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Unveiling Investor Preferences: Insights from the 2024 Impact Investors Foundation Roundtable
- June 7, 2024
This blog post dives into the key takeaways from the 2024 Investors Roundtable, offering valuable insights for investors, entrepreneurs, and organisations working in impact investing across Africa.
Aligning priorities: Investor focus and sectoral trends
Breakout discussions. Source: Impact Investors FoundationThe roundtable revealed a clear focus among investors on specific sectors that address pressing social and environmental challenges. Renewable energy, green and circular economy initiatives, and agriculture emerged as the most sought-after areas for investment. This is consistent with the growing global focus on addressing climate change and promoting sustainable development. Notably, investors are looking beyond national borders, exhibiting a shift towards a more Pan-African investment focus. This opens up exciting possibilities for impactful businesses across the continent to access much-needed capital.
But, the investment stage matters!
The roundtable discussions highlighted a shift in investor preferences towards growth-stage businesses. This indicates a growing demand for companies with proven track records, higher turnovers, and a clearer path towards profitability. While early-stage ventures remain crucial for innovation and long-term impact, investors seem to be prioritising businesses demonstrating their ability to scale and deliver meaningful social and environmental benefits alongside financial returns.
Bridging the connectivity gap between investors and businesses is critical
Beyond Nigeria: The landscape of limited partners and asset owners
The roundtable discussions revealed a diverse range of Limited Partners (LPs) that investors are interested in engaging with. Pension funds, foundations (including government foundations), family offices, philanthropic investors, and Development Finance Institutions (DFIs) were identified as key players. This diversity reflects the growing pool of capital seeking impact alongside financial returns. Engaging with such a broad range of LPs is sine qua non to unlocking the full potential of impact investing in Nigeria and Africa.
Beyond capital: The importance of robust measurement
While securing capital is essential, the roundtable emphasised the importance of robust impact measurement and management (IMM) mechanisms. Investors require clear frameworks to track the social and environmental impact of their investments. Implementing effective IMM practices will allow businesses to demonstrate their impact alongside financial performance, making them more attractive investment propositions.
The way forward: A call to action
The 2024 Impact Investors Foundation Investors’ Roundtable shed light on critical trends and priorities in Nigeria’s impact investing landscape. An understanding of these insights will enable stakeholders to take concrete actions to facilitate growth and unlock the full potential of this nascent ecosystem. While you can read the full investor roundtable report on the IIF website, here are some actionable steps:
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For investors: Utilise platforms like Deal Source Africa to discover investment opportunities that align with your criteria and explore blended finance models to unlock promising ventures.
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For businesses: Focus on building robust business models with a clear path to profitability while demonstrating significant social and environmental impact.
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For policymakers: Create an enabling environment that incentivizes impact investing and facilitates the flow of capital towards sustainable and impactful businesses.
Through collective action and a shared commitment to impact, we can build a more sustainable and prosperous future for Africa.
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