Jargon Decoder

Jargons in the impact investing and social finance industry are often confusing, but fear not! We are here to help!

With our Jargon Decoder, the Social Finance Academy team decodes common jargons in this industry, so that impact investors, social entrepreneurs and donor organizations can speak to each other more effectively. We end the Babylonian confusion and establish real communication between the main actors in the ecosystem. Here are our Top 10 Jargon Decoders (with some great resources)!

Ready to take your first step to speak social finance?

#1 Investor-Speak: “Competitive Returns”

Jargon: “As an impact investor, we’re looking for competitive returns.” Or also: “We seek risk-adjusted market-rate returns when we make impact investments.”

Decoded: “We want the same financial returns that we get when we invest in a commercial enterprise with the same risk. (Yes, we actually compare apple with pies but that’s the promise of impact investing!) And on top of that, we want positive impact. (i.e. we are actually even more demanding than traditional investors)”

Appetite to read more about this topic? Here are some great resources:

GIIN Annual Impact Investor Survey 2017

How much money is there in impact investing? (quick read < 5 min.)

#2 Entrepreneur-Speak: “Game Changer”

Jargon: “Our solution is a real game changer.”

Decoded: “Let’s be honest, the rules of the game need to be changed to make my solution a real success. But in fact, my mission is to change these rules with my solution.”

More food for language enthusiasts:

Disruptive Innovation and Social Enterprise (quick read)

Closing the Pioneer Gap

#3 Investor-Speak: “Execution”

Jargon: “Your team should have great execution capabilities

Decoded: “Your team gets sh*t done. We perfectly know that people working in your field are often young and underpaid, but still we want you to be top-notched and super experienced.”

Click for more insights:

The Human Capital Crisis: How Social Enterprises Can Find the Talent to Scale

What’s the Biggest Challenge for Social Enterprise? … & the entire blog series:  Talent in the Social Impact Sector  

#4 Investor- & Entrepreneur-Speak: “Impact First”

This one is often used by both, but they really understand it differently:

Jargon (entrepreneur): “There are not enough impact-first impact investors out there for social entrepreneurs like me.”

Decoded: “I can’t provide solid financial returns to investors. I wish there were more investors who accept low financial returns because I’m saving the world. But it seems they’re rare angels living on another planet.” (“and yes, all those impact investors who are NOT impact-first are all over the place right now”)

Jargon (investor): “Social entrepreneurs often think that impact-first investors like me don’t do their financial homework.”

Decoded: “Dear social entrepreneurs, you probably dream about eventually meeting this ONE investor who has SO much goodwill to invest that he or she doesn’t care for the hard facts.”

Food for more thought? Here you go:

Impact Investing: Who Are We Serving?

Three Buckets of Money (quick read)

Short Break….

# 5 Entrepreneur-Speak: “Mission Drift”

Jargon: “I’m concerned that taking investors on board will create mission drift.”

Decoded: “I’m actually not sure whether my solution is able to align its social impact with commercial success – at least there might be tensions. What happens if investors get on my board and don’t follow my intuition? I wish they could just give me the money and that’s it.”

Feel like reading more on this subject? Click below:

How Social Enterprises Can Protect Mission and Deliver Profit

Entrepreneurs Talk Mission Drift, Social Impact and Preventing Burnout

#6 Investor-Speak: “Due Diligence”

Jargon: “We run a rigorous due diligence before we invest.”

Decoded: “We really like your team and your solution, however, we won’t invest without checking the boxes! Get your commercial and impact data ready before asking us for money. We literally turn every stone.”

For more appetite, read here:

Social Investment Manual: Screening and Due Diligence Process (pages 14-15)

Due Diligence is Good for You, Says Social Entrepreneur (quick read)

#7 Entrepreneur-Speak: “Responsible Exit”

Jargon: “If I accept investors in my social enterprise, I want to be sure that a potential exit will be responsible.”

Decoded: “Investors, please forget about offering your equity stake to just anybody who pays the highest price. It needs to be surefire that my social enterprise’s mission will not be compromised by an investor who just wants to make huge profits.”

More insights required? Here you go:

A Practical Guide to Planning and Executing an Impactful Exit  and A Short Guide to Exits

The Graceful “Art” of an Equity Exit (quick read)

Still curious???

# 8 Investor-Speak: “Proof of Concept”

Jargon: “Before we invest in a social enterprise, we need to see a proof of concept.”

Decoded: “We may like innovation, but we’re not too fond of risks. You should have piloted your products, services or projects. Show us that your business and impact model work in practice, because we definitely won’t invest in super cool ideas that are just on paper.”

Hungry for more?

Testing Your Idea – Why Good Preparation is Necessary and What You Need For a Proof of Concept

FASE-EPN Webinar Testing Your Idea (video)

#9 Entrepreneur-Speak “Disruptive”

Jargon: “Our solution is disruptive.”

Decoded: “Our solution has never been tested but we hope that it will survive and finally change everything you know about [add your impact sector here].”

Click for more insights:

Disruptive Innovation For Social Change

Beyond Tradeoffs: The Rise of the Impact Unicorns (quick read)

And…. #10 Investor-Speak “Scaling”

Jargon: “We only invest in social enterprises with a strong scaling potential.”

Decoded: “We would like to see your revenues exploding without too much efforts or cost increase. So if you have big plans for growing your revenue and impact efficiently, great, otherwise please put down your phone.”

Dig deeper into this subject here:

PATRI Framework for Scaling Social Impact / as a slideshare

5 Tips for Social Enterprises Looking to Scale (quick read)

More jargons for us to decode for you? Let us know!