Monaco tax haven turns impact hub

Monaco, that bastion of the tax loophole looks set to become the location of equity for social entrepreneurs and impact investment intermediaries. Henry Palmer heads to the luxurious Metropole hotel to find out more.

A group of Monaco-based venture capitalists are meeting to discuss setting up syndicated funds to provide equity capital to social entrepreneurs and impact investment intermediaries.

The Monaco Private Equity and Venture Capital Association (MVCA) confirmed to Pioneer’s Post that a meeting was being organised to discuss how these funds would work and to identify organisations for a first funding round.

The move followed a meeting at the Metropole hotel in Monaco last week at which representatives from around 25 venture capital firms based in the ‘jurisdiction’ attended.

The meeting was organised by MVCA, which has 70 members, and is in the process of developing an ‘impact investment centre’ with the stated goal of mobilising ‘resources both financial and non-financial to develop business entrepreneurship, which will have measurable positive social or environmental impact.’

Impact investment broker Total Impact Advisors (TIA), which co-hosted last week’s meeting, is in the process of setting up a Monaco office, which it believes could play a role in untapping impact investment from the considerable private equity available in the jurisdiction. The MVCA estimates there is around €20bn invested in venture capital in Monaco.

Arthur Wood, a founding partner of TIA, told participants that the only way to tackle global issues such as climate change and sanitation would be to ‘inject modern market capital solutions into the provision of social good’.

He said that neither governments nor philanthropic organisations had the capital available to tackle key global problems. ‘If we’re actually to solve those problems and issues we cannot continue to do so by using unleveraged and non-annuitized capital. The capital is just not there,’ he said.

He called on Monaco’s venture capital industry to align more of its investments to social mission. He said: ‘The first you’ve got to do in the impact market place is move away from this idea that the world is bipolar [divided between for and not for profit organisations]. What we’re talking about today is taking the skills that you have as business people and applying them to this space. There is nothing sacrosanct that says because an investment has the word “social” in front of it, it is any different.’

Those attending the meeting heard from a panel of high profile impact investment professionals, before a series of presentations by companies looking for investment. These companies included Light Years IP, which is looking for investment into a producer-owned venture, manufacturing and exporting Shea butter from South Sudan. Other companies included MYC4, a global web-based company connecting small businesses in Africa with investors worldwide; the Medical Credit Fund, which provides SME loans to private healthcare professionals across Africa; and AfricInvest, a private equity fund manager specialising in SME's across Africa.