In my previous post, we highlighted two important concepts to keep in mind as you think about impact measurement for a seed stage fund:
- Developing an adaptive right-sized framework to measure and report impact rolled-up at the fund level.
- Tracking mission drift early on, so all stakeholders, including the entrepreneurs can make informed decisions.
In this post, I will talk about Unitus Seed Fund’s right-sized framework integrating the concept of mission drift. I will focus on the common metrics that we track across our investment companies and then roll up to the sector and portfolio levels to understand the overall impact the fund has created in our portfolio companies’ target markets.
We create impact in these three broad categories of metrics, each of which has been mapped to the international-standard IRIS catalog of metrics –
- Social Impact
- Financial Impact
- Ecosystem Impact
Below is of each of the metrics within these categories along with our rationale behind them.
Social Impact metrics
Number of BoP Lives Touched (PI3193)
Number of unique BoP individuals who were clients of the organization during the reporting period. If the company’s clients are households, number of individuals can be calculated considering the average number of members per household.
This is our primary impact measurement to track and aggregate from a company level to a sector and portfolio level. Tracking change in percent of BoP clients out of the total client individuals will enable tracking “mission drift” over time.
Number of Employees in portfolio companies (OI8869)
Number of BoP and non-BoP paid full time and part-time employees or staff across companies (This does not include any unpaid staff – volunteers / interns).
We use this metric to track job creation enabled by Unitus Seed Fund among portfolio companies. Tracking percentage of BoP employees will shed light on job creation among the target population.
Number of States Touched (PD6806)
States the portfolio companies are operating in, even if they are working only in one or more districts / regions within that State.
We use this location metric to map at a high level the geographic reach of the portfolio companies, and thereby track the fund’s ability to reach out to low-income states as well as Tier II and III cities where the percentage of BoP population is higher.
Financial Impact metrics
$ Amount Invested by Unitus Seed Fund
$ Capital committed (over time) to our portfolio companies.
We aim to measure over time the impact created by Unitus Seed Fund per $ invested.
$ Revenue Generated (FP4761)
Growth in value of the organization’s revenue from one reporting period to another.
Using this metric we aim to track how we as a fund have enabled sustainability among businesses with in-built social impact in both the short and long term. An increase in revenue generated without a correlated increase in number of lives touched would also be an indication of mission-drift, showing portfolio companies heading up-market or raising prices on existing customers.
$ Further Capital Raised (FP8293)
$ New capital raised in the form of equity, debt or grants received as a co-investment and/or after Unitus Seed Fund makes the first round of investment.
Unitus Seed Fund plays a significant role as a capital catalyst in the impact investing industry. This metric helps us track our role in enabling growth in capital among the portfolio companies.
Ecosystem Impact Metrics
Number of Advisors
Number of Board Members, Advisory Board Members, Venture Advisors identified and on-boarded by the companies and by the fund; rolled up at different levels.
As the impact investing industry is growing as an economic model, we feel it is important to track how the network of members is building. It would also give us an insight into how proactive companies are to on-board advisors indicating expansion in size and vision.
Number of Ecosystem Partners
Number of systemic partners and collaborations established by the companies and our Catapult Partners on-boarded as a fund.
We believe every company we invest in has the potential to scale and thereby cause systemic change and possibly influence policy in the future. This metric helps us track companies’ ability to benefit from, influence, and improve the functioning of the overall ecosystem.
These metrics give a seed stage fund sufficient insight into the impact created through our investment and ecosystem building activities. They are also economical to collect and will not make the data gathering and reporting processes too burdensome on the fund or our portfolio companies. In other posts I also walk entrepreneurs through how to think about impact measurement within their companies.
Other articles in the “measuring your impact” series:
- Applying Impact Measurement to a Venture Fund
- Measuring Business Social Impact – Getting Started 101
- A Lean Adaptive Approach to Impact Measurement