The impact investing market has grown and matured significantly since SVX began its journey in 2007. Tens of billions in capital is dedicated to impact investments by Canadian asset owners. Hundreds of new and current structured products are actively seeking capital from Canadian investors. Despite this, impact investors (alongside managers and advisors) have found it challenging to find and access impact investing offerings.
Our research and field-building work has identified the need for a new data platform that bridges the gap between investors and issuers, addresses information gaps, and enhances transparency to create a more efficient impact ecosystem.
As a result, SVX is pleased to introduce the SVX Impact Index. In this blog, we will be answering your 5W’s and beyond.
What is the SVX Impact Index?
The SVX Impact Index is a comprehensive database featuring the universe of current private impact offerings that are available to Canadian investors. The Impact Index also allows investors to gain access to a set of vetted opportunities (Impact Index+) that have met impact, governance, and financial requirements. The Impact Index features a diverse range of debt and equity opportunities from private equity funds to housing bonds.
What is Impact Index+?
Impact Index+ is a group of qualified private impact investment offerings that must meet rigorous impact, governance, and financial standards. These offerings are vetted and reviewed by external reviewers, an Advisory Group of industry professionals, and the SVX team. Impact Index+ opportunities are announced semi-annually. You can read more about the 2024 Impact Index+ Issuers here.
What is SVX?
SVX’s mission is to advance social, environmental and economic justice through impact investing. As a nonprofit, diversified financial services firm, we work with investors, funds, enterprises, and institutions to help them take the first step or next step on their impact journey. We provide knowledge products and programs, design strategies and products, manage funds, operate an impact investing platform, and develop systems change solutions. A part of our platform, the SVX Impact Index is a comprehensive database featuring the universe of current private impact offerings that are available to Canadian investors.
Why did we develop the Impact Index?
There are many reasons that we developed the Impact Index:
- Market Growth: The impact investing market has grown and matured significantly. An estimated 1,300 organizations manage $1.1 USD in impact investing assets worldwide. There are hundreds of new and current structured products in Canada actively seeking capital from investors, from private equity funds to housing bond issuers.
- Investor Demand: There is significant demand for issuers amongst impact investors. The demand far outstripped our former platform offering, first launched in 2013 (SVX 1.0) and updated in 2018 (SVX 2.0).
- Product Availability: Impact investors, alongside managers and advisors, experience significant challenges finding and accessing impact investing products. Finding impact investments in Canada is like trying to shop at farm markets. You have to make multiple trips to multiple destinations. Products are highly seasonal. They come and go. Locations are not easy to find, and you need to be “in the know” via referrals or recommendations on the best places to find opportunities.
- Market Data Gap: There is a fundamental data gap in the Canadian impact investing market. There is no single source of information on past or present products. There is also limited information on impact and financial performance of the market over time. Further, there is limited research and data on products to enable effective and efficient due diligence by investors, managers and advisors.
- Incremental vs. Transformational Change: Although we are having a positive impact, our business offering is having an incremental effect on the impact and mainstream system. Our previous platform offering was not aligned with our long-term vision of helping to create a world where all investments are impact investments.
Our market analysis identified the need for a new platform that bridges the gap between investors and issuers, addresses information gaps, and enhances transparency to create a more efficient impact ecosystem.
The new data platform will make it much easier and more efficient. Our aim is to create a one stop impact investing data shop. Moving from a farm market style to a supermarket, it will be easy to browse and find products. Offerings will be continually tracked and product shelves will be continually restocked. It will be useful for casual and serious investors, with a range of supports from education to research to help you on your journey.
Who can benefit from the Impact Index?
The SVX Impact Index has been designed for Canadian asset owners and asset managers active or interested in impact investing. At this time, the platform serves accredited investors including foundations, families, high net worth individuals, faith-based organizations, trusts, charities, financial institutions, portfolio managers, and advisors.
In the near future, we hope to be able to expand our offering to serve all investors.
What are the costs for investors?
We want to make sure market information is as widely accessible as possible. Accredited investors can join for free as a community member to access basic information. For more data and research, the Impact Index offers flexible multi-tiered memberships; see below for details.
What are the costs for issuers?
There are no costs for issuers to have their information included on the platform, or to be considered and identified as an Impact Index+ opportunity.
How is this an index?
In its simplest form, an index is a collection, list, or compilation of data, information or resources that is organized systematically to make information easy to find. In brief, the Impact Index is a collection of impact investing data making it easy for investors to find information on the market.
The term “index” is widely recognized in the capital markets, suggesting a comprehensive, methodologically organized collection of financial information, including measures and indicators. Accordingly, a financial index is typically a data source that measures changes (or performance) in the capital markets. It is typically composed of a number of constituents that represent a particular segment of the market. Each constituent of the index is selected to represent a segment of the market; these can be individual stocks, bonds, or other types of financial instruments.
Specifically, the key characteristics of a financial index include:
- Representative: An index should represent the performance of a specific sector or the entire market. It provides a snapshot for investors of how a particular market segment is performing.
- Benchmarking: Investors and fund managers often use indices as benchmarks against which to measure the performance of investment portfolios. For example, a mutual fund that invests in large-cap U.S. stocks might use the S&P 500 Index as a benchmark.
- Diversified Constituents: An index usually includes multiple constituents (like stocks or bonds) from a variety of sectors to ensure diversification. The weight of each constituent in the index might be based on their market cap or an equal-weighting method.
- Dynamic: Although an index provides a static list of constituents, it is regularly updated. Companies can be added or removed based on the criteria set by the index’s methodology (e.g., market capitalization, liquidity).
In our case, the Impact Index provides a comprehensive data source on the private impact investing market in Canada. It is representative of this market segment, seeking to develop long term benchmarks for the sector with a diversified set of constituents (unweighted) that will be regularly updated based on criteria set by our methodology.
It is indeed true that the concept of an “index” in private markets is less common than in public markets, but that does not mean that private market indexes (or indices) do not exist.
There are examples of efforts to create index-like benchmarks or databases to provide insights into the performance and trends within the private markets. These efforts aim to bring more transparency and comparability to an area of finance with less available information. Such private market examples include Cambridge Associates Index, PitchBook Benchmarks, Prequin Indexes, S&P Global Market Intelligence, and Burgiss.
The SVX Impact Index is similarly designed to help impact investors make better investment decisions in private markets by providing enhanced transparency and availability into impact investment product data, including impact and financial information.
Is the Impact Index an investment platform? Can I invest?
The SVX Impact Index or Impact Index+ is not an investment platform that facilitates transactions. It is really a data platform. We want to be clear about what we are bringing forward, so here are a few key important disclaimers:
- SVX is registered as an Exempt Market Dealer (EMD) under applicable securities legislation in Ontario, Québec, Alberta, British Columbia, Manitoba, and Saskatchewan; however, no securities regulatory authority has approved or expressed an opinion about the securities offered on the platform.
- The opportunities included in the database are for informational purposes only. They are not intended as investment advice or an offer or solicitation for the purchase or sale of any financial instrument.
- Investing in the exempt market has significant risk. You should be aware of these risks, and as appropriate, consult with appropriate financial professionals to support your decision-making processes.
- For those issuers included in the general Impact Index database: we have not completed due diligence on these opportunities, including any qualified, non-reliance based analysis or specific work required for meeting Know Your Product (KYP) standards that could support investment decision-making. Further, we cannot verify or disprove any statements made by issuers regarding current or past financial or impact performance, or any of the specific stated financial or impact metrics or objectives.
- The Impact Index and Impact Index+ not designed to be a replacement for due diligence. However, it is hoped that it makes that process much more efficient for investors and issuers alike.
- Issuers on Impact Index+ have met certain requirements or standards in terms of governance, finances, impact, and equity. However, SVX or its advisors do not endorse any investments of any of the organizations, and we do not recommend any investments.
What products are included in the data platform?
Medium and large scale private debt and equity investment opportunities from bonds to private equity funds. We will expand into other segments over time to help identify and consolidate the available set of impact investing products for investors (eg. term deposits, balanced funds, etc.). At this time, we are not including direct venture equity (e.g. common shares or preferred shares) in individual, for-profit enterprises in the Impact Index. However, we would consider individual nonprofit organizations seeking debt financing for projects, outcomes financing tools, or real estate that met our criteria.
How many products are on the platform?
There will be an estimated 200+ impact investing products on the platform.
How many products will be considered for the Impact Index or Impact Index+?
There is no limit to the number of products that will be considered for the Impact Index or Impact Index+. Based on current trends, we would estimate there are 20–30 products that will meet the Impact Index+ requirements on an ongoing basis.
What are the minimum screening requirements for the Impact Index?
The Impact Index has the following minimum screening requirements:
- Impact sector alignment with social, environmental, and economic impact focus.
- Investment size/scale with at least $2 million in capital being sought.
- Investment structures exclusively within the private or exempt market domain, encompassing private equity, debt, mixed private structures, and not limited to funds, bonds, and outcomes-based financing tools.
- Issuers with investment availability that are currently in a capital-raising phase or those planning to initiate one in the next 6–12 months.
- Eligible for Canadian investors (impact not necessary in Canada).
What is the criteria for organizations to be featured on the Impact Index+?
Issuers must meet a set of in-depth criteria related to management and governance, impact, finances, and equity:
1. Management and Governance
- Track Record: Demonstrated track record for active and established issuers or previous track record of team and partners for new and emerging issuers.
- Team: Aligned team experience, skills and performance.
2. Impact
- Management: Impact management strategies, including impact measures.
- Standards: Adherence to market-standard for impact. This may include a third-party standard or agreement to code of conduct.
3. Finances: Sustainability, Structure and Exit Strategy
- Financial Sustainability: Strong financial model and potential for financial sustainability
- Financial Return: Potential for financial return from concessionary, below-market, at-market, to above-market rate.
- Exit Strategy: Clear strategies for exit that align with long-term impact and sustainability for issuer, investor(s) and community.
4. Equity: Racial and Gender Equity
- Demonstrated commitment to advancing racial and gender equity within management, governance, and business operations.
What impact standards are used in the selection criteria for Impact Index+?
It is important that issuers apply an impact standard to demonstrate their impact. Issuers have the flexibility to leverage various best-practice third-party impact certifications, impact principles, or impact assessment tools as standards to guide their organizational impact. The following list presents a comprehensive, though not exhaustive, compilation of these standards. See it here. Issuers are encouraged to share additional standards for evaluation by our Advisors and the operating team.
What if I am not ready for investment?
SVX offers investment readiness services for organizations, intermediaries, and governments seeking to develop impact investing funds, bonds, outcomes financing tools, and other innovative financing products. Please get in touch with us at info@svx.ca to arrange a conversation or to get more information.
Is SVX looking for ventures?
At this time, we are not seeking direct venture equity (e.g. common shares or preferred shares) in individual, for-profit enterprises for the Impact Index. However, we would consider individual nonprofit organizations seeking debt financing for projects, outcomes financing tools, or real estate that met our criteria. Further, we are also open to other equity opportunities such as GP/LP structures.
We’re just getting started with the SVX Impact Index. We have a long way to go, and it is an exciting and reinvigorating journey for the organization. In terms of some of the next steps for us, we are looking at the following:
- The Impact Index will be seeking issuers to be part of our second cohort announcement in Fall 2024. We had an overwhelming response to our first call and there are a number of opportunities that have been launched in the past few months that can be considered and included.
- We will introduce thematic categories and sub-portals for the Impact Index that will include themes like community finance and gender lens investing.
- We will also look to introduce geographic categories at a country and/or regional level. Our work and partnerships in Latin America provide us with unique market insights and access to the region.
- There are an increasing number of portfolio managers that are bringing larger scale products to market. The Impact Index will introduce a managed product (or equivalent) category to increase knowledge of the range of managed solutions for investors.
- The Impact Index will also explore other market segments beyond private markets, as well as explore retail segmentation to expand access to information about opportunities that are available to the general public.
- We will be collecting data. We will also be reporting data. And collecting more data. And reporting more data. Shampoo. Rinse. Repeat. It will require a constant and consistent effort to monitor the market and continue to provide data and benchmarks for the impact investing sector in Canada. We expect to produce regular market reports on the data on an annual basis.
- We will need to make updates and revisions. The Impact Index will update data collection processes, make technology updates, evaluate and revise our criteria revisions, and more, based on feedback from our clients and stakeholders.
