Can you tell us a bit about how you came to start Ignis Advisory?
My partners and I launched Ignis to help companies achieve greater scale and impact by offering a holistic, integrated and collaborative approach alongside access to our unique networks. Organisations often lack the tools and resources to effectively translate their values into robust strategies. And as a fellow and alum of the World Economic Forum, I understand the power of market-based solutions in addressing development challenges and the necessity for greater collaboration within and across sectors.
And what’s your current focus?
At Ignis, we work to scale responsible business strategies in frontier markets, with a specific focus on Sub-Saharan Africa. We approach this from both a systems perspective – by conducting rigorous academic research and working with multilateral organisations – and from a practitioner perspective – by assisting forward-thinking businesses with investment readiness.
We believe that investments made with patient capital will create a new breed of vertically integrated companies to push the boundaries of innovation and capture the value-add potential across the continent. Ignis is increasingly shifting towards technology-based solutions which is why we are excited to work with Orbitt.
How would you define impact investing and what makes the approach suitable for African markets?
Impact investments are investments made into companies, organisations and funds to create social and environmental impacts while generating financial returns. These investments are critical for African market as they create a vehicle for the global private sector to contribute to the continent’s economic growth and development objectives. It is estimated that $1.2bn a year is needed to end extreme poverty for 700 million people globally and to meet the UN Sustainable Development Goals. The impact investment approach complements public spending and development assistance, by crowding-in private sector capital and skills, and providing market-based solutions to address socio-economic needs.
What does it take for entrepreneurs to develop their businesses into credible entities, ready for investors who may not have expertise in that specific sector?
Purpose-driven entrepreneurs often address a pressing need with their products and services; however, they need to prove commercial viability. Considering that external influencing factors and policy environments in Africa are sometimes challenging, the bar is set high and building a positive track record takes time. We help entrepreneurs adequately assess their investment readiness and strengthen areas most needed. For some companies, this means positioning themselves for concessional and philanthropic finance to build the early-stage capacity and prepare them for larger, commercial investments. Catalysing these forms of “blended solutions” will require greater engagement and exchange between the impact-first community of DFIs, foundations and angel investors, as well as the wider investment community.
Are you seeing any recurring issues in match-making investors and entrepreneurs?
While committed impact investments for Africa have grown substantially in the past years, recurring market inefficiencies prevent flows from reaching businesses at true scale. With the proliferation of actors in the impact investing ecosystem, there is a clear need to overcome persistent inefficiencies. Investors face difficulties in finding high-potential, investment-ready opportunities. Transaction costs can be high due to the due diligence requirements, varying legal systems and currency volatility. Intermediaries and new technologies can play a critical role in building trust between parties, reducing friction and building a functioning investment.
How would you suggest creating greater efficiencies and scaling impact across the value chain?
We often find that there is a lack of local engagement as well as investor bias: many investors making investments in emerging markets are based in Europe or the United States. The larger ones are increasingly developing a local presence to source and support portfolio companies, but this is not feasible for smaller funds and angel investors. Not having on-the-ground experience makes it difficult to identify and assess opportunities, and a comparative lower less understanding of market conditions which ultimately increases risk (or the perception thereof) and slows decision-making. Furthermore, to build a robust entrepreneurial ecosystem and enable enterprises to scale and become investment-ready, investment must be coupled with technical assistance. Affordable and skilled talent is short, but there are opportunities for up-skilling, greater exchange of lessons learned and talent resources sharing.
When it comes to measuring impact, what strategies are there to guide companies looking to raise capital/investors looking to exit?
We’ve seen a clear shift from anecdotal to more data-driven impact reporting. This is a positive development, and Ignis works with clients on the implementation of impact measurement standards to bring consistency and comparability to the impact investing space. However, the most popular impact assessment frameworks have a large set of indicators that can be time-consuming and financially straining, which can be very overwhelming for small and growing businesses. Investors need to signal which indicators matter most to them, keep reporting requirements simple and consistent to ensure data comparability over time, avoid errors and the high cost of data collection. I am hopeful that the emerging, decentralised solutions to impact measurements will create more transparency and accountability to address issues of double counting and allow for ways of evaluating impact across projects and at scale. In my view, it is critical for investors to actively engage in these efforts to help the impact sector leap forward.
Jessica Camus is Founder of Ignis Advisory