The Impact Investment Ecosystem

Learn about the impact investment ecosystem and the key players who, along with investors, provide integral support to social entrepreneurs.

The Impact Investment Ecosystem

The figure below demonstrates the various stakeholders in the impact investment ecosystem as well as the manner in which they interact. Some of these stakeholders have already been discussed and some more will be discussed as this course progresses. What is worth highlighting, is the enabling environment designed by industry entities, accelerators and the government, which shape the impact investment and entrepreneurial ecosystem.

Industry Bodies in the Investment Ecosystem

Industry bodies, such as the Aspen Network for Development Entrepreneurs (ANDE) and the Global Impact Investing Network, provide resources and services to grow the entire impact investment ecosystem. They convene other organizations (social enterprises, investment firms, industry experts etc.) in the sector to help promote best practices, create partnerships and increase the scale of the sector. ANDE, for example, believes in the power of small and growing businesses (SGBs) to help developing economies grow. Over the past decade, ANDE members have invested US $14.8 billion directly into SGBs and supported over 730,000 SGBs with capacity development services.

Accelerators and Incubators

Accelerators and incubators help early-stage impact enterprises by providing mentorship, incubation and technical assistance. Many accelerators also provide seed capital or growth equity to help the enterprise become self-sustaining. For example, Echoing Green provides fellowships to select social entrepreneurs to support the launch of their organization. In addition, fellowship recipients receive access to strategic and financial support from Echoing Green’s diverse community and advisory board.

Governments in the Investment Ecosystem

Governments play a catalytic role in driving awareness, skills and capital to the impact investment ecosystem. On the demand side, they can support social enterprises through technical assistance, investment readiness programs, procurement and other initiatives. On the supply side, they can provide tax incentives, guarantees and subsidies, as well as co-invest in blended finance instruments. With intermediaries, the government can create wholesale banks, exchanges or other channels to facilitate links between supply and demand. Finally, the government can influence fiscal, legal and tax policies to drive interest and capital to the sector.

Do you know other entities participating in the impact investing ecosystem? Which one is the most important in your opinion and why?