Giving is good, and so are exits
ClearlySo's Mike Mompi shares some thoughts on why the recent announcement of JustGiving's sale is a transformative impact investing exit.
The major news right now in both the charity sector and in the impact investment sector is the sale of Justgiving, (JG) the world’s leading online giving platform, to Blackbaud. Based in the US, this publicly traded firm is a leading provider of IT and software services to the charitable and “not-for-profit” sector and has agreed to purchase JG for £95 million.
As I led the team that worked on the recent ClearlySo mandate for JG, I’ve volunteered to share some thoughts. Why do we believe this is such a significant event in the charity and impact investment sectors?
Firstly, JG transformed the business of raising money for charities in the UK by making the process easier, faster, and more convenient. Over $4.5 billion has been raised through their platform to date. Through that, JG was able to directly support the various causes championed by these charities and enable them to create more impact. Giving is good. Efficient giving is better.
NVCO reports that historically it had cost charities approximately 12% of their budget on average to raise money. JG has managed to dramatically lower the cost of fundraising to just 5% of total funds raised. In addition, it is estimated that approximately 1/3 of the money that passed through the website was “new money” to charities. That’s additionality. We like additionality.Now with access to expanded resources and infrastructure as a result of the acquisition, JG have a bigger opportunity than ever before to grow their business and scale their positive impact.
Secondly, this amounted to a fantastic exit in financial terms and has created another critical data point in this growing yet sparsely populated impact investment sector. The company is estimated to have been funded by about £6 million since inception, so this £95 million represents an incredibly good return on capital invested. As with most impact businesses, success here was due to exceptional founders and team consistently executing a commercial solution to a social problem. In doing so, JG delivered an outsized impact. The $4.5 billion donated through the website makes UK-based Justgiving the largest charitable giving website in the world. Big impact and big exit.
At ClearlySo we are increasingly working with companies where impact and financial return are positively correlated – these types of exits are critical as they help move our part of the market more towards the hearts, minds, and the wallets of the mainstream. We would be remiss to overlook the fact that two exceptional women founded Justgiving, Zarine Kharas and Anne-Marie Huby, which only increases the significance of this transaction. They ‘Leaned In’, and they won.
We find that values-driven business tend to have a more balanced gender split than what currently exists in the mainstream. This is beyond a moral imperative of “women’s issues”, as an increasing body of research points to better performance with more balanced teams. At ClearlySo we are happy to have seen that 24% of our client companies were female founded and/or led, and 33% of our angel investor group are female.
Some may be sad at what could feel like the passing of a significant and impactful UK business into the arms of US-listed company. In certain ways it might feel bittersweet, something akin to one’s own child growing up and moving off to University and out of the home. However, we are clear that exits are vital for the impact investment sector to learn, develop, and grow.
For investors to be willing to fund high-growth impactful businesses, we must expect and embrace these financial exits are essential to the successful functioning of the direct equity impact investment market. Within an increasingly dynamic impact investment sector, and having raised capital for well over a hundred high-impact entrepreneurs and funds, both our firm and the market have never been closer to making this work.
It would be appropriate to finish on a vision our CEO Rod has consistently shared with the team over the years: ClearlySo was founded with the idea of “helping to create 100 Justgivings”. As Justgiving has been a client of ours several times over the last decade, we take particular pride in sharing their success as widely as possible. With one down and ninety-nine to go, and with another dozen or so very strong candidates in the pipeline, we are well on our way to achieving that vision. Exits are good, and exits with impact are better.