We are thrilled that Vital Capital was highlighted in the Global Impact Investment Network’s flagship report, the “2020 Annual Impact Investor Survey.” The report incorporates data from more respondents than ever before – almost 300 impact investors – focusing on their investment activity, capital allocations, performance, and impact measurement and management.

To mark the 10^th edition of the study, this year’s report looks back on the impact investing industry’s significant advancement over the past decade – and it starts with Vital Capital’s 2011 fund launch. The timeline “Notable Commitments Over the Past Decade” on page 20 of the report begins with our successful $350 million investment fundraise. We are proud that our smart, targeted investments have delivered essential development impact to millions of individuals in low and middle-income communities and helped kick-off a decade that has seen so many important developments in impact investing.

The report also features Vital’s insights on how the impact of the COVID-19 pandemic reinforces the need for investments along SDG themes. Though each firm’s contributions are unattributed, you can find our quotes on page 65. In addition, Vital’s data contributed to the survey’s research.

Some key findings from the report:

• Most respondents (57%) indicated that they are ‘unlikely’ to change the volume of capital they plan to commit to impact investments in 2020: This uninspired response from the industry underscores the need for additional funds similar to the Vital Impact Relief Fund.

• Strong performance is motivating investment activity: One critical driver of market growth is the industry’s performance – in both impact and financial terms – over time. 88% of respondents report meeting or exceeding their financial expectations. In terms of impact performance, 99% of respondents noted that they have met or exceeded their expectations since inception.

• “Sophistication of impact measurement and management practice” is cited as one of the greatest areas of progress over the past decade: Impact measurement and management (IMM) practices enable impact investors to demonstrate real results and ensures accountability. IMM practices now reflect greater sophistication and strategic use of tools. As the market matures, much opportunity still exists for greater depth and refinement.

• Interest in key sectors and geographies (excluding outliers): Top sectors to which respondents allocated capital were energy (16%), followed by financial services (excluding microfinance), with 12% of sample AUM. The majority of capital is allocated to developed markets (55%), with the top region of investment being US & Canada (30%). Top asset classes are private debt, comprising 21% of the sample AUM, while public equity accounts for 19%.

• Growth marked by 17% compound annual growth rate (CAGR) among repeat respondents: Among repeat respondents to the GIIN’s 2016 Annual Impact Investor Survey (2015 year-end data) and this year’s survey, aggregate AUM grew from USD $52 billion to $98 billion.

• The current market sizing was calculated to be USD $715 billion based upon assets of the 294 respondent investors from the 2020 Annual Impact Investor Survey.

In a recent interview with Michael Holder for Environmental Finance, Vital Capital Managing Partner, Mr. Nimrod Gerber discussed the economic crisis facing Africa as a result of the coronavirus pandemic and how small- and medium-sized businesses stand to be most affected. Mr. Gerber described how Vital Capital has adapted its core strategy to extend support to these companies with the launch of the Vital Impact Relief Facility, explaining that: “This is what impact investment is all about: we see the need from being on the ground, not from our theoretical model. The need right now is to preserve impact and to save existing value – not necessarily to build new impact, as with our greenfield projects.”

He also issued a rallying call for investors to preserve impact and value by backing these otherwise viable companies that have recently joined the “missing middle” of financially underserved businesses: “Fantastic companies, which are creating an important impact for their communities and have good financial performance, are now fighting for survival. And unless someone acts fast there’s going to be a massive destruction of value.”

In discussing how Vital Capital is supporting its existing portfolio, Mr. Gerber explained that in addition to putting in place World Health Organisation guidance on workplace practices as part of its standard ESG practices, in many cases the investment team are “rolling up our sleeves,” helping out overloaded CEOs as if they are working for the companies themselves: “they are calling banks, talking to creditors, arranging international alternatives to existing supply chains.” With Vital Capital’s deep and long-established presence in the region, Mr. Gerber also revealed how Vital’s team can bring some “extra perspective” to management teams that may not have encountered too many crises before.

The full article can be found online here (subscription required)

Our team recently participated in webinars hosted by GIIN and Big Path Capital focused on the economic consequences of COVID-19 in Africa and on the role the impact investment must play. These discussions have been illuminating and served to further shape our thinking and approach to supporting impactful businesses providing services to communities throughout our target geographies in sub-Saharan Africa.

We wanted to share some of the key takeaways:

The pandemic is already affecting businesses, demanding urgent, direct action

While the full extent of the public health emergency caused by COVID-19 in Africa has yet to unfold, the economic impact is already undeniable. Supply chains are being disrupted, foreign investment is drying up and governments don’t have the financial clout to offset the effect of the “stay at home” mobility restrictions they’re imposing. This threatens the livelihoods of employees and the communities these businesses serve. As our managing partner, Nimrod Gerber commented during the Big Path Capital panel: “One thing for certain is that the economic crisis is already a reality… it’s already happening. We cannot sit on the fence; impact investors need to step up now to secure businesses delivering essentials for local populations.

The ‘missing middle’ is most at risk

Against this backdrop, it’s the small and medium-sized businesses that are most vulnerable. While the very small ‘mums and pops’ businesses may be able to manage, and large strategically important companies will be at the top of the list to receive what government aid is available, it’s mid-sized companies – the financially underserved missing middle – that are most at risk. The harsh reality is that as financing channels have dried up, many previously viable and successful firms now find themselves in this bracket – and this missing middle has grown dramatically in just a matter of weeks.

Impact investors have a key role to play

It’s these businesses that need to be supported: to survive the crisis; to maintain the positive economic and social impact they have on their communities; and to position them to thrive in the future. The good news for investors is that it presents a significant opportunity to create both impact and financial value – there are plenty of great companies with fantastic profitability that, without the stresses presented by the crisis resulting from the COVID-19 pandemic, wouldn’t be in difficulty.

This is a test for impact investing

There is an opportunity for impact investment to demonstrate it truly works. Investors are in a position to create real impact and to be financially rewarded but it requires a flexible approach and urgent and immediate action.

The risk is that if these companies are left to fail, it would represent a terrible destruction of both value and impact. The damage caused and cost of failing to act would be great – not just for the businesses and communities affected, but also for the credibility of impact investing more broadly.

In an interview with Ian King of Sky News, Vital Capital founder Mr. Eytan Stibbe discussed the impact that the spread of COVID-19 is having on Africa and highlighted the financial needs of SME’s providing essential services in the region. “The first [to be affected] and most vulnerable are the small and medium-sized businesses,” Mr. Stibbe told Sky News. “Their financing channels have dried up and there will be plenty of opportunities to invest.”

With foreign direct investment globally expected to fall by 30%-40% as a result of COVID-19*, the potential economic crisis facing Africa is severe and companies offering essential services in the developing world are among the most vulnerable to the coming financial shocks. It’s a situation that demands urgent and immediate action to save these businesses, which is why we have announced an emergency debt facility to help such companies continue to offer their critical services and get them through the coronavirus pandemic.

The Vital Impact Relief Facility, which starts with an initial $10 million in capital, will primarily target financially sound African businesses involved in agro-industry and processing, healthcare, and sustainable infrastructure and education in Kenya and Uganda. We plan to roll the facility out to our target geographies including Ghana, Democratic Republic of Congo, Côte d’Ivoire, Angola and Senegal, and are calling on other investors to join us and ensure that impactful businesses across the region can survive the crisis, continue to benefit millions of people across the continent and emerge even stronger from this crisis.

For official announcement click on the Vital Impact Relief Facility (link).

* according to the United Nations

We’re excited to announce that Vital Capital been selected to the ImpactAssets 50 2020!

The IA50 ia a publicly available, online database for impact investors, family offices, financial advisors and institutional investors that features a diversified listing of private capital fund managers that deliver social and environmental impact as well as financial returns.

“With record applicants and assets under management, the IA 50 continues to reflect the rapid growth and interest in impact investing,” said Jed Emerson, ImpactAssets Senior Fellow, and IA 50 Review Committee Chair. “This year’s showcase includes eleven impact funds with more than $1 billion in assets under management. And to ensure we’re capturing the best future ideas, we’ve added emerging impact managers, who have the hunger, creativity and a willingness to explore alternatives that more seasoned fund managers may not.”

The IA 50 2020 saw a record number of private debt and equity fund manager applications. Managers who met the IA 50’s in-depth review criteria manage an estimated $39.8 billion in assets devoted to creating measurable, positive impact, up from $26.9 billion in 2019. Emerging impact managers direct nearly $400 million into cutting-edge strategies and high impact investments.

Eytan Stibbe, founding partner at Vital Capital, writes about how business leaders should be a force for positive change.

See the article published on CTECH here.

A new report “Impact Due Diligence: Emerging Best Practices” was recently released by Pacific Community Ventures together with support by the IMP and GIIN. The report examines trends and offers insights in an important, yet underdeveloped, area of investment practice. After analyzing impact investors due diligence approaches PCV present seven areas of best practice.

See in the report a brief case study on Vital and our Impact Diamond (page 42).

Click here for the report.

Vital’s Head of ESG, Ms. Tamar Pashtan, spoke at the Milken Institute’s 22^nd Annual Global Conference on Meeting SDGs through Disruptive Technologies. The panel hosted an important discussion on how project finance structures can overcome gaps and critical development needs in water, food, energy, and health technologies for adoption and diffusion in new growth economies.

We’re pleased to announce that we’ve been selected as one of 50 impact investment fund managers recognized in the Impact Assets 50 database in 2019. The IA50 recognizes outstanding impact investment funds with a demonstrated positive social, environmental and financial impact.