WASHINGTON — The impact measurement and management space has a new player. Y Analytics, an organization spun out of investment company TPG’s Rise Fund, announced its launch Wednesday in Davos, Switzerland.
“The role we want Y Analytics to play in this whole space [is] catalyzing more research, helping to identify and make bridges happen between people who are doing research and people who are doing investment.”— Maryanne Hancock, CEO of Y Analytics
The organization aims to help investors better understand and value social and environmental impact to make effective investment decisions that achieve impact. The organization will work to translate research and help decision-makers evaluate impact on the front end, through a framework developed by The Rise Fund, and work with them to manage impact.
The Rise Fund, a $2 billion impact fund, developed a system for evaluating the potential impact of an investment — the Impact Multiple of Money — that it uses to predict an investment’s impact and evaluate whether or not it will make an investment. The IMM measure relies on using existing research to evaluate the economic value of achieving the environmental or social outcome and adjust for risk which it uses to create a social return on every dollar spent.
More from Davos:
Much of the evaluation framework and the work Y Analytics is doing is built on the work of others in the social return on investment space and in the impact measurement and management space. Now, the methodology is being framed in a new way: The key difference is that with The Rise Fund, the framework and IMM have been operationalized and designed to deliver at scale, explained Maryanne Hancock, the CEO of Y Analytics.
“We know we are building upon a couple decades worth of tremendous thinking in the impact community and we are eager to continue to do that in a collaborative fashion, so by putting this out into the space, it is by no means saying this is ... near done,” she said in an interview from Davos. “This is really the start of a next set of conversations that go deeper and continue advancing over time.”
The biggest contribution of this model, Hancock said, is that the approach goes beyond mathematical calculations and turns to third-party research to understand what is going to have impact, going beyond what an investor thinks might have impact.
“The primary purpose of [the organization] to start is as a decision-making support to enable anyone who is allocating capital to make better-informed decisions,” she said. “The role we want Y Analytics to play in this whole space [is] catalyzing more research, helping to identify and make bridges happen between people who are doing research and people who are doing investment.”
About half of The Rise Fund’s work has been carried out in developing countries and it has been able to find research for all the investments it has made, but there are areas or sectors that Y Analytics will look to identify where more research may be needed, Hancock said.
While much of the research relied upon so far has been peer-reviewed academic research, the company will look at other sources — from emerging technologies that are engaging stakeholders to work being done by multilateral banks, the development community, and people operating on the ground, she said.
Y Analytics will also look at how to evaluate impact after an investment has been made. With The Rise Fund, it looks at some impact metrics on a quarterly basis but those are largely output measures — for example, the number of people a service reached.
Having that quarterly monitoring, parallel to the financial monitoring, allows for better management of the impact and more learnings, Hancock said, adding that a more robust way of testing the effect of the investment over time is necessary. The Rise Fund and Y Analytics are working to test the best methodologies for that evaluation through a number of pilots. In some cases, lean data techniques could be used, in some perhaps randomized controlled trials, and in others, research that companies are doing themselves, she said.
“The methodologies vary, the situations will vary in terms of who is actually funding this,” she said. Some of The Rise Fund’s pilots in this space are in emerging markets and because they see the measurement as a key part of their commitment to deliver on impact, it will not be a burden on companies, she said. And while defining impact pathways up front allows for a more focused set of metrics, Hancock said they are only in the early stages and there is a lot to learn from the community of people who have been doing these types of evaluations.
“This is simply in growth equity at the moment, and there are a tremendous amount of other situations, contexts, asset classes that will need to be expanded, so we have a lot of work ahead of us,” Hancock said.