Impact investment is developing rapidly, with investors actively seeking to allocate capital to ventures that have social and environmental benefits while generating financial return. While the issues that impact investment targets rely heavily on government support, the ability of many governments to mobilize funding to address these issues remains limited today.
With its knowledge of local contexts, proven record of developing and managing a pipeline of bankable projects, expertise in sustainable development, and the ability to identify socially, environmentally and economically sustainable projects, the UNDP is a key stakeholder that can effectively run nationwide impact strategies backed by sustainable business models.
Kolba Lab, a social innovation lab that has been active in Armenia since 2013, is one of the major milestones and successful models run by the UNDP. Being an idea incubator, it has received 580 ideas and incubated 40 startups, of which 14 have generated a social impact within Armenia’s government, civic sector, and market. Hence, special efforts are needed to support the continued (post-incubation) development of SEs, particularly in growing their markets, and increasing their investment absorption capacity and visibility to investors.
In 2017, an important step was made towards the creation of impact venture culture, the first IID summit organized by the UNDP. The summit was a collaborative dialogue that brought together a wide range of impact business leaders, social venture philanthropists, United Nations officials and other development practitioners. Also present were social entrepreneurs, philanthropic organizations, government representatives and academic leaders. The summit brought together key stakeholders from the growing impact investment ecosystem in order to create new models of collaboration between investors, ventures, governments and international development organizations.
Yet another milestone followed the summit, the founding of the SDG Lab at the SCI Center, supported by the Government of RA. The lab was created to identify gaps in SDG implementation and prototype new cross-sectoral solutions and funding mechanisms to fulfill them. ImpactAIM Venture Accelerator is a key component of this process, an accelerator to support the startups helping bridge these gaps in achieving SDGs. ImpactAim VA will be the next step of support for impact ventures and prepare them for further evolution, either through direct equity investments or by development into the more mature outcome buying market.
There are several existing and prospective projects that are ready to accept impact acceleration mechanisms and adapt to new business models to support their goals and generate market value. ImpactAim VA is the first step in a larger intervention exploring the use of impact investment as a viable alternative to traditional funding mechanisms for development within the UNDP.