Businesses can be good at solving some of the world’s most significant challenges - from financial inequality, access to education and healthcare, to gender equality and climate change. This short video explains this better than we can.
https://www.youtube.com/watch?v=0iIh5YYDR2o&feature=youtu.be
Having taken your ‘first steps’ as an impact company, there are some things you might now consider continuing to develop and deepen your company impact.
The way we define impact portfolio companies is that the companies not only act to avoid harm but also generate one or more significant effect(s) on positive outcomes for otherwise underserved communities and/or the planet.
<aside> <img src="https://s3-us-west-2.amazonaws.com/secure.notion-static.com/a5ca4a4e-1dfb-4369-add3-018a67298ba5/Antler_Sign.jpeg" alt="https://s3-us-west-2.amazonaws.com/secure.notion-static.com/a5ca4a4e-1dfb-4369-add3-018a67298ba5/Antler_Sign.jpeg" width="40px" /> Impact is when the outcomes of the business operations, business model, and objective of the company leads to a positive environmental or social benefit that is intentional, demonstrable, and quantifiable. This is very often linked to the UN Sustainable Development Goals. The Sustainable Development Goals (SDGs) or Global Goals are 17 interlinked global goals designed to be a "blueprint to achieve a better and more sustainable future for all." The SDGs were set up in 2015 by the United Nations General Assembly (UN-GA) and are intended to be achieved by 2030.
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If you think you have met the criteria of Antler’s definition of an impact portfolio company, there are some questions you may want to consider.
Ensure that you are ‘walking the talk,’ i.e., your internal processes should mirror the importance you place on sustainability. This may include external statements, communication with customers, supply chain, and business partners.
Use the GIIN’s simple theory of change checklist here. This will help clarify your impact priorities, define your strategic objectives and the path to reach them.
Investors are still grappling with a consistent framework to assess impact across the VC industry.
The most common approach we see is the use of the Impact Management Norms. Antler takes a similar approach with adaptation and simplification for our early-stage companies. Their guide looks at the extent of a company’s impact and classifies accordingly, using the 5 dimensions shown below:
As an impact company, ensure you are able to clearly respond to these questions. Antler is a member of ImpactVC and the below table is sourced from their playbook. We think this is an appropriate approach to an impact framework across different company growth stages.
| IMP Dimension | Pre-seed | Seed | Series A | Series B+ |
|---|---|---|---|---|
| What | Comprehensive understanding of the range of outcomes that could occur as a result of using this product. | An understanding of some of the outcomes occurring in practice | A growing understanding of the outcomes occurring (e.g. understanding how different users experience different outcomes including any negative outcomes) | An understanding of all material outcomes occurring (including negative) |
| Source of proof points | Founder lived experience, academia, media, user research, etc. | User interviews/ feedback | User interviews/ feedback across more of the user base (e.g. people who stop using the product, etc.) with more data points | Surveying a representative sample of all the user base |
| Indicative example | ‘We expect the range of outcomes across all users to include XYZ’ | ‘User testing with five users told us they experience XYZ’ | ‘Groups ABC experience XYZ different outcomes on a consistent basis and if the product is misused we anticipate seeing 123 negative outcomes’ | ‘For X% of our user base, we tend to see these 123 positive outcomes. For y% of the user base we see ABC negative outcomes.’ |
| Who | Target customer groups. | As before | Understanding the severity of the issue that users experience | Understanding the demographics of user base to assess how in need/vulnerable users are |
| Source of proof points | Founder intent | - | Engagement metrics / Needs survey | Needs survey & other data (e.g. postcodes for deprivation index) |
| Indicative example | ‘We are targeting all customers including those who experience this problem to a high degree and those on low incomes’ | - | For some applications, engagement data may be a proxy for severity of the issue (e.g. counseling app, number of sessions could be linked to severity of mental health challenges) |
Where this is not possible active data collection might be necessary: ‘Our survey data suggests that on average people are in the top quartile for mental health challenges’ | ‘X% of our customers live below the UK poverty line’ Or ‘Y% are single parents’ | | Scale | Size of the problem being targeted (i.e. TAM) | As before | Number of people being reached & estimated % who will experience impact | Definitive data on number of people benefiting | | Source | Research for pitch deck | - | Product data | Impact measurement baked into the product (e.g. surveys, passive data, etc.) | | Indicative example | ‘XYZ number of people are currently using an inferior solution for this problem’ | - | ‘We see X number of monthly active users and Y% of them go above our engagement threshold where we expect to see meaningful impact created’ | ‘X number of people are currently benefiting in Y ways from using the app’ (can be segmented across user groups) | | Depth | Understanding of the type of depth that could be achieved. | Unit impact validation (i.e. how much does the needle move per application of this product) | Proxy metrics across most user groups | Impact experienced per person/user group | | Source | Founder lived experience, academia, media, user research, etc. | One off deep-dives in testing/iterating the product | Metrics baked into the product | Impact measurement baked into the product (e.g. surveys, passive data, etc.) | | Indicative example | ‘If we manage to build this product we could make things X% cheaper/faster/better helping to create Y impact’ | ‘Testing with a few users showed an X% improvement in Y outcome’ | Engagement metrics or NPS as a proxy for impact being created: ‘Our retention rate/NPS is above market average demonstrating value to customers’ | ‘For different groups ABC we see different impact profiles where XYZ change in outcomes are being achieved’ | | Duration | An idea of how long the benefit could be maintained. | As before | As before | Evidence how long the benefit the startup creates is maintained | | Source: | Lived experience, academia, media, user research, etc. | - | - | Impact measurement baked into the product (e.g. surveys, passive data, etc.) | | Indicative example | ‘Research suggests that improvements in X generate lifelong benefits’ | - | - | Where the product is a one-off with long term benefits (e.g. weight loss app): ‘Improvements in X were maintained Y months after users stopped using the product’ Or where the product generates benefits for active users (e.g. a job seekers platform) ‘the average users stays on the platform for Y months) | | Contribution | How are you different from other similar solutions? | As before | As before | Studies which compare outcomes achieved of the product compared to alternative to determine the unique impact achieved by the product | | Source: | Research for pitch deck | - | - | Dedicated research (often in partnership with external experts) | | Indicative example | ‘We are the only organisation working on this problem, so any impact created is unique’ ‘The NHS provides a similar service but is stretched for capacity, we are able to provide it much faster therefore our contribution is to accelerate care’ | - | - | ‘Our solution creates XYZ outcomes above and beyond the best alternative options’ |
VC should ensure the startup is measuring the above but should also keep a track of the below as important predictors of impact:
| Key area | Possible Proof Points |
|---|---|
| Founder intent | 1. Talks about impact in pitching the company |