WhitePaper Series: Impact Sellers

Hi there ChangeMakers, it’s Proof of Impact here. We will be coming out with posts and articles called the WhitePaper Series. This series is meant to outline, define and explain the issues in impact investing, POI’s solution and application that we believe are necessary for the impact industry to bring forth the Purpose Economy and promote measurable and transparent progress in our world. In this fifth installment, we’ll be starting with last time’s introduction on impact marketplace players and focusing on the impact consumer user experience, or as we refer to them as ‘impact buyers’ — the superheroes that will bring about the change we all wish to see in the world.

The Impact Marketplace

The Marketplace is designed for two primary users: Impact Implementers (sellers) and Impact Buyers:

1. Impact Implementers (Sellers) include anyone who has the capability to implement a relevant impact event. They can include any type of company or organization or individuals. A local hospital delivering immunizations. A non-profit distributing clean cookstoves. A school. A multinational or a small company wanting to demonstrate the social and environmental standards they adhere to in their manufacturing or production processes. Intermediaries in supply chains who want to make the economic distribution of their supply chain transparent. Local health providers that want to access additional sources of income. Local communities planting trees or cleaning beaches.
2. Impact Funders (Buyers) can include traditional institutional and individual impact donors (i.e., who give unrestricted funds that are not contingent on an impact event), investors seeking impact return only (i.e., who give donations that are linked to the achievement of impact events, but not linked to a financial return), investors seeking both impact and financial return, and payers who pay upon successful impact delivery (e.g., government entities, philanthropy).

Just like in any marketplace model, the two primary user types have different needs and different navigation options/ experiences in the Marketplace and, as needed, dedicated pieces of infrastructure (wallets, admin panels, dashboards). The Marketplace is in the public domain for anyone to view the available impact tokens, track their history, research their context and study the order book. As the Marketplace matures, more impact events will be added, others will be removed, and those with the greatest success will continue to be funded until the outcome is achieved.

Impact Buyers: The User Experience

Prior to sign-up, Buyers will also be able to explore the Marketplace, browse a searchable menu of impact event types, and view the cost of each impact event type and the associated return on investment they could expect to receive for each impact event completed, as applicable (i.e., if they are seeking a financial return in addition to their impact return).

Step 1: Buyer Onboarding

Onboarding for Buyers will include the standard account creation and linking to payment methods, followed by the Buyer selecting their preferred type(s). As noted above, there are different segments of buyers:

1. Institutional or individual funders (i.e., giving unrestricted funds that are not contingent on an impact event)

2. Investors seeking impact return only (i.e., donations linked to achievement of impact events, but not linked to a financial return)

3. Investors seeking both impact and financial return

4. Payers who pay upon successful impact delivery (e.g., government entities, philanthropy)

Buyers can define their own preferences if they want to: impact areas of interest, target geographical areas, and select from the publicly available menu of impact event types that they would like to fund.

Step 2: Research and Due Diligence

Prior to committing capital, different buyer types will have different informational needs regarding the validation requirements and proof points for each impact event type, evidence-base and track record of the Implementer, and target population, among other

design factors. For this reason, Buyers would have the option of committing capital to impact event types as a commodity, agnostic to which Implementer delivers the impact event, or they could select a specific Seller profile that they are comfortable supporting and commit capital to pay for impact events delivered by that specific Implementer. Based on the Seller’s profile selections, they will also be automatically matched by the Marketplace to sellers that share the same focus areas for funding consideration.

Step 3: Deploying Capital and Generating Returns

Buyers can deploy capital at different times: upfront, performance-based, or instant:

- Impact investors commit capital upfront, but that capital is still only deployed when impact events are delivered. The key is that they don’t receive their financial return until impact is delivered at scale.

- Buyers seeking impact and financial returns will deploy their capital upfront with the potential to gain their original funding back plus a financial return upon the successful delivery and validation of impact events.

The Table 1 below illustrates the flow of capital depending on the role of the Funder and Implementer.

Upon successful completion of the impact events, capital (including upfront funding and returns) will be automatically deployed to the appropriate stakeholders.

Step 4: Tracking and Managing Impact

Buyers have access to streamlined dashboards and analytics tools that will allow them to view and manage all of their investments in one location. They have the ability to view total committed capital versus deployed capital (by sector, category, impact event type, country, Seller, etc), view their impact and financial summaries, and receive automated notifications when individual impact events (or larger impact and financial goals) are achieved. They can also see their aggregated impact in the wider context of impact delivered in the respective category/ geographic area/timeframe. The Platform also provides exportable financial reports, tax information, and audit reports needed for external reporting purposes.

Conclusion

The emergence of global Impact capital markets will bring together all segments of impact stakeholders as well as investors, funders, large small and medium companies, governments and communities to buy and sell/ deliver impact outputs and outcomes.

In order for these impact capital markets to emerge, several prerequisites need to be fulfilled. These are related to fast, reliable event verification at scale, financial engineering and trading infrastructure.

Proof of Impact is addressing these prerequisites and is building the world’s first liquid impact capital marketplace. Through a streamlined and transparent process that allows buyers to know the precise impact of their time and resources, the POI Marketplace will rapidly accelerate the pace of private capital investments into social and environmental programs, and harness the engine of capitalism for social good.

At Proof of Impact, our hope is that the Marketplace will provide a venue for people across the world to work together in ensuring prosperity for all and protecting our planet. Our dream is to not only achieve the SDGs by 2030, but also provide a tool to rapidly solve new problems that arise for our future generations. Will you join us?