solve social issues financially sustainably and what implications the financial return expectations have on impact-first ventures.


First, a brief summary of the reports sample, characteristics and findings: Taking private, close-end funds available to institutional investors in the sub-asset classes Growth Equity, Venture Capital and Mezzanine, which are intent to generate social impact beyond ESG or environmental impact and vintage years prior to 2011, the GIIN Benchmark tracks 51 funds drawn from databases ImpactBase, Impact Assets 50, CA’s MRI database, OFN and CDVCA. In terms of capitalisation, the main characteristics of this sample are smaller fund size (27 had less than 50 Million USD), young funds (two thirds had vintage years 2005-2011) and sectorial focus (the majority (67.7%) invested across sectors, followed by a large focus on microfinance and financial services/microfinance/financial inclusion (26.8%)) and geographical focus (51.2% in Africa, 34.5% in the US and 6.2% in emerging global economies). The sectorial focus are stark due to the comparison to commercial funds which is capitalised to 98.8% in multi-sectors. Similarly, geographically, the comparative universe lists predominantly 71.8% in the US and 16.6% in Asia-Pacific/emerging economies).

The GIIN Benchmark finds that aggregate funds launched between 1998 and 2010 returned 6.9% to investors.

Moreover, Impact investment funds that raised under 100 Million USD returned a net IRR of 9.5% to investors. The report also attempts to split the sample further to compare emerging markets, emerging markets excluding Africa and developed markets in order to compare this to the commercial universe.

Methodologically, this first edition could be improved in terms of sample size, aggregation and analysis. For Asia the sample is opaque and findings therefore inconclusive. Yet, the report claims to validate the financial viability of impact investments in the sub-asset classes of growth, mezzanine and venture capital by finding that market-rate returns are feasible in impact investing.

Unfortunately, the report does not measure social returns. This raises the question as to how far this is relevant for impact-first social investors. If we are serious about blended returns, then including social achievements as part of the impact benchmark would have been a crucial addition to validating the sector’s efforts to create a social impact.

Plus, what does this mean for the success/failure definition of impact-first ventures? Will grants be judged as a failure in future for not yielding financial results? It seems that further differentiation is required to understand when social issues can be solved by the market or philanthropy.

Beyond these concerns, we still do not understand what drives performance. The GIIN benchmark hints at some performance indicators such as manager selection (p. 1 and 19), due diligence (p. 1), fund size and geography (smaller and emerging markets including Africa appear more efficient, p. 19). Figures 10 and 11 also suggest great variation in performance between funds. In the commercial space in VC, the top 10% of fund managers produce around 90% of the return. The role of fund managers remains unclear in this space and would be crucial to develop further.

We continue to observe the developments in this space and see how solving social issues fit with financial sustainability and profitability. We invite you to access the report on and you can join the “dialogue” below.

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