Spring 2020 Issue
Heidelberg University, Germany: Facade of the main building
For specific fields, industries, or geographic areas, structured financial products could help achieve viable risk-return profiles. Investments could be combined across regions, where more stable ones provide a counterbalance to those that are less stable, levelling out the overall risk. They could also be placed within a region but across fields, so that for example market rate return investments in booming areas, such as green tech, would help fund empowerment. The structured investments mentioned here could be designed like Asset Backed Securities (ABS), which got notoriously prominent because of their role in the past financial crisis. However, instead of being driven by high-return expectations — via the restructuring of low-risk products into highrisk derivatives — they level-out risk (or return) to a moderate degree. A positive side-effect could be the potential aggregation of many smaller scale investments to make them attractive for institutional investors, such as Germany’s Ananda Ventures, which typically aims for deals above €500k. These are only a few options, but I believe they could be crucial for getting impact investing into areas where it is most needed. Investors, market-
shapers and intermediaries should consider them, and if they already employ them, share their experiences. Next to the structural barriers discussed here, our lack of knowledge about players and deals in impact investing is the second-biggest challenge in the path towards the SDGs. i ABOUT THE AUTHOR Gorgi Krlev holds a PhD from Oxford University (Kellogg College). He is a postdoctoral researcher at the Centre for Social Investment (CSI) at the University of Heidelberg. His research focuses on social finance, impact, entrepreneurship and innovation. The book, Social Innovation — Comparative Perspectives, won the Best Book 2019 Award of the Public and Non-profit Division of the Academy of Management (AOM). He can be found on Twitter @gorgikrlev. ABOUT CSI The Centre for Social Investment is a research centre at the Max-Weber-Institute for Sociology in the Faculty of Economics and Social Sciences of Heidelberg University. It is an interdisciplinary centre for research, education and training. CFI.co | Capital Finance International
Author: Gorgi Krlev
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