MaRS Library Case Studies in Social Innovation: MaRS Centre for Impact Investing – SVX
SVX started from a simple idea: create a market for good. Its founders wanted to find a means to fight both poverty and climate change. With this in mind, the SVX was first proposed in 2007 as a market to attract financial resources to assist local social ventures with a keen focus on poverty reduction. To implement the new initiative, the creators met with key stakeholders such as members of government as well as local and global leaders in social innovation and capital markets. The idea was later endorsed by the Government of Ontario as a part of its Poverty Reduction Strategy in 2008. Subsequently, SVX has received support with funding through the Feasibility Study and Pilot initiated by Social Innovation Generation (SiG) at MaRS Discovery District, the Ontario Ministry of Economic Development, Trade and Employment, Causeway Social Finance and TMX Group Inc.
To provide guidance, the founders have since amassed a cross-sectoral group of expert advisors with decades of experience in mainstream capital markets and securities law and regulations, as well as in the not-for-profit, social finance, social venture and sustainable corporate sectors. After establishing this foundation, the creators of SVX took a year to address fundamental questions. They engaged in meticulous market research in an effort to understand the barriers and opportunities. The information gathered further enabled them to shape SVX to fit their vision and local conditions.
Connecting investors, social ventures and impact funds
There is interest among a growing number of investors to place capital that generates financial return alongside social and/or environmental impact. However, these investors lack search capabilities, due diligence resources and the ability to collaborate with other investors. SVX allows investors to identify screened investment opportunities, reducing their burden of due diligence, and it provides ventures and funds with increased access to capital and financial expertise at low cost.
First proposed in 2007, the first phase of SVX’s “market for good” opened in 2012. It is a local, impact-first market that connects social ventures, impact funds and impact investors in order to catalyze new debt and equity investment capital for local ventures that have demonstrable social and/or environmental impact. The long-term aim is to create a fully regulated market with access for retail investors that could be paralleled or integrated into mainstream markets. SVX is also interested in spreading its model to other areas where it can have a positive impact.
Advice for innovators
SVX’s development provides keen insights into how to engage in social innovation:
- Never ignore the bottom line. Social innovators and entrepreneurs have a greater challenge than mainstream innovators and entrepreneurs: they must work to tackle a pressing problem while also making sure their business model is sustainable. Thus, an adequate amount of attention must be paid to each so as to increase the likelihood of success.
- Fostering collaboration matters to teaching and learning best practices. There is no substitute for hard work, genuine partnerships and good teams. One person cannot deliver a successful social innovation. You can only succeed with the full and genuine contribution of those leading the social innovation or enterprise and the project partners and team members supporting the initiative.
- Stay true to your vision and mission but adapt to local and global trends. It is easy to drift from your mission given the range of challenges and opportunities that will arise in the development of your idea. But to succeed, you need to stay focused on your vision and mission. While your original idea, business model or means of achieving your vision may seem the right way to go, remember that innovators and entrepreneurs need to continually adapt to local and global trends to accomplish their goals.