With positive intent, impact investors place risk-adjusted capital in opportunities seeking both a financial return and a defined and measureable social or environmental impact. Both investees and investors aim to prove how this intentional capital is converted into demonstrable impact.
They seek investments that have clear, attributable impact. In other words, the investee needs to demonstrate increases in the quality or quantity of its social or environmental outcomes and impact – for example, improved health services or increased availability social housing – because of the investors' capital contribution.
How do we attribute these impacts? Impact measurement, including social return on investment (SROI), is crucial to correctly identifying attribution of a particular investment and the overall transparent growth of the impact investing market. It helps investees accountably track their outcomes, manage performance, and ultimately better serve their clientele.
So, how does an organization or investor measure impact? Social Asset Measurements (SAM) enables organizations – corporate and non-profit, foundations and governments – to identify, collect, validate, measure and report on their impact instantaneously and credibly.
When she was 16, Anshula Chowdhury, founder and CEO of SAM, interned at her uncle's Silicon Valley software reporting firm for wealthy investment clients. "I was fascinated by the rigour and power of software, but wasn't particularly excited by the traditional financing industry," she said.
Back in Toronto in the fall of 2008 she co-founded the Young Social Entrepreneurs of Canada. While there, she started a micro-lending program, which financed very small youth-led social enterprises. "The program provided a place to experiment with various impact analysis methods. After the initial reports were released, there was a lot of interest from charities to receive similar reporting. SAM was born."
As a young entrepreneur, Ms. Chowdhury saw younger donors and buyers becoming more aware of the social costs of their decisions. This increasingly important audience was demanding greater commitment to social and environmental issues. While many organizations tried to track their data, Ms. Chowdhury didn't think they had the appropriate technology to do it well. They needed to transparently and accountably report on their impact – the numbers that proved their social activism was working, and not just their financial data.
Consulting is expensive, time consuming, and the final report is static and at best a historical snapshot of an organization. Enter Software-as-a-Service (SaaS). SaaS delivers unlimited and real-time reporting, faster and cheaper, enabling organizations grow their top line while improving their bottom.
Since 2011, and with support from the National Research Council's Industrial Research Assistance Program, SAM has been using a SaaS-based model. SAM's Social Return Intelligence Suite simplifies a complex process, offering customizable off-the-shelf reporting tools.
A client can select from a proprietary database of over 2,000 measures to add to its bespoke measurement frameworks, thereby configuring its accounts to identify measures for demonstrating impact. While SAM enables clients to do-it-yourself, the firm also offers consultation with SAM-qualified industry partners to ensure clients optimize their (S)ROI. As soon as a client's framework is complete, it can start collecting data and generating reports. This simple front end, which has user experience top of mind, is married to a sophisticated back end that instantaneously adjusts its algorithms based on user information.
SAM's business model thus relies primarily on a SaaS-based solution (cheap and scalable location agnostic platform), supplementing as appropriate with bespoke client consultation. SAM's clients – for-profits, non-profits, governments – have access to their services for a monthly fee.
SAM's closest competitors, which include Sinzer in the Netherlands and Social Solutions in the U.S., have either offered their clients simple static models that don't capture complicated nuance, or provided consultation that may only be relevant for a brief time. With the impact investing space continuing to grow rapidly (and with the MaRS Centre for Impact Investing assisting this charge) the competitive landscape of impact outcomes measurement and reporting providers will continue to grow.
Vicki Saunders, founder of SheEO, states "I have advised thousands of young leaders in the past two decades and Anshula stands out for her ability to hold an audacious long-term vision and bootstrap her way towards it. She's a changemaker par excellence."
It is this audacity that has led SAM through word of mouth and referrals to win over 100 contracts and service over 600 clients over its short history. Nick Yeo, manager of programs at Futurpreneur, says that he "wanted to measure the ROI of our programs from a social perspective and relied on SAM to setup their Social Return Intelligence Suite. We've seen immediate benefits in being able to instantly look at our services through a new lens. If we were to do this reporting ourselves, it would be too much work, and basically impossible."
Thus far, all of SAM's clients say the software allows their organizations to conduct impact outcomes and SROI analysis to a depth that they would not have otherwise been able to.
Offering ease-of-use and deep insights, SAM has tripled its growth and is forecasting a run rate greater than $1,000,000 in 2015. SAM's team of five was recently selected as the reporting tool of choice by the Canadian Government's Build in Canada Innovation Program for its measurement and reporting power, and will be undertaking a seed financing round in 2015 to increase its market penetration.
SAM provides a service that is becoming important to an increasing number of organizations. Consumers, investors and donors are asking for more and new types of information and the organizations that supply this information first create an important presence in their respective markets.
"As businesses become aware of this trend, we think SAM is uniquely positioned to provide a solution that can enable rapid and credible impact reporting adoption," says Ms. Chowdhury, thereby helping to demonstrate that intentional impact capital is indeed converted into demonstrable impact.
This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They now appear every Tuesday on the Report on Small Business website.