Priming the pump: the case for a sector based approach to impact investment

Matt Bannick Paula Goldman
Omidyar Network

Five years after the term ‘impact investing’ was coined, Omidyar Network has developed a series of six articles that highlight key issues and opportunities for the industry.

In this discussion paper, the authors argue for a shift in focus — toward the goal of scaling entire industry sectors, in addition to individual firms. Their experience from the past eight years is that impact investors can massively increase the number of lives they touch by concentrating investments in specific industry sectors in specific geographies, and by investing in a range of organisations to accelerate the development of these industry segments. The need for investment is particularly acute at the earliest stages of innovation, which provide the foundation in which entire new sectors can emerge and scale rapidly by tapping commercial capital markets.

Creating and scaling entire sectors can make the difference, for example, between supporting one solar lantern company that can provide safe lights to thousands of children who otherwise can’t study for school at night — and accelerating an entire solar lantern industry that could provide these lanterns to millions, if not hundreds of millions of students. This paper offers several ideas on how to spark, nurture, and scale new sectors for social change.