LESSONS LEARNED FROM SIF’S SOCIAL BUSINESS ACCELERATOR

JANUARY 2017

INSIGHTS INTO IMPACT INVESTING

Dear Friend,

The Social Innovation Forum (SIF) began to work in the impact investing field five years ago. Then, and now, we recognized that philanthropy alone cannot address the wide range of social issues present in our community and that impact investing offers significant leverage for social change. So we set out to bring our strengths and assets to this emerging field, building connections, advancing learning, and developing tools for both entrepreneurs and investors to increase investments in social impact businesses.

Through our Social Business Accelerator program, SIF has since worked with 24 impact-focused entrepreneurs, engaged more than 50 mentors, and showcased our portfolio companies to audiences of investors seeking both social and financial returns.

Since our 2015 spinoff from Root Cause, SIF has been engaged in deep reflection about the role of our impact investing work in the greater Boston social impact ecosystem. We commissioned this report in order to understand the effectiveness of our model in accelerating the growth and impact of socially focused businesses and to help us strengthen and refine our approach going forward.

We are tremendously grateful to those whose vision, engagement, and support helped shape the early stages of this work, especially Root Cause CEO Andrew Wolk and the Devonshire Foundation. They have been true partners in navigating the opportunities and challenges that came with entering into an emerging field; we have been fortunate to have them on this journey alongside us.

Sincerely,

Susan Musinsky, Executive Director Ryan Dings, Board Chair

Green City Growers Founder & CEO Jessie Banhazl welcomes SIF to its Fenway Park rooftop garden.

Letter from the Social Innovation Forum

INSIGHTS INTO IMPACT INVESTING| 1

About Impact Investing“Investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return.”

- GIIN definition of impact investing

In recent years, investors concerned about the social and environmental impact of their investments have shifted from a strategy of avoiding negative investments to one of actively seeking investment opportunities in companies with positive business practices. This shift, coupled with the realization that charitable giving is not the only way to put money toward positive change, has fueled the impact investing movement. Over the last decade, impact investing has become increasingly popular as individual investors, foundations, endowments and institutions are aligning their capital with their values.

Impact investments range from those that prioritize social impact over financial return to those that try to minimize the negative consequences of investments, while seeking a full market-rate return (as in the chart below). While traditionally seen as requiring a tradeoff between profit and social good, recent research has provided evidence that many impact investments actually achieve market rate or even above market rate returns.

The Social Innovation Forum (SIF) entered the impact investing space in 2012 after nearly a decade of experience accelerating the growth of innovative, effective nonprofit organizations. Our community of funders and investors had requested opportunities to invest in local social enterprises, and we knew that local impact entrepreneurs had been actively seeking ways to access the capital they needed to grow. To meet this need, we developed our Social Business Accelerator, a program to link entrepreneurs with mentors who help them achieve their business goals and with networks of investors who seek to invest capital for both impact and financial return.

(Source: Net Impact. Used with permission).

The Impact Investment (Financial Return) Spectrum:

INSIGHTS INTO IMPACT INVESTING| 2

Social Business Accelerator Highlights

The Social Business Accelerator is a mentor-driven program, focused on meeting the specific needs of a small cohort of impact-focused entrepreneurs. Each year, SIF has adjusted its program based on learnings from the prior year, advances in the field, and the unique needs of the entrepreneurs in the cohort. In 2016, six “Impact Entrepreneurs” and 19 mentors engaged in a 12-week program that included workshops, guest speakers, and weekly one-on-one mentoring sessions.

The SIF Social Business

Accelerator helped us craft

our story and become much

more of an investable

company. I’m very happy we

participated in the program.

Shivang Dave, CEO

PlenOptika, 2016 Cohort

24ENTREPRENEURS

ENGAGED SINCE 2013

50%OF THE ENTREPRENEURS RAISED CAPITAL POST-

ACCELERATOR

$700,000RAISED THROUGH SIF

CONNECTIONS

8.8RECOMMENDATION SCORE (OUT OF 10)

100%OF THE COMPANIES

ARE STILL OPERATING

$4MRAISED SINCE

PARTICIPATING IN SIF ACCELERATOR

Impact Entrepreneur Spotlight: Cabbige

In 2014 Cabbige launched a pricing tool to help local farmers move more of their food into the mainstream food supply. When using the tool resulted in an average increase in revenue per farmer of 9.6%, Founder & CEO Jessica Angell knew she was on to something.

A member of the SIF Social Business Accelerator 2015 cohort, Jessie credits the SIF team with instilling in her a level of rigor and discipline in every aspect of her work. Mentors Ben Chigier, an entrepreneur and investor, and Cathy Mannick, a Director at Launchpad Venture Group, helped Jessie navigate the challenges of growing an early stage business. In less than two years, Cabbige has grown to 100+ users, developed relationships with agricultural organizations across the Northeast, including Cornell, UVM, UNH, and UMaine, and raised a round of investment capital, with a number of investors connected through SIF participating.

INSIGHTS INTO IMPACT INVESTING| 3

Year Cohort size

Program Features

2006-2012

n/a

SIF supports social enterprises within its nonprofit accelerator cohort, including, Building Impact, InnerCity Weightlifting, Mill City Grows, More Than Words, Revision Urban Farm, Tacos Unidos (a program of ROCA), UTEC, and Work Express.

2013 4

SIF launches separate cohort-based accelerator to meet the needs of social impact businesses: one lead mentor, monthly meetings, introductions to other mentors

2014 68-session cohort-based accelerator with workshops and speakers

2015 812-week cohort-based accelerator with mentors, speakers, and Lean Canvas curriculum

2016 612-week cohort-based accelerator with targeted mentor matching, speakers, and investor engagement

While the program has evolved each year, key components to SIF’s approach include:

Access to capital, talent, and markets Connections to high value, industry

experts and impact-driven mentors A curriculum targeting critical early

stage challenges of a social impact business

Investor and network interactions during and after the program

In-kind support and access to an award of up to $15,000

Showcase event for prospective investors

Ongoing connections and advice

SIF’s Evolving Approach to Accelerating Social Enterprises

Impact Entrepreneur Spotlight: GRIT

With both creative and technical prowess, GRIT redefined its industry with the Leveraged Freedom Chair, an all-terrain wheelchair. After winning a $100,000 prize at MassChallenge, GRIT joined the SIF Social Business Accelerator seeking an opportunity to learn with fellow Impact Entrepreneurs and to connect with a community of mentors and investors specifically interested in mission-driven companies.

“GRIT truly matured as a company through our work with the Social Innovation Forum,” said Tish Scolnik, CEO and Co-Founder. “We have a much better understanding of the impact investing space, and being part of a cohort with other fantastic social enterprises made the experience even more valuable.” Since participating in the SIF program, GRIT closed its first funding round, raising $650,000 from 16 impact and angel investors, many of whom came through the SIF network.

Selected Guest Speakers

Asheesh Advani, CEO, JA Worldwide, and Founder, CircleLending · Jean Hammond, Co-founder and Partner, LearnLaunch, and

Founder, JPH Associates · Glynn Lloyd, Executive Director Minority Business Enterprise Initiative at Eastern Bank · Christopher

Mirabile, Managing Director, Launchpad Venture Group · Barry Nalebuff, Milton Steinbach Professor of Management at the

Yale University School of Management and Co-founder of Honest Tea · Deval Patrick, Managing Director, Bain Capital Double

Impact, and former Governor of the Commonwealth of Massachusetts · Chat Reynders, Chairman & CEO, Reynders McVeigh

Capital Management · David Sand, Chief Impact Investment Officer, Community Capital Management · Alex Whitmore, CEO,

Taza Chocolate · Howard Wolk, Co-President, The Cross Country Group

INSIGHTS INTO IMPACT INVESTING| 4

Social Innovation Forum’s “Impact Entrepreneurs”

Since 2013, 24 social businesses have participated in the Accelerator. The portfolio includes early stage businesses and those further along in their development, for-profit and nonprofit business models, and companies that create social impact both locally and globally. The participants span a range of industries and social focus areas.

Although each entrepreneur is unique, they are united by a common goal: using a business approach to help solve social or environmental challenges. Together, they are redefining what success means in business.

315MASSACHUSETTS JOBS

SUPPORTED BY THE ENTREPRENEURS

$21 MTOTAL REVENUE GENERATED BY

COMPANIES IN 2015

71%OF THE COMPANIES ARE

FOUNDED/OWNED BY WOMEN OR A MINORITY

SIF’s Entrepreneurs Have Been Recognized by the Following:

4

5

4

6

5

INDUSTRY

Apparel

Food & Beverage

Products

Services

Technology

4

6

6

5

3

SOCIAL FOCUS

Education

Environment

Food & Nutrition

Health

Other

INSIGHTS INTO IMPACT INVESTING| 5

2014

2015

2013

2016

Social Business Entrepreneur Portfolio

The entrepreneur selection process includes a written application and in-person interviews. Investors and prospective mentors assist SIF staff in selecting entrepreneurs who are the best fit for the Accelerator.

Since participating in the cohort, we have

secured investment, grown the business, and

positioned ourselves for further growth,

allowing us to increase our investment in our

community through hiring, sourcing of goods,

and donations to local organizations.

DAVID WARNER, CEOCity Feed and Supply, 2013 Cohort

INSIGHTS INTO IMPACT INVESTING| 6

Mentors are an integral part of the SIF Social Business Accelerator. SIF engages an active and diverse group of mentors to support the entrepreneurs’ needs. Mentors serve as role models, coaches, and confidantes, offering knowledge, insight, perspective, and wisdom. Many mentors are also investors, providing their perspectives and support to help entrepreneurs move to the next level.

Mentors and Investors

620MENTOR HOURS CONTRIBUTED

DURING 2016 PROGRAM

$100,000VALUE OF CASH AND IN-KIND

SERVICES CONTRIBUTED

92% OF MENTORS STAYED IN TOUCH WITH

ENTREPRENEURS AFTER THE PROGRAM

75%OF MENTORS HAD MENTORED

STARTUPS BEFORE

Angel Investor

Chief Executive Officer

Chief Financial Officer

Chief Impact Investment Officer

Chief Operations Officer

Entrepreneur

Founder

Managing Director

Partner

ATHENA PowerLink Program

Bain Capital

BlueMountain Capital Management

Harvard University

ING Financial Partners

LaunchPad Venture Group

MassChallenge

Merrill Lynch & Co.

Selected Mentor Profiles

Selected Mentor Affiliations

I have mentored several business and

social entrepreneurs in the past and enjoy

it a great deal. I was also interested in

participating in the broader process to

understand how socially focused

accelerators operate and to network with

the entrepreneurs and investors.

MICHAEL GILLIGAN, FOUNDER, URBAN CATALYSTSIF Mentor, 2016

INSIGHTS INTO IMPACT INVESTING| 7

83% OF MENTORS MET WITH

ENTREPRENEURS OUTSIDE OF THE SIF ACCELERATOR SESSIONS

75% OF MENTORS WOULD

CONSIDER INVESTING IN SIF ENTREPRENEURS

92% OF MENTORS WOULD

RECOMMEND BEING AN SIF MENTOR TO COLLEAGUES

Investor Spotlight: Jeff Kushner

Former CEO of BlueMountain Capital Europe Jeff Kushner attended a Social Innovation Forum event in 2013 and was soon hooked, becoming involved in SIF’s nonprofit and social business accelerators. Jeff first volunteered as a mentor and advisor to 2013 Impact Entrepreneur GRIT. He later became GRIT’s board chair and helped the team raise a $650,000 round of funding in 2015. Jeff finds mentoring young entrepreneurs, including 2016 Impact Entrepreneur PlenOptika, highly rewarding, while participating in the accelerator helps him to get to know the strengths and weaknesses of companies before making an investment. Finally, he credits being part of the SIF community with providing him access to a local impact investment community that allows for learning and network building in this emerging space.

Offering Value to Mentors and Investors

Mentors and investors derive value from their participation in the SIF accelerator and its related events. They become part of a growing, influential, local impact investment community that allows them take advantage of learning and networking opportunities, to “give back” to Boston’s thriving entrepreneurs, and to get to know compelling social enterprises in which they can invest.

Impact Investing Showcase:Connecting Investors to Entrepreneurs

The Impact Investing Showcase is the annual culmination of SIF’s intensive Social Business Accelerator program. Each entrepreneur pitches to an audience of more than 100 impact investors and business leaders who are seeking investments that offer both financial and social impact returns. In addition to highlighting Impact Entrepreneurs, the Showcase sparks conversation about the best approaches for accelerating the performance of social enterprises and making investments in local social impact startups.

62% of attendees at the 2016 Impact Investing Showcase identified as investors

INSIGHTS INTO IMPACT INVESTING| 8

Impact investing is an important area for

Boston to grow into. The Social Innovation

Forum is at an early stage but has already

offered a significant opportunity for

business, investors, and others who want to

play a role in impact investing.

BEN CHIGIER, ENTREPRENEUR AND INVESTOR

SIF Lead Mentor, 2016

The field of impact investing is still quite fragmented and early-stage, and challenges remain for both entrepreneurs and investors. The Social Innovation Forum’s experience has been one of learning and exploration, and we look forward to continuing to evolve this work in the future.

Key Lessons Learned

It’s clear that the SIF model from its nonprofit accelerator can be adapted for use with for-profit social businesses, but it needs leadership and mentors who have both business experience and applicable industry knowledge to assist the companies in their work. Thoughtful mentor recruitment and matching has been key to companies deriving value from the accelerator.

There is a significant and growing interest in impact investing from both investors and the philanthropic community, yet translating interest into actual investments has occurred slowly. As people manage the complexities of adapting traditional approaches (i.e. due diligence, risk assessment, and deal structures) to this field, it will require extra effort to bring investors and businesses together.

Measuring the social impact of for-profit businesses is challenging. Despite a commitment to social good, few of our portfolio companies are actively measuring their social impact. Helping companies track, measure, and communicate their social impact in a manageable way is an important area of focus in order to take this work to the next level.

Learning, Field Building, and the Future

Running apparel company Janji was a 2014 Impact Entrepreneur

Looking Ahead

SIF has worked with entrepreneurs who represent a range of business stages and social impact areas. We have engaged mentors and investors with different backgrounds, interests, and approaches. We are proud of our successes in supporting social businesses and advancing the field.

Knowing that this work is challenging and emerging over time, we will take a long-term approach as we work to link investors and entrepreneurs. We will continue to build and adapt our model while seeking connections with others working in the field. We will deepen partnerships with funders and investors who are exploring new ways to deploy capital for social good, providing the education and information they need to invest in impact. And, we will provide ongoing mentoring and support to social business entrepreneurs, particularly those whose work will benefit diverse and disadvantaged communities in greater Boston.

INSIGHTS INTO IMPACT INVESTING

Acknowledgements

SIF would like to thank all who have made this work possible, including our funders – The Devonshire Foundation, Reynders McVeigh Capital Management, Chuck and Charlene Hyle, and the SIF Sustaining Partners; as well as the mentors and volunteers – particularly 2016 Lead Mentors Vikram Punwani and Ben Chigier; consultants – David Boghossian, Alan Martinez, Rebecca Price, and Marissa Silapaswan; and the SIF Board of Directors.

A special thanks to the SIF staff team for their deep focus on impact and for their willingness to continue learning and evolving as the impact investing field emerges locally, nationally, and globally. It is exciting, yet often challenging, to work in this new space at the intersection of profit and purpose.

About the Social Innovation Forum

The Social Innovation Forum is a Boston-based connector and catalyst committed to building lasting social change.

SIF provides exceptional training and networks to social impact organizations, funders, and skilled volunteers, aligning their strengths and passions to more effectively address complex social problems. Since 2003, the Social Innovation Forum has directed more than $24 million in cash and in-kind services to 106 portfolio organizations – nonprofits and social impact businesses – that collectively touched more than 250,000 lives in 2016.

Research and Methodology

This report represents the results from research and data collected between May and August of 2016 by Ty Thiele and Amanda Roosevelt, MBA candidates at the Olin School of Business at Babson.

The researchers reached out to the entrepreneur, mentor, and investor participants, asking them to reflect on their involvement with the Social Innovation Forum from 2013 to 2016. Research methods included:

Surveying and interviewing 23 of 24 entrepreneurs

Interviewing and collecting program feedback from 2016 cohort

Surveying 12 of the 19 mentors from the 2016 cohort

Conducting follow-up interviews with nine mentors/investors.

Additional data was gathered by the SIF staff and through research conducted by Andrea McGrath of Amplified Impact in the summer of 2015.

Learn More

To learn more about the Social Innovation Forum:

Visit our website at www.socialinnovationforum.org

Contact us at impactinvesting@socialinnovationforum.org or 617.492.2305

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617.492.2305 • www.socialinnovationforum.orgOne Congress Street, Suite 113, Boston, MA 02114