Industry

Impact investing is a new investment model, capable of combine financial return and social impact.

There are nowadays a few different definitions about Impact Investing: these definitions are tending to gradually broaden the framework of Impact Investing activities and operating models.

Within this scenario, Oltre Venture's activity focuses on the Social Venture Capital sector, investing equity in Start-ups and/or Expansion Companies that carry out economic sustainable activities with the aim to create a positive social impact.

Impact Investing in Developing Countries
The main topics discussed
The novelty of this sector is generating a wide discussion on some key-topics: the following FAQs briefly resume our point of view.

1) Is there a trade-off between social impact and financial return?

We believe that the solutions promoted by Impact Investing should achieve in the long term a traditional ratio between risk and financial return: otherwise, these companies would not find, in the future, the financial resources necessary for their own development. However, as it is all about promoting innovation in a complex and widely public-oriented sector, it is likely that the investors in early-stage Start-ups will have to accept a ratio risk/financial return higher than the market average. In addition, we think that private wealth – which has never been so large and concentrated in the whole of history – must take the responsibility of such initiatives’ promotion in order to create an added value for the entire community.

2) How can we measure social impact?

Various measuring methods have been proposed in the last few years. Nevertheless, we are still unsure whether it is realistic or not to find an absolute measuring method; in addition, we believe that the long-term measurement of initiatives promoted through Impact Investing (in other words, the outcome measurement) is both too difficult and too expensive. Consequently, we believe that social impact has to be measured in comparative terms rather than in absolute terms, that is by comparing the impact obtained by one initiative with the results of the other solutions offered by the market.

3) Is it true that Impact Investing is proposing a new concept of value and a new method for its measurement?

We strongly believe that this is the case. Impact Investing’s initiatives can reduce social needs and create savings for the Public Sector, so that positive externalities can be generated. Such values should be incorporated in the companies’ evaluation criteria. It is acknowledged that companies are analyzed through a profitability multiple, and that such multiple may vary greatly from industry to industry: if the companies promoted by Impact Investing will be able to create “solutions” producing an added value for the society, we expect that such companies’ evaluation criteria will be high, in this way the overall value generated (i.e. both social and economic) will be considered.