Social Impact Investing

SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE
associations collect data directly from the venture capital firms. Some national angel investment
associations also play a data collection role.
6.37 Even though data from some of these venture capital associations or angel investor networks can
be fairly comprehensive, usually it only covers information obtained from members or associates. This
caveat is even more important in areas where the association\network might only represent a small share of
the market players. This is, for example, the case of business angel associations and networks. The case
with SII is even more challenging given the varying views on definitions and the potential incentives for
investors to classify themselves as social impact investors when they might not qualify. Rapidly growing
SII-related associations such as Venture Philanthropy Associations (e.g. EVPA in Europe or AVPN in
Asia) will certainly be important in future data collection efforts.
6.38 The main challenge in sourcing data from intermediaries is that it is usually collected to address
investor needs. Data disaggregation, in terms of social areas, relevant to a policymaker might be very
different from the breakout and labels that would be appealing to an investor. It is important to distinguish
the data requirements of investors, researchers and policymakers as outlined in Section 6.2. For example,
while data collected for investors should reflect mostly financial characteristics (e.g. risk-return profiles,
investor perspectives and investor practices, track record), data for policymakers should make the link with
social outcomes and collected in such a way to provide the basis for informed policy action. Further work
is needed to obtain data in a way that can provide insights for policy guidance.
6.4. Current Approaches to Data Collection
6.39 Various approaches might be used to collect SII information depending on which parts of the
market are being assessed. However, none of the currently available approaches are optimal. The first is a
top-down approach where key national aggregates are identified that allow the estimation of the SII market
conditional on (strong) assumptions. The second is to compile information from players that have a
common legal form directly linked to SII. The third is to collect data via surveys from market actors. Data
requirements can also vary depending on who is seeking the data (market players, academics, policy
makers). The details, advantages and disadvantages of each approach are described below.
6.4.1. Top-down approach
6.40 Some of the components of the SII framework can be estimated using a top-down approach.
Within this approach, the first step is to obtain data on national aggregates. Since this data are highly
aggregated, it combines a myriad of different information sets that go beyond SII. Therefore, the key is to
single out the SII components. For this exercise a number of (rather strong) assumptions are required. First,
it requires that some (rough) idea of the shares of the SII component, which needs to be based either on
perceptions or historical information.
6.41 While using shares based on perceptions can be misleading, depending on historical data assumes
that it is: i) representative of the SII market; and, ii) there are no structural shifts, and thus percentages
remain the same. On one hand, significant challenges still remain in terms of sizing the market. On the
other hand, the SII market is evolving and growing rapidly, which means that assuming stable shares of the
SII component might be unrealistic. In addition, it is important to note that even if shares provide a good
representation of reality in one country, it will likely not be the case in different countries with different
social systems. As a result, this approach has significant limitations. Although it can be useful to provide
rough estimates of the market and foresights of demand and supply in the coming years, it does not allow
effective measurement of SII demand or supply, nor is it able to provide insights into SII deal flows.
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