Giant Leap’s impact calculator for startups and VC investors
Releasing Giant Leap’s impact calculator and benchmarks that we use to compare impact opportunities as part of our screening process.
The comparison challenge of impact investing
Impact investing is the practice of allocating capital to maximise both beneficial outcomes for people and the planet alongside financial returns.
When comparing opportunities for financial returns, investments are easy to compare with a standard dollar figure.
But when comparing opportunities across a broad house of impact issues — the climate crisis, social inequity, health disparities — it’s not so easy.
How do you compare the value of reductions in carbon emissions against improved health outcomes? Or increases in diversity against pathways to employment for people below the poverty line? And how much impact is “enough”?
The judgement is further complicated when you need to account for subjectivity, where some investors care deeply about some issues more than others. Additionally, impact investing needs to account for the risk of unintended consequences, such as generating emissions reductions at the cost of human health.
It can sometimes feel like comparing apples to oranges to spaghetti.
Navigating impact assessment
To navigate the question, Giant Leap developed an impact calculator that is built upon the principles of the Impact Management Project Framework and inspired by the work of Tripple, an impact family office.
The Impact Management Project Framework was developed by thousands of stakeholders in the impact investing ecosystem including Giant Leap’s Head of Impact, Erin Kuo, PhD. It provides a set of industry-recognised standards and guidance for assessing impact.
The key questions asked under the framework are:
- What — tells us the positive outcome the enterprise is contributing to and how important the outcome is to stakeholders.
- Who — tells us which stakeholders are benefitting from the outcome and how underserved they are in relation to the outcome (noting that the ‘who’ could also be the environment).
- How Much — tells us the scale, depth and duration of the outcome created by the enterprise.
- Contribution — tells us whether an enterprise’s and/or investor’s efforts resulted in outcomes that were likely better than what would have occurred otherwise.
- Risk — tells us about the risk of unintended consequences and/or the likelihood that the impact will be different than expected.
The calculator produces a score out of 300, which classifies investments into the following categories:
Typically, Giant Leap seeks to invest in companies that score above 120, placing them in the category of Benefit Stakeholders or Contribute to Solutions. Portfolio companies assessed to date score on average above 180 (see live data here)
Giant Leap’s impact calculator
We’re releasing this calculator with the hope that you can use it, improve on it, and share your thoughts.
Some must reads before jumping in:
- For startups, we are assessing their potential future impact. That means when answering questions, we look ahead 5–7 years and try to imagine the possible impact at that point in time.
- Impact scoring is a highly subjective process and other people’s judgments (including the Giant Leap team’s), may differ from yours.
- We expect it to be very unlikely to score close to 300 for a startup, so don’t be discouraged! The highest score for our portfolio is around the 240 mark.
- For best results, share the calculator with one or more people in the team so you can compare your answers and interrogate the assumptions behind those answers.
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