One of the tools that informs venture and private equity investors most about how to approach investment opportunities from a valuation and structure perspective is comparison analysis: the task of comparing historical deals that relate to the deal at hand.

At the larger deal scale, Capital IQ is a fantastic asset, aggregating information from capital markets, public media and verified sources to provide report generation functionality that enables much greater insight into strategic and tactical trends in deal-making. At the smaller scale, venture investors thrive on their networks and access to non-public information to help inform their decisions. Much of the data in that sector is secretive since the investor is not incentivized to publish their activities in any great detail. Even so, peHub does a great job of distributing deal activity in a very accessible manner.

As social ventures attempt to increase capital infusion into the sector, there is an argument for greater information availability as to what deal activity is occurring, thereby helping new entrants (and those on the sidelines) to understand more about the emerging trends. This also builds confidence that they’re executing along lines similar to other investors who’ve been in this game a little longer. This is especially important as the sector’s challenges are not only about deal structure and valuation, but also exploration of the options for entity structuring. A clear understanding of economic viability for non-profit, through hybrid to pure for-profit models has not yet developed, and examples of organizations that have been successful and details of their operational structure would be very beneficial to new entrepreneurs seeking proven solutions. Initiatives like GIIRS really measure impact performance. What we’re interested in here is the underlying structure and investment approach that delivered that performance.

Tight networks already exist between active funds in the sector, as evidenced by the recent investors’ roundtable hosted by VentureWell and Unreasonable Institute at the NCIAA Conference in Washington, D.C. on March 25th, 2011. Invariably, this network of colleagues and associates shares information in a very open manner, in recognition that formalizing approaches to social investment now depends substantially on selfless sharing of best practices and learning from all mistakes. The more we know about what works and what doesn’t, the quicker we’re going to see this whole sector develop towards a proven asset-class and increased capital availability.

Might an initiative to build a sector resource providing such data in searchable format and with flexible reporting be a huge value-add to social venture financing at this time? We certainly think so, and are consequently investing in our own infrastructure—we’d welcome partnership opportunities to help build it out and offer a proper and expansive solution to the marketplace.

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