Miami – In January the Global Impact Investing Network (GIIN) released a study that predicts impact investing funds to grow from $8 billion dollars in 2012 to $9 billion in 2013. This large percentage of growth from year to year means that impact investing is in an explosive state.
“What’s interesting is that we’re also in a territory where we don’t have reliable performance data to give investors confidence,” said Catherine H. Clark, Director of the Center for the Advancement of Social Entrepreneurship (CASE) i3 Initiative on Impact Investing and Associate Professor of the CASE at Duke University’s Fuqua School of Business.
“We’re in this Wild West period where a lot of people think this is important, huge amounts of government subsidy and leverage are being put in the field, and we have to see where it all shapes out,” Clark added.
Touted as the next big thing and given its challenges, how would impact investing avoid the fate of being the next big thing for the next 20 years, as was the case in Brazil?
Jocelyn Cortez Young, Managing Partner and CEO of the Minerva Capital Group, explains that the challenge of impact investing gaining momentum is the amount of money allocated to it. “In Latin America, $7.9 billion was allocated to the private equity space last year alone, according to the Latin American Private Equity & Venture Capital Association. But there was only $100 million that was allocated to the impact investing space, and that was allocated among five managers.”
With respect to the numbers released by the GIIN, Young believes impact investing is gaining momentum. “But the question is how is that money being allocated? That’s the problem,” Young said, adding that, “There is not enough information when it comes to risk metrics, which is the driver behind this.”