ARYZE spoke with Forbes Europe’s 30 under 30 member Laura Cramer, who is Investment Manager at Social Impact Ventures. She discussed how to measure and increase social impact, and the advantages of being a woman under thirty in the finance industry.
Long before she became an impact investor, Laura Cramer learned first-hand the importance of social entrepreneurship. In 2011, Cramer worked alongside an NGO to research different methods of supplying clean drinking water and sanitation to Cameroonian communities. Through this process, she found that the donation model is a limited means to gain the infrastructural resources necessary to implement these methods. Instead, Cramer learned that entrepreneurial solutions provide a stronger, longer-term solution:
This strengthened my belief that so much more attention should be given to companies that solve pressing societal issues with entrepreneurship, instead of Economics 1.0’s focus on ‘shareholder maximization’ only.
This experience inspired her to become part of the initiation of Social Impact Ventures, the leading Dutch impact investment firm based in Amsterdam. The double-bottom line company aims to help social entrepreneurs grow their impact whilst also creating strong financial returns. Social IV provides funding and support for companies whose services are built to meet one or more of the UN’s Sustainable Development Goals under the following themes: “circular solutions” (environmental sustainability), “people power” (creating educational and employment opportunities) and “healthy living” (nutrition and health-issue prevention). Ensuring that their clients operate in a commercial and scalable manner is central to their mission. As Cramer says:
One of the most important things we look for in our companies is that financial growth and impact growth are closely aligned.
In order to measure their potential clients’ impact, Social Impact Ventures uses a logic framework building off of the Theory of Change. When assessing a new company, Social IV analyses 1) which societal problem they want to solve, 2) what they want to achieve, 3) who will benefit, 4) how big the effects of their solution will be, 5) what would happen without that solution, and 6) whether their solution will make macro-level systemic changes. Then, they make sure the company’s goals also facilitate financial growth to create impact and returns at scale, and that they are operating in line with the UN Global Principles.
Once they have identified a company as being impactful and economically sound, Social Impact Ventures works with their new client to set several impact performance indicators. Then, they provide the client not only with finance, but also with expertise and external assessment of the impact indicators.
Despite its admirable goals, it was, initially, challenging for the newly-assembled Social Impact Ventures team to raise its first fund, as its approach was totally novel for the Dutch market. According to Cramer, Dutch investors initially believed that social impact and financial returns are mutually exclusive. Therefore, they met Social IV’s claim to create both with wary surprise:
At the time The Netherlands was still Europe’s ‘black hole of impact’, so raising an impact fund was, for many fund investors, a completely new topic; we had to explain a lot. Nevertheless, the timing was right for a group of first movers, as we were able to successfully raise our first fund of €40 million. It has been an incredible journey to help develop the Dutch impact market to where it is today.
Now, Cramer believes the time is right for the company to raise a second fund. Impact dealflow is increasing, the fund has shown proof of its investment thesis with two successful responsible exits and the exit market for scaling social ventures is rapidly increasing. Moreover, the second wave of adopters are keen to invest, and larger institutional investors are increasingly showing interest in impact investment. Cramer believes that our ability to reach the UN’s Sustainable Development Goals depends largely on the financial industry, as social investment has the power to truly catalyse social change. However, despite increased interest in impact investments, she feels this is not happening fast enough:
Many financial players like the idea of impactful investing (or are pressured by their clients) but it’s a very slow process. I see developments in the right direction, but in my opinion we need to move faster. Like, a lot faster.
Cramer shared her three pieces of advice for how existing companies, in and out of the financial sector, can increase their social impact:
- Change your impact perspective: “making an impact is not a cost burden, it’s a source of future proof innovation and the best way to create strong employee and customer engagement.”
- Be transparent: “Make your current impact (positive and negative) visible; this helps to make the right decisions and shows your customers the authenticity of your impact goals.”
- Dare to be first: “take risk; as the market for impact is still young there’s ample opportunity if you dare to be a first-mover”
Cramer believes that being a woman under thirty gives her a fresh perspective that allows her to reassess the operations and values of financial institutions. Says Cramer:
Even though at times a bit of grey hair can be an advantage when having difficult conversations with funders and founders, in general I believe that in the finance sector, being a young female brings something new to the table which is complementary to the skill sets usually present. Nowadays it is common knowledge that more diverse teams create better results, and this is something I definitely experience in the finance industry. So I hope these tables continue to become more diverse in the years to come!
Indeed, her success at a young age has gained her, and Social Impact Ventures, recognition on Forbes Europe’s 30 Under 30 list for finance. With this momentum, their next step will be to raise a newer, larger fund. In line with their mission, they plan to use this to help socially impactful companies grow and scale. To learn more about Laura Cramer and Social Impact Ventures, connect with her on LinkedIn or visit their website. For more profiles of Forbes 30 under 30 members, please visit ARYZE’s blog or website.