Congratulations on receiving a $4,530,000 investment from the Multilateral Investment Fund. Can you provide some details regarding your conversation with them around measuring impact?
As a GIIRS Pioneer Investor, the MIF was interested in learning about how we were utilizing GIIRS and we shared with them our Fund Rating Report and our companies’ GIIRS Rating Reports. They were most interested in the impact business models of our portfolio companies to understand how they were creating social impact through their products or services.
Did your Fund Rating Report help communicate and demonstrate Vox Capital's approach to social and environmental impact during your conversation with the MIF?
By providing weighting for impact metrics and impact business models, GIIRS is aligned to our approach towards social impact. For us, impact is related to the people served by our portfolio companies. We care about having the ability to measure and communicate how peoples’ lives are affected overall by our investment decisions. The GIIRS Fund Rating Report demonstrated how we are executing on that mission, using a third-party verified methodology.
What tools is Vox utilizing to demonstrate its social impact to investors?
Through our annual GIIRS Rating, we communicate our fund’s impact and the impact of our portfolio companies to our investors. We also share with our investors a dashboard with IRIS indicators and our financial results on a direct and regular basis, and we plan to use the B Analytics platform to show our key performance indicators in the future. One of the most innovative aspects of our fund is how we’ve tied social performance to our [fund manager’s] financial compensation. To do this, we use GIIRS as a proxy for the carry compensation of the fund and have tied our variable compensation to our GIIRS rating. After the financial hurdle rate of 6% net of inflation, the management team carry is divided in 10% for the financial performance component and 10% for the social impact performance of the portfolio companies. If our portfolio companies earn a 3 star GIIRS rating or higher, then we get the full 20% carry.
Why did Vox decide to become a GIIRS Pioneer Fund?
We believe in the concept of impact investing – the reason the industry is being formed is to generate larger, more scalable impact than traditional business. We also believe in the adage, “what gets measured gets done”. As much as possible, we want to standardize measurement and use metrics that are accepted by the market so that the industry can start creating common knowledge and a database to compare and discuss results.
The structure of the B Analytics report – its ease of communication and efficacy for understanding our impact – was able to guide the investor discussion, along with other considerations that led to the investment decision.Daniel Izzo, Vox Capital
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