Inaugural CECP Report Estimates Corporate Impact Investment Market at $2.4B

A pilot study recently released by CECP found that a third of large corporations (S&P) invest approximately US$2.4B each year in programs designed to achieve social impact and financial returns. The study, Investing with Purpose, is the first time that corporate’s role in impact investing has been analyzed in detail.

Six Approaches Corporate Venture Capital Uses

The report described six ways that large corporations companies have been organizing to deliver impact investing.

The six approaches are: Direct, Self-Managed, Third-Party (through a Syndicate or an LP), Strategic Alliance (e.g. Joint Venture with a Social Enterprise), Accelerators, or Corporate Foundations.

1. Direct Investments – when a company funds from its own balance sheet for a social enterprise.
2. Self-Managed Funds – when a company creates a captive fund or investment company.
3. Third-Party Funds – when a company makes investments through a syndicate or a fund as a limited partner.
4. Strategic Alliances – when two companies join together for strategic non-financial partnerships and/or joint ventures with social enterprises.
5. Accelerators and Incubators – when a company provides support, such as mentorship, office space or access to funding networks for a specific project or venture.
6. Corporate Foundations – when the charitable foundation of a company provides working capital through loans, loan guarantees, or equity investments often called program related investments, to an organization.

Close to half of CECP survey participants responded that they utilize approach #2 – Self-Managed Funds – or corporate venture capital (CVC) and drive impact through innovation.

Network technology giant Cisco, for example, in 2009 invested US$250 thousand in Husk Power systems for rural electricity in India through its internal VC unit called Cisco Investments.

Also Intel Capital, since 1991, is said to have invested over $9 billion in 1,000 companies in over 40 countries.

In 2015, CVCs invested US$7.5 billion out of total $51 billion or just over 11% of total US Venture backed funding. (ImpactVC)

CECP’s study methodology involved extensive review of existing literature and a 25-question survey of 100 selected companies, including in addition to Intel and Cisco mentioned above, Target, JPMorgan Chase, Price Waterhouse Coopers and 3M.

Source: CECP, 2016 © CECP