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Sebastian Petric, Augustine Agyeman-Duah, Fabian Cazares, Hema Vallabh and Aliya Valiyff

By Sebastian Petric, Augustine Agyeman-Duah, Fabian Cazares, Hema Vallabh and Aliya Valiyff

Impact Investing: An Entrepreneurial Project at the University of Oxford

As part of the Entrepreneurship class at the University of Oxford, we initiated a promising project in mid-2019, focussed on investing for impact in East Africa. The Executive MBA has equipped us with the necessary skills and the experience for such an endeavour. Nearly two years later, we finished our business proposal for an impact investment fund aiming at a region where social capital is scarce, but opportunity is plenty.

The proposition is alluring: Investing to generate a financial return in addition to making a positive social impact – a win-win situation with investors realising a financial return while benefiting society, and social entrepreneurs who are often neglected. It certainly isn’t easy to generate both, with many belonging to the school of thought that these are simply mutually exclusive goals. This is partly the reason the impact investment market is still constrained. A lack of appropriate capital and insufficient investment vehicles are among the concerns facing stakeholders.

Impact investing can have different forms, but all have the same overarching idea: capital can be used to make a positive social impact, while also generating a financial return. The Global Impact Investing Network (GIIN) defines impact investments as “investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return.” This stands in contrast to aid where you use money only once; with impact investing a social mission can be fulfilled while receiving a financial return over and above the initial investment payback. Given these benefits, impact investing presents as a world-class solution for many global challenges.

In our Entrepreneurship class at the University of Oxford, we aimed at addressing some of these global challenges through our group project. Our team’s entrepreneurship project focused on addressing a real market gap – capital for early-stage businesses with high social impact potential. The costs of investing in early-stage businesses make them unviable for many traditional investors. The need for social capital is immense in Africa and impact investing is a market-based solution to some of the challenges on the continent. Given the vibrant and rising social entrepreneurial scene in East Africa, we chose to start the project in Kenya. Due to the risks involved, innovation to mitigate and/or manage these risks to turn them to viable ventures is key. Innovation is driven by need and hence, some of the most ingenious ideas are born on the African continent.

We focused on several key questions in our project: 1) Does the source of capital determine our business model? 2) What are the right focus areas to achieve impact? 3) What role do intermediaries play to fill the void of financing small-scale impact investments in Kenya? 4) How can we keep the costs of deploying capital low to ensure smaller investments are profitable, and prove these investments viable?

While not necessarily landing simple answers to these complex questions, our project did ignite a fuse that has the potential to burn for years to come. All in all, the entrepreneurship project was a rewarding experience with many lessons learnt. The experience this project at the University of Oxford has given us will undoubtedly have a significant impact not only on our lives but also on the beneficiaries of our commitment to invest for purpose and impact.

In laying a solid foundation for tackling investment and impact challenges, we are individually and collectively well on our way to setting in motion activities that will change the investing landscape on the continent for the better.

Sources:

  • Allman, K. A. (2015). Impact Investment: A Practical Guide to Investment Process and Social Impact Analysis. John Wiley & Sons.
  • Nicholls, A., Paton, R., & Emerson, J. (Eds.). (2015). Social finance. Oxford University Press.
  • The Global Impact Investing Network, “What is Impact Investing?”.
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