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Impact Investment: The Midway between Investment and Philanthropy
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Business Administration.
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Business Administration.
2019 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

Impact investment is an innovation in the finance field, thus contributing to further development of social finance. This kind of investment is essential due to its ability to help reach the SDGs. The biggest challenges our generation has to address are represented through the SDGs. Impact investing offers a viable potential to tackle these goals. Through this type of investment, the investor aims to generate positive environmental and societal change, alongside financial returns. Research about the role of impact investors is rather scarce. The definitionof the field, its market players, and the investment process are unclear. Therefore, we have derived a question that aims to explore the field of impact investment by grouping the main players in two categories. Further, the research question seeks to explore the impact investment process by these two groups of investors and identify the difference. Thus, this purpose resulted in the research question as below:What are the differences between the approaches used by VPOs and SIIs in the investment processstages, in the DACH region?The field of impact investment is in its infancy. Therefore, there is no fully developed theoretical research performed. Thus, initially, an overview of entrepreneurial finance is provided. Further, we identified two main players, VPOs and SIIs, and their main characteristics as impact investors. In order to set the theoretical foundation of our research, we identified stages of the investment performed by two groups of investors which are: deal sourcing, deal screening, due diligence, investment decision, post-investment, and exit. Further, we compared the approaches used between two groups of investors. This comparison led to the preliminary framework, which is used as a guide for the exploratory study.When conducting the impact investment market research, we identified that DACH region as a hub of many types of impact investors: impact investing funds, microfinance funds, investment advisors, wealth managers, foundations, charities, and social investors —using an inductive approach, for the selected comparative exploratory study we conducted semi-structured interviews. A general question about the investment process was initially asked, followed by additional questions for better clarity and understanding of the process.The study arises with two groups of investors who, even though performing similar investment process, use different approaches in the investment process stages. Results from the study show that there are differences in each stage of the investment, where the deal screening and due diligence are the stages with the majority of the differences. The analysis has shown that the reason behind these differences is due to the type of the investors, targeted themes, targeted markets, targeted financial return, targeted impact return, and targeted stage of development of the companies. We believe that we additionally provided a better understanding of the two types of investors.

Place, publisher, year, edition, pages
2019.
National Category
Business Administration
Identifiers
URN: urn:nbn:se:umu:diva-160860OAI: oai:DiVA.org:umu-160860DiVA, id: diva2:1330162
External cooperation
Anonymous
Educational program
Master's program in Business Development and Internationalisation; Master's Programme in Finance
Supervisors
Examiners
Available from: 2019-06-25 Created: 2019-06-25 Last updated: 2019-06-25Bibliographically approved

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CiteExportLink to record
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