Effective Investing has launched its proprietary Total Firm Value methodology, which seeks to provide investors with a metric that can be used to assess, benchmark and monitor the Total Firm Value of both prospects and portfolio companies.
The methodology centres on four components: Scale, Potential, Impact and Externalities, leveraging the UN Sustainable Development Goals and the B Assessment framework to provide an objective Total Firm Value metric.
The methodology w s born out of a frustration with the lack of available resources to make more informed investment decisions. The result: investors tend to resort to what they know; financial and business model fundamentals.
The methodology h as been piloted successfully on a number of impact companies, with significant investors showing early interest.
Total Firm Value is aimed at providing a powerful tool to private investors. Effective Investing is in talks with a number of wealth managers and advisors to support their burgeoning impact investing offering. The methodology can also be used by companies, independent of investors, for accurate performance assessment and monitoring.
The methodology, developed in concert with Oxbridge academics, was the brainchild of co-founder Stephen Barnett (30), an entrepreneur and ex-banker based in Oxford. He has teamed up with his old colleague at Openwell LLP, Sanjay Mahtani (27) to support both investors and companies.
Effectuve Investing co-founder, Stephen Barnett, says: ‘We are about to experience the largest wealth transfer in history. Upwards of USD50 trillion is changing hands from Baby Boomers to Millenials over the next three decades. The investment industry must act now to provide the right tools for socially conscious investors as they seek to preserve both their wealth and their world.’
‘The Total Firm Value methodology was devised out of a frustration with the fragmented, subjective and tightly-held impact methodologies that are often detached from financial and business model rationale.
‘All too often impact has been kept in a silo by mainstream investors, seen as a ‘nice to have’, or, worse still, as a means to a financial ends. The only way to see significant levels of investment in impact is by speaking the language of investors, removing the zero-sum-game assumption that surrounds impact and financial returns.’
‘We are working with a number of investors and companies and are always learning. Our mission is to help change the investing landscape through a better understanding of an investment’s Total Value.
‘We don’t hold our status as Millenials lightly. Our approach is based upon understanding the attitudes and aspirations of our fellow Millenials.’