Working Capital Newsletter – April 2019

April 18, 2019

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Reflections from Working Capital’s Impact Report (AKA: How are we going to measure the big changes we aim to help create?)

Dear friends,

The Working Capital Fund is committed to tracking and reporting on the impact of our work. We assesses four dimensions of impact: on workers in global supply chains; on the portfolio companies we invest in; on the corporates that are seeking to improve respect for labor rights; and on the fields of labor rights and impact investing.

At the end of the first quarter of this year, we submitted an Annual Impact Report to our investors, tracking the Fund’s first six investments. During 2018 we brought in QuizRR, Sundar, SupplyShift and Phylagen, and made a follow-on investment in Provenance. We had previously invested in Ulula. (In early 2019 we completed an investment in Altana, which is not included in the report.)

We selected these investments from a total pipeline of 275 companies so far, conducting detailed impact and financial diligence to find companies that offer the greatest potential for impact at scale with sustained revenue.

At this early stage of our approach we can share the highlights of our work, but are hard-pressed to lay out impact as experienced by the people whose conditions we aim to improve, the vulnerable workers in global supply chains.

This may sound counter-intuitive: an impact report that doesn’t yet report on quantifiable impact – but our approach embraces the difficulties of measuring the impact that we intend to achieve. Each of our portfolio companies is delivering observable impact through the use of its services, but significant change at scale, mobilized by the Fund and experienced in the daily lives of workers, will not necessarily emerge or become evident immediately.

The Fund is an intervention in changing the system by which multinationals procure goods, and in which people work in global supply chains. Impact will result from our work over the ten-year term of the Fund. Selecting the right investments is only the first part of the impact equation. In the coming months, we will describe our detailed theory of change, and lay out the indicators and approaches by which we measure our impact. We aim to be specific, both about how we think impact will emerge, and how we will measure whether it has.

Throughout this year, we will be sharing our thoughts with you on what we have learned about these and other challenges:

Scoring the potential for impact during our initial investment diligence

We are not seeking one-size-fits-all approaches to impact. Some of our investments have demonstrated that they can deliver value for workers already, and others are still building their products. Some portfolio companies build tools that workers use directly; others are targeted at multinationals to build transparency and accountability into supply chains. We are responsible for assessing the potential for impact from each individual investment, but also from the portfolio as a whole.

Delivering impact with risk assessment and transparency tools

We have developed more detailed theories of change for these two investment focal areas that we look forward to sharing.

Applying a gender lens to look at our investments

The demographics of the leadership teams and Boards are easy to measure. Four of our investments have women founders, two have majority female Boards, and one has a Board with equal representation of women and men. We plan to assess the way in which gender influences the efficacy of portfolio companies’ products and services.

Using a fund structure provide value to portfolio companies that seek to deliver impact

Working Capital Fund is the first of its kind impact fund focused on labor rights in global supply chains. Our staff take Board seats, help build theories of change, evaluate and refine product offerings and in other ways support the growth and development of our portfolio companies. But over the ten-year term of the Fund, we will need to position ourselves to best support the transformation of the space so that a new standard of ethical supply chain practice emerges.

On these and other topics there is more work to be done. As we share these components of our approach to impact over the next several months we very much look forward to your feedback and engagement.

Below, you’ll find our recent highlights along with news and updates from across our portfolio. As always, we thank you for your interest and support, and we look forward to sharing our progress with you in the coming months.

Working Capital News

  • We’ve added two new companies to our growing portfolio:
    • Working Capital is among the leading investors for Phylagen, a San Francisco-based microbiome data analytics company, building the world’s largest environmental microbiome database and revolutionizing the way products are traced through their supply chains.
    • Working Capital is also among the leading investors in Altana, an artificial intelligence partnership unlocking the power of global economic data to make trade safer, more efficient, and more profitable.
  • Working Capital and Managing Director Ed Marcum are featured in a Financial Times article on the use of new tools and technologies to address the risk of forced labor in the seafood industry.

Portfolio & Partner News