Certainly, there’s no shortage of systems for measuring and managing impact. And the push for standardization continues. But what if an entrepreneur wants a quick and easy method, something appropriate for a pitch deck or web site that provides a clear and accurate analysis of the company’s potential impact?
That’s the goal of the Impact Beacon, a just-introduced platform from City Spark—the seed investing arm of impact investing firm City Light—along with partners Nasdaq Entrepreneurial Center and a consortium of academic institutions. The app builds on technology City Light uses to assess the impact of its portfolio companies.
The goal isn’t to replace existing models like IRIS+, but rather to complement them with a simple tool targeting entrepreneurs, as opposed to, say, fund managers or other impact players. “Our goal isn’t to recreate the wheel,” says Jeff Rinehart, a partner at City Light. “Our goal is to build a clean simple tool for entrepreneurs.”
For now, the platform focuses on City Light’s areas of specialty—environment, education and safety and care—though plans are in the works to add more areas eventually.
A Side Letter about Metrics
City Light focuses on early-stage companies that can produce market rate returns and what Rinehart called “product-based impact”. That means the core product or service is the thing that drives impact. As a result, even as a company grows, its success won’t dilute the impact of whatever it sells. (Example: Varuna, which provides sensors and software with which utilities can monitor water quality, replacing costly and inefficient manually read sensors and providing more detailed information about contaminants in water).
Impact Beacon grew out of a system City Lights uses to analyze portfolio companies’ impact. It breaks down a specific set of factors, the better to understand the potential impact over time. Then founders sign a side letter as part of their agreement committing to track those metrics over time. “It helps crystalize in entrepreneurs’ minds how to scale,” says Rinehart. “And that can change everything from the way they hire to how they talk about themselves on their web site.”
Open Sourcing the System
Rinehart and his partners wanted a way to take that process and “open source it,” as he says, making it available to entrepreneurs everywhere. The challenge, according to Rinehart, was to build an app any entrepreneur could use but with a measurement system that wasn’t too generic, including metrics specific to the important elements of a particular company’s impact.
To that end, there’s a series of six or so questions entrepreneurs need to answer that assesses potential impact and, ultimately, provides concrete examples of what that impact means—for example, the number of trees planted—and how that maps to the Sustainable Development Goals.
The platform also produces an infographic entrepreneurs can use in presentations, on their web sites, in marketing materials and so on. Users can also add or tweak different variables to see how that might change their impact.
Accelerating Seed Investments
Since City Light launched City Spark in August, it’s made 55 seed investments. The company also built an app with which entrepreneurs can interact with each other. And it provides programming. Plus, the firm invested in data analytics tools allowing it to aggregate company data quickly and make rapid decisions.
According to Rinehart, the idea for City Spark arose after City Light made 19 $50,000 investments in startups, in part to start to build relationships with fledgling impact enterprises. “We asked ourselves, what if we could do 100 of those investments?” says Rinehart. The answer was to form a seed-funding arm.
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