Hi Tom and Paddy, I also can’t resist chiming in.
Tom, you raised concerns about the practicality of ‘measuring’ investor contribution. I’ve noticed some investors using the term ‘assessment’ instead of ‘measurement’, and I’ve started to use it too. Assessment seems like a better term to use when high-quality measurement work (like you do at 60 Decibels) is not possible. Not to suggest that there are no measurable indicators related to investor contribution…
It seems strange to use traditional financial practices as a default reference point for impact investing, as your message seems to imply. Impact investing is, by definition, different and needs committed investors who tackle its unique challenges. I know great investors who promote their ability to get into ‘hot’ oversubscribed rounds, but they also recognize that impact is different and it would be ridiculous to claim a (financial) contribution when they invest in such rounds.
To riff on Paddy’s point, you’re only an impact investor if, in expectation, you’re making something happen that would not have occurred if you didn’t care about impact. So, if you’re an impact fund manager that is making things happen that traditional managers wouldn’t, why not be transparent about it? And if you’re a bold manager who invests in net negative impact companies in order to make them more positive, isn’t investor contribution your entire story?
Regarding your concern that focusing on additionality might be a distraction, I see improving practices across all dimensions of impact as a positive-sum game. I would think that being more thoughtful, transparent, and rigorous about assessing investor contribution would be correlated with equal passion for helping companies measure the outcomes they produce (and their enterprise contribution). Indeed, helping companies measure their impact is a form of investor contribution. Additionally, as work on investor contribution becomes more refined, I believe the tools and techniques for managing it will become more effective and easier for all investors to use.
Looking forward to hearing more thoughts and ideas from both of you and the rest of the community.