Italian Social Entrepreneurs Revolutionizing Impact Investing

Social Entrepreunership Luciano Balbo Sofia 24 October 2016

Sharing MVH THE FIRST ITALIAN IMPACT INVESTING FUND Concordia Medi.Co Boccaleone Eticredito 2 2

The Operating Model Oltre Venture operates according to the venture capital model. In our vision this is the most powerful mean to support the innovation and the start-up of enterprises. Oltre Venture s model is a combination of financial resources, skills, proactive approach and entrepreneurship. The intensive follow-up and the co-entrepreneurship approach in the portfolio management are elements that distinguish our model. The management team combines strong financial and managerial skills to a deep knowledge in the social work area, besides a solid experience in the management and development of entrepreneurial activities. This fundamental factor and the hands on approach not only contributes to a qualified evaluation and selection of several investment opportunities, but also support an active growth of our portfolio. Oltre Venture incubates and then finances start-up companies by putting together entrepreneurs with competences within the social area and experienced managers who become the tutors of the enterprises management team. 3

Our Proposal Health Services Centro Medico Santagostino Social Housing Sharing & Gastameco Microcredit PerMicro PerMicro is the first Italian microcredit experience. Its business model has been recognized and rewarded also at European level. Sharing & Gastameco are the most important social housing projects ever realized in Italy, in partnership with the municipality and other important local associations. CMS services with excellent quality and at affordable prices. CMS covers the supply gap in the health services, supposed to be covered by the NHS (mostly in the area of dental care and assistance), offering services at prices slightly higher than the public sector, at a significantly higher quality level. supplies medical care temporary which was Since 2007 PerMicro provided +120.000 micro loans for an overall value of + 82M. placed +4.000 professionals and set up 12 branches mostly in northern Italy. Thanks to the entrance in its capital structure of BNL (BNP Paribas Group), PerMicro opened two branches also in Southern Italy. The accommodations are destined to different users relatives of in-patients coming from other cities, single mothers with children, young couples that cannot afford to pay rents at market level) at a low tariff. Sharing and Gastameco manage 1.560 beds in Torino, Bologna, Venezia and Milano. psychological (students, CMS has 8 centers with +120.000 patients and +350 doctors and professionals and in 2015 offered +220.000 health services. PerMicro represents a unique attempt on the Italian territory to combine economical sustainability with the financial inclusion of non bankable people. Sharing tender for the management of two more buildings in Turin: Cascina Fossata (temporary housing) and Borgo San Paolo (student housing). has been awarded a CMS offers a new model taking care of patients in an integrated manner, diminishing costs and increasing satisfaction. CMS is in constant growth being a novelty in the health sector. patients social 4

TheFuture Oltre II: a second larger fund backed by European Investment Fund 5

Why social innovation is so important and needed The demand of social needs has changed deeply (inequality, immigration, wealth divide, ageing, digital divide, globalization impact) while the offer is stuck in the past. The offer of social services is mainly financed by the public sector and by the out of pocket of the citizens. The lack of innovation is an issue as relevant as the scarcity of financial resources. A correct analysis of the total social spending (public plus private) shows that it is very similar in all the developed world.* The quality of the solutions is what makes the difference. This is the reason why we need social innovation. Our society has been deeply changed by new technologies, but the real disruptive innovations are those that make our society more inclusive for all. *Source: OECD, Social expenditure database. 6

In Order to come up with a correct definition we need to understand the Dynamics of the Sector Impact Investing cannot exist without companies that: Are self sustainable. Generate a positive social impact and therefore deal with social needs more effectively than existing solutions. o o These companies begin as start-ups, otherwise they would be already operating under financial models (criterion of additionality). traditional THEREFORE THE INVESTORS IN THESE START UPS (Social Venture Capital) ARE THE REAL DRIVERS OF THE SECTOR (AS SEEN IN MICROFINANCE) 7

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How To Build the Sector The sector is in the early stages of development: there are few projects which merit investment today. The first objective is to attract new talent from all sectors of society by tearing down existing barriers . Offer creates demand (VC history teaches this). Management team are not only venture capitalists but also incubators. The first entrepreneurs in the sector are the management team of the SVC. What is needed is impatience to resolve unsolved social needs and patience to create new solutions. 9

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Which Investors For Impact Investor The answers lie in the sector's structure. The companies do not have a static position in the following diagram. They operate in the initial phase based on risk/return related to the mission and can grow only if they subsequently attract commercial capital: if this does not happen then the companies will be unable to grow and open up new markets 11

How Oltre Venture generates value Oltre Venture invests in enterprises which fulfil the necessities of the community pursuing a balanced, sustainable and not only financial development. This activity produces a value chain that fairly spreads benefits among the different society members. 1) Oltre Venture promotes initiatives that transfer part of the economic value to users, thus generating well- being and widening the social services market. 2) This well-being makes an impact on the whole community. The resulting improved living conditions can increase income level and reduce state welfare expenditures. 3) Such benefits will be gradually recognised by both the social and the financial community, consequently they will attract new investors making the valuation multiples of companies participated by Oltre Venture grow, as well as the value of Oltre Venture itself. Oltre Venture invests in new enterprises aiming at joining both the collective and the private interests 12

Management Team Incentive / motivation Each investment is linked to a well defined social goal to be measured with one or more parameters. Final reward of the team is linked to the achievement of both financial and social return. The creation of financial value is more based on long term high growth and scalability than profitability. This makes the financial goal more compatible with the social goal. 13

Luciano Balbo luciano.balbo@oltreventure.com Lorenzo Allevi lorenzo.allevi@oltreventure.com Adriana Versino adriana.versino@oltreventure.com www.oltreventure.com 14