Prof Bugg-Levine's presentation on capital markets.

1. Innovations in financing
development solutions
Antony Bugg-Levine
Business Innovations in International Development
October 2010

2. How will I find capital to
grow my development-
focused business?
How can I assess the
capital raising strategy of a
business plan?
How can I make
investments that support
business innovations for
development?
How can I build a
business solving
these problems for
others?

4. • Retail investors
• HNWI
• Private bank clients
• Family offices
• Private foundations
• Institutional investors
• Sovereign wealth funds
• Development finance
institutions
• Government

5. Supply
(Buy-side)
Demand
(sell-side)
Intermediation

6. Supply
(Buy-side)
Demand
(sell-side)
Intermediation
• Retail investors
• HNWI
• Private clients
(UHNWI)
• Family offices
• Private foundations
• Pensions
• Taxes
• Commercial banks
• Trading platforms
• Wealth advisors
• Private banks
• Investment funds
• Institutional asset
managers
• Development
finance institutions
• Treasury
department
• Sovereign wealth
funds
• For-profit businesses
• NGOs (e.g. Scojo)
• Suppliers (e.g.,
smallholder farmers)

7. Where is the money?
Retail bank
High net worth
Private bank
Family office
Insurance fund
Pension fund
DFI
Foundation
endowment
ODA
Corporate investment
Government support
28
23
17
30
20
0.21 (flow)
0.6
0.12 (flow)
US$TR

8. Retail savings
High net worth
assets
SWF
Insurance
funds
Pension funds
Foundations (US)
Private giving (US)
DFIs
ODA

9. 1. Retail investors
2. HNWI
3. Private bank clients
4. Family offices
5. Private foundations
6. Sovereign wealth funds
7. Development finance
institutions
8. Institutional investors
9. Government
Potentialinvestmentsize
Impact investment appetite/
independence
9
2
6
7
8
4
5 3
1

10. Where is the money?
Retail bank
High net worth
Private bank
Family office
Insurance fund
Pension fund
Capital/account
Investor
discretion

11. The Scott Budde Problem…
ERISA
Make impact
investments…
$700MM commitments
At scale

12. • Retail investors
• HNWI
• Private bank clients
• Family offices
• Private foundations
• Institutional investors
• Sovereign wealth
funds
• Development finance
institutions
• Government
• CCI note invested in
community housing
• Grameen loan guarantee
• Syndicate microfinance loan
• School finance fund
• Charter school guarantee
• CDFI cash deposits
• China investments in Africa
• Loan for new roads
• Electric car company loan

13. Social
enterprise
Social enterprises stuck in the middle
when trying to raise funds
Social return
Charity/
non-profit
~20%
For-profit
business
0%
Risk-
adjusted
financial
return
-120%

14. ~20%
Impact investing industry emerging to fund
social enterprise
Social return
-120%
0%
Risk-
adjusted
financial
return
Examples:

15. ~20%
Impact investing industry emerging to fund
social enterprise
Social return
-120%
0%
Risk-
adjusted
financial
return
Examples:
Double-bottom line trade-off

16. ~20%
Market-rate impact investing
Risk-
adjusted
financial
return
Social return
-120%
0%

17. ~20%
Market-beating impact investing
Risk-
adjusted
financial
return
Social return
-120%
0%
Examples:
generation__

18. ~20%
Can impact investing become a stable
equilibrium?
Social return
-120%
0%
Risk-
adjusted
financial
return
Examples:
Business
discipline
Social metrics

19. Opportunities for entrepreneurs
Investment
firms
• Structure deals
• Make investments
NGOs
• Raise capital
• Fund management
• Advisory
Start-up
firms
• Asset management
• Investment banking
• Advisory

20. Capital raising examples
• Private foundations
• Family offices
$20MM
• Private foundations
• Family offices
• (U)HNWI
• Corporate customers
$50MM
• Private foundations
• Family offices
• HNWI
• DFIs
$102MM
$16MM
$1.5 Billion
• Venture capital
(Sequoia)
• Angel investor
• Family office
• Commercial bank