Until very recently, the nature of impact investing — investments made to generate beneficial social or environmental impact as well as a positive financial return — made the market easy to play in. Fund managers rarely felt pressured to compete for so-called charitable deals, as they sincerely believed these opportunities would always be abundant.
Now, as wealth shifts from one generation to the next and younger investors assert their interest in philanthropic investments, asset managers must compete to find and fund the most impactful capital deployment instruments.
The Global Impact Investing Network (GIIN) found that the private impact market jumped to approximately $1.2 trillion in 2022 — and the trend is accelerating. Even more telling is that 9 out of 10 institutional investors say they plan to step up their capital commitments even more within the next 5 years.
Institutional investors decide who to book with based on their documented success in environmental, social, and governance (ESG) and emerging markets. If your organization wants to receive funding, you’ll need to work more efficiently and effectively to build the strong reputation that sponsors expect.
To bolster its own reputation, Women’s World Banking relies on DealCloud for target sourcing, due diligence, and portfolio management. Read on to learn how DealCloud helps improve the group’s overall performance.
Women’s World Banking is a multifund asset management group that invests in businesses that enable women to achieve economic empowerment. Led by Mary Ellen Iskenderian who explains that the group “creates enterprise value and competitive financial returns by investing in businesses that unlock the potential of women as customers, suppliers, leaders, employees, and full participants in the economy.”
The nonprofit’s key to success is in the targets it sources. “We’re looking for companies that are looking to move the needle in gender performance,” said Angie Goenaga, Senior Investment Associate at Women’s World Banking. This unique mandate means the visibility of private company data is paramount.
DealCloud gives Women’s World Banking team members a clear, comprehensive view into potential targets, so they can spend less time gathering, parsing, and making sense of the data. With DealCloud, general partners (GPs) can view verified data from PitchBook, SourceScrub, S&P Global Market Intelligence, Preqin, Sutton Place Strategies, Dun & Bradstreet, FactSet, PrivCo, Esri, and a variety of other trusted third-party data providers — all within their firmwide information system.
From here, deal sourcing teams can gain deeper insights by filtering the data by region, business structure, deal type, potential deal size, and other variables. In the case of Women’s World Banking, the team can explore gender equality and representation within organizations.
“For example, companies that have mainly focused on transportation have been in a mostly male-dominated field,” Goenaga explained. “We look at how we can get involved and support a company as they try to involve more women in their internal staff as well as in their clientele and market.”
Having this visibility strengthens the confidence of the firm’s decision-makers. Executives also save time on streamlined target analysis and are free to devote their attention to building relationships with both the targets’ leaders and the institutional investors who may back them.
When the deal team at Women’s World Banking identifies a target of interest, the real work begins.
DealCloud enables improved target vetting by allowing the group to weave its own historical information and firmwide knowledge into the system. The software can then recommend who in the firm is best suited to take ownership of a deal based on their experience in the sector, product, or region.
DealCloud also provides configurable relationship intelligence to show how strong those dealmakers’ relationships are within the space. The software assesses and displays the team’s individual contacts so partners can quickly allocate or reroute their personnel to provide deal coverage where it’s needed most.
The actual work of due diligence for impact investees differs from conventional diligence in two major ways. First, institutional investors and their asset managers look for more than positive financial returns. They need their due diligence processes to reveal value creation opportunities in ESG effectiveness, as well as monetary gains.
Second, due diligence for impact investees deviates in the variety and depth of potential risks a deal sponsor will take on. GIIN states that there are five dimensions of impact that sponsors should consider during impact investing, including whether people or the environment will be negatively impacted if the expected deal outcomes aren’t realized.
DealCloud equips dealmakers at the Women’s World Banking group to organize, plan, and manage their workflows as they navigate this unique, nonlinear process. The better their due diligence, the better they can reveal these valuation-changing factors, resulting in more successful outcomes.
Investor relations’ portfolio monitoring and management work
Women’s World Banking encountered a variety of unexpected benefits when it adopted DealCloud as its deal pipeline and relationship management system. One of those surprising advantages included improved portfolio management.
“When DealCloud came along, we quickly realized we could also use it for portfolio monitoring,” Goenaga recalled. “For existing portfolio companies, we can go back and see all the data points that we want to track in terms of financial performance and impact for us as an impact investor. It’s really important to keep track of these specific impact data points.”
Goenaga names gender involvement as an example of a crucial impact data point. “We want to see the percentage of women clients, the percentage of women in leadership, and the percentage of women staff,” she said. “DealCloud has become a good way to visualize it and see it on a portfolio level.”
Building a reputation as a reliable leader
DealCloud has removed many of the administrative barriers facing Women’s World Banking, allowing the gender lens investment group to successfully find, unlock, and return value. As Women’s World Banking continues to improve target sourcing, due diligence, and portfolio management, the fund manager can both maximize and add to the potential value creation of businesses that elevate and empower women.
As a by-product, the nonprofit’s capital allocators, the public, and even future targets feel confident trusting Women’s World Banking to make the most impact.
Whether impact investing is a core or peripheral focus for your group, it’s important that you and your teams have the ability to unlock value by elevating the underserved. Like Women’s World Banking, you too can leverage DealCloud to centralize your data and streamline your dealmaking work. Schedule a demo today to learn how.