Sunteți pe pagina 1din 11
LGT Venture Philanthropy Q3 2013

LGT Venture Philanthropy

Q3 2013

LGT Venture Philanthropy Q3 2013

LGT Venture Philanthropy: Our team

Our global team is based in six regions and passionate about creating societal impact

in six regions and passionate about creating societal impact Board members Countries with local team members
Board members
Board members

Countries with local

team members

impact Board members Countries with local team members LGT Venture Philanthropy is supported by different
impact Board members Countries with local team members LGT Venture Philanthropy is supported by different

LGT Venture Philanthropy is supported by different competence centers within LGT Group such as HR, accounting, marketing, legal

department and asset management.

2

LGT Venture Philanthropy: Our impact

Since inception, our over 25 portfolio organizations improved the quality of life of more than 7 million less advantaged people

of life of more than 7 million less advantaged people Impact * 1‘100 1.7m 4.2m 5.5m
Impact * 1‘100 1.7m 4.2m 5.5m 7.9m (cumulative) lives improved lives improved lives improved lives
Impact *
1‘100
1.7m
4.2m
5.5m
7.9m
(cumulative)
lives improved
lives improved
lives improved
lives improved
lives improved
USD allocated
USD 2.2m
USD 5.3m
USD 8.3m
USD 12m
USD 16m
(cumulative)
# of organizations
1
10
13
19
26
Portfolio
organizations
Time
2007/08
2009
2010
2011
2012

*Most organizations have several donors/investors; therefore, the # of people reached is not only correlated with our donations or investments.

LGT Venture Philanthropy: Our approach

We use 8 Principles of Venture Philanthropy: Long-term, deep engagement; growth orientation; customized support

deep engagement; growth orientation; customized support Applying the Venture Philanthropy approach, we provide more

Applying the Venture Philanthropy approach, we provide more than just financing: Management know-how and access to relevant networks can be even more important to achieving sustainable growth.

“We want to be as efficient and transparent as possible in our impact investing / philanthropic efforts.

With this objective in mind we have applied many proven principles and processes from the venture capital and consulting industry to our impact investing / philanthropy approach.”

H.S.H. Prince Max von und zu Liechtenstein

Focus on few organizations Optimization of long-term social & environmental return Young, rapidly growing
Focus on few
organizations
Optimization
of long-term social &
environmental return
Young, rapidly
growing organizations
Venture
Continuous
controlling
Philanthropy
Intense local due
diligence to build
knowledge and
relationship
Long-term
engagement
Tailored financing: Equity,
debt
and grants
Financing combined with
management know-how
and networks

LGT Venture Philanthropy: Our approach

Our investment process uses deep analysis to select the best organizations, as the number we can work with at once is limited

as the number we can work with at once is limited Timing Process # deals to

Timing

Process

# deals

to date

Main

activities

Tools/

Documents

Due Diligence 6 – 12 months 5 – 10 years 1 week – 3 months
Due Diligence 6 – 12 months
5 – 10 years
1 week – 3 months
Portfolio
Preliminary
Deal
Deal sourcing
Deal screening
controlling &
Exit
review
execution
reporting
5‘000
700
70
40
26*
5*

Sourcing of potential deals

Information exchange with cooperation partner/ reference calls

Stop-go decision partners

Tracking database

Quick-screen

checklist

Screening of organizational

information

Gathering of basic information

Calls or first

meeting with

senior mgt

members

Stop-go decision

team/partners

Factsheet (~2 pgs)

Capabilities Assessment (light)

Evaluation of business plan/ proposal

Intensive discussions with

senior mgt team

members

Stop-go decision

board/client

Preliminary Review

(~7 pgs)

Intensive on-site due diligence

Reference calls for

each management team member of investee

KPI and milestones

determination

Final investment

decision

board/client

Business, risk and capabilities assessment

Depth and scale of impact assessment

Termsheet

Investment Memo

(~30 pgs)

Contract(s)

Continuous

support/meeting

(management

know-how and

networks)

Each investment

manager covers on

average 5

investments, spending min. 0.5 day/week with each organization

Monthly reports

Quarterly KPI

Annual report

Post investment

monitoring

Business, risk and

capabilities

assessment

Depth and scale of Impact assessment

Options for exit are:

MBO

Sell to social strategic buyer

Sell to social

investor

Exit is clarified and agreed on with the organization upon deal execution (pre- investment)

Contract(s)

* 26% grants, 19% debt, 6% convertible debt, 49% equity (including SWAP deals with average deal size USD 50k ) ** Exit: 1 debt, 4 grants

5

LGT Venture Philanthropy: Our approach

We typcially invest $200k - $5mm in the early growth stage, using the following criteria

Funding need:

USD 200K to 5M

Growth stage:

Early to growth phase

At least 1-2 years old

Sectors:

Education, Health, ICT, Agriculture, Renewable Energy

Track record:

Not pre-revenue

Team / legal entity should exist

record: Not pre-revenue Team / legal entity should exist Org. & Mgt. Quality: Relevant experience /
Org. & Mgt. Quality: Relevant experience / track record of CEO + mgt. team
Org. & Mgt. Quality: Relevant experience / track record of CEO + mgt. team
Effectiveness of solution: Proof of solution / business model?
Effectiveness of solution: Proof of solution / business model?
Growth potential: Potential / ability to scale ops. across regions / countries?
Growth potential: Potential / ability to scale ops. across regions / countries?
Efficiency of implementation: Focus; presence of systems / processes; plans
Efficiency of implementation: Focus; presence of systems / processes; plans
Impact: Potential to reach a high number of beneficiaries?
Impact: Potential to reach a high number of beneficiaries?

LGT Venture Philanthropy: Sample investments

Impact Measurement: Varthana

India

Sample investments Impact Measurement: Varthana India pablosalgado.com ENGAGEMENT OF LGT VENTURE PHILANTHROPY
Sample investments Impact Measurement: Varthana India pablosalgado.com ENGAGEMENT OF LGT VENTURE PHILANTHROPY
pablosalgado.com
pablosalgado.com

ENGAGEMENT OF LGT VENTURE PHILANTHROPY

USD 200’000 investment through compulsorily convertible zero coupon debentures

Varthana has access to LGT Venture Philanthropy’s iCats Program, its network as well as ongoing mentoring support

IMPACT

Varthana’s loans help in increasing schools’ capacity by constructing new classrooms, putting additional benches etc., and thereby increasing the access to education for low-income household students

Financing by Varthana also helps in improving the quality of education by enhancing school infrastructure and adding key learning resources such as a computer/science lab or expanding a library

PROBLEM

Lack of expansion capital is a major hurdle to the progress of affordable private schools that offer low cost (avg. monthly fee of USD 5 to 20 per student) high quality education to low-income household children

These schools are not viewed as business entities by banks; their typical loan requirement (~USD 15’000) is too small for banks and too big for Micro Finance Institutions

As a result, they cannot access the right type of financing, and therefore have

to compromise on quality of infrastructure as well as the capacity to enroll

students

of infrastructure as well as the capacity to enroll students SOLUTION  Varthana aims to fill

SOLUTION

Varthana aims to fill the current gap of financing affordable private schools by providing loans to help school proprietors grow and improve their schools’ infrastructure

Varthana offers loans ranging from USD 2’000 to USD 80’000 at interest rates ranging from 20% to 25% with monthly repayments over a 2 5 year period

Reach

 

2013e

2014e

2015e

2016e

2017e

# schools funded p.a.

150

1’191

3’924

9’876

20’940

# students (‘000) p.a.

75

595

1962

4938

10470

Depth

Improved material well-being: Increase in education is directly proportional to increase in income

Increase in education is directly proportional to increase in income

Improved physical well-being:Better education increases awareness

Better education increases awareness

about sanitation, nutrition etc.

Improved social well-being:Increase in self-esteem as well as more respect in the society

Increase in self-esteem as well as more respect in the society

Improved security:NA

NA

Improved freedom: Increased freedom to choose an

Increased freedom to choose an

occupation depending on the education

LGT Venture Philanthropy: Sample investments

Impact Measurement: M-Kopa Solar

Kenya

Sample investments Impact Measurement: M-Kopa Solar Kenya PROBLEM  Over 63% of Sub- Saharan Africa’s
Sample investments Impact Measurement: M-Kopa Solar Kenya PROBLEM  Over 63% of Sub- Saharan Africa’s
Sample investments Impact Measurement: M-Kopa Solar Kenya PROBLEM  Over 63% of Sub- Saharan Africa’s

PROBLEM

Over 63% of Sub-Saharan Africa’s population are rural, lower-end consumers with small inconsistent incomes/revenue streams. They can barely afford basic services but end up allocating up to 70% of their household expenditures on poor, inefficient and potentially hazardous energy sources e.g. kerosene.

Studies show that 110 million households across Africa spend USD 160 or more every year on kerosene for lighting and cooking despite the poor quality

of light provided by kerosene lamps and related health risks of smoke fumes.

SOLUTION

M-KOPA Solar enables low-income households purchase quality d.light solar home systems through an affordable and convenient pay-as-you-go payment plan using the renowned mobile payment system M-PESA.

The d.light solar home system has 3 bright lights and mobile charging abilities. Customers pay a USD 15 deposit followed by 85 US cents daily for up to one year; owning the product outright after completing payments.

M-Kopa plans to reach over 300’000 households with clean energy by 2015.

ENGAGEMENT OF LGT VENTURE PHILANTHROPY

LGT VP invested USD 500’000 debt and USD 37’500 equity to fund initial roll- out of M-Kopa Solar commercial product targeting low-income households

M-Kopa has access to LGT Venture Philanthropy’s iCats Program, LGT Venture Philanthropy’s network as well as ongoing mentoring support

IMPACT M-Kopa’s inaugural product makes clean and renewable solar energy available to low-income households, thus potentially increasing productive work days, improving income opportunities and reducing health-related hazards . Through pre-payments, low-income households can re-direct daily energy expenditures from inefficient, wasteful and unsafe sources such as kerosene lamps towards purchase and ownership of affordable solar home systems.

M-Kopa will bring energy access to a considerable portion of Kenya’s un-

electrified households.

Reach

M-KOPA Solar seeks to address energy needs of up to 300’000 low-income households across Kenya with its solar home system and could introduce new products for micro-entrepreneurs. To date over 20’000 have been sold in just over one year.

Depth

Improved material well-being:Increases household productivity and income

Increases household productivity and income

Improved physical well-being:Reduced health risk though cleaner energy and light sources

Reduced health risk though cleaner energy and light sources

Improved social well-being:Increased social interactions due to micro- enterprise activities

Increased social interactions due to micro- enterprise activities

Improved security:Secure access to electricity and light

Secure access to electricity and light

Improved freedom:Greater freedom of choice of products through pay-per-use system

Greater freedom of choice of products through pay-per-use system

LGT Venture Philanthropy: Industry insights

Suggestions for working with impact investors

CAPTIAL RAISING PROCESS:

working with impact investors  CAPTIAL RAISING PROCESS:  Find a lead investor, negotiate terms with

Find a lead investor, negotiate terms with the lead first, the rest will follow.

Understand the different types of investment and the terms that go with them or find an attorney to consult

Choose investors that share your values and approach whether debt, equity or grant, impact investors will see themselves as your partner and be heavily engaged in your business…it’s like a marriage

KEY INVESTOR CRITERIA:

Quality management with proven track record/expertise to execute

Ability to scale Impact

Financial Sustainability

USE OF FUNDS: Know precisely how much capital you need, how you’re going to use it, and how it’s going to grow your business and impact

IMPACT: Have at least a few relevant key impact metrics including lives improved

EXIT: Be able to articulate possible exits or payback period loan repayment, share buybacks, strategic sale, IPO

LGT Venture Philanthropy: Contact

LGT Venture Philanthropy: Contact Contact information It all starts with a personal conversation. Contact us to

Contact information

It all starts with a personal conversation. Contact us to arrange a meeting. We are looking forward to meeting you.

En Lee Co-Head, Asia Pacific Co-Head, Asia Pacific

Raya Papp Co-Head, Asia Pacific Co-Head, Asia Pacific

Joan Yao Investment Manager Investment Manager

Phone: +65 9868 8820 Email: en.lee@lgtvp.com

Phone: +65 8103 2780 Email: raya.papp@lgtvp.com

Phone: +63 917 811 5831 Email: joan.yao@lgtvp.com

Website: www.lgtvp.com

Support

LGT Venture Philanthropy is funded through substantial contributions from each of the following LGT Group companies: LGT Bank Ltd., LGT Bank (Switzerland)

Ltd., LGT Bank (Austria) Ltd., LGT Bank (Singapore) Ltd., LGT Capital Management Ltd. and LGT Capital Partners Ltd.

Legal Information

Legal Information This document is intended solely for the recipient and may not be duplicated, distributed

This document is intended solely for the recipient and may not be duplicated, distributed or published either in electronic or any other form without the prior written consent of LGT Group Foundation. This publication is for your information only and is not intended as an offer, solicitation of an offer, public advertisement or recommendation to buy or sell any investment or other specific product. Its content has

been prepared by our staff and is based on sources of information we consider to be reliable. However, we cannot provide any undertaking

or guarantee as to it being correct, complete and up to date. The circumstances and principles to which the information contained in this publication relates may change at any time. Once published, therefore, information shall not be understood as implying that no change has taken place since its publication or that it is still up to date. The information in this publication does not constitute an aid for decision- making in relation to financial, legal, tax or other consulting matters, nor should any investment or other decisions be made on the basis of this information alone. It is recommended that advice be obtained from a qualified expert. Investors should be aware that the value of investments can fall as well as rise. Positive performance in the past is therefore no guarantee of positive performance in the future. Forecasts are not a reliable indicator of future value developments. The risk of price and foreign currency losses and of fluctuations in return

as a result of unfavorable exchange rate movements cannot be ruled out. There is a possibility that investors will not recover the full amount

they initially invested. We disclaim without qualification all liability for any loss or damage of any kind, whether direct, indirect or consequential, which may be incurred through the use of this publication. This publication is not intended for persons subject to legislation that prohibits its distribution or makes its distribution contingent upon an approval. Any person coming into possession of this publication shall therefore be obliged to find out about any restrictions that may apply and to comply with them.

It is up to potential investors to obtain comprehensive information and appropriate advice in their home country, country of residence or country of domicile about the applicable legal requirements and any tax consequences, foreign currency restrictions or foreign exchange controls and any other aspects that are of relevance prior to any decision to subscribe to, purchase, own, exchange or redeem such investments, or enter into any other transaction in relation to same.

The securities and rights mentioned in this document may not be purchased or held by investors or for investors domiciled in the USA and/or with US citizenship, nor may such securities and rights be transferred to them.