In today’s world, it’s crucial to measure not just tangible outcomes but also the intangible – focusing on both the intended and unintended impacts of business and investment. Happiness Capital, in partnership with SVT Group, is leading the charge by creating an innovative framework to measure happiness.
At Happiness Capital, we believe in making investments that contribute positively to society’s well-being. Our vision is to grow a Happiness Ecosystem where the companies and VC funds we support collaborate with us to co-create a better, happier world. We’re committed to being a force for good, driving inclusive, equitable, and regenerative economic practices.
Through our Happiness Return Framework, we assess how our investments impact the happiness and well-being of all stakeholders across the venture capital value chain. This comprehensive framework allows us to measure not only financial returns but also the societal and environmental value generated by our investments, ensuring that both subjective and objective aspects of happiness are prioritized.
This groundbreaking approach aims to revolutionize the world of investing by considering more inclusive and happiness-oriented outcomes for growing companies and their stakeholders.
At the heart of the Happiness Return framework is a collaboration between Happiness Capital and three partners, each bringing unique expertise to the table:
Jed Emerson A leading authority in impact investing, social entrepreneurship, and strategic philanthropy, Emerson is known for originating the Blended Value concept. This concept integrates financial performance with social and environmental impact, providing a solid foundation for the Happiness Return framework.
SVT Group As a pioneer in impact management, SVT Group brings innovative approaches to defining and assessing value creation. Their human-centered methods and expertise in impact management and disclosure standards ensure that the Happiness Return framework is both meaningful and practical.
60 Decibels This impact measurement company specializes in helping organizations understand their customers, suppliers, and beneficiaries. Their proprietary Lean Data approach brings customer-centricity and responsiveness to impact measurement, enabling the Happiness Return framework to incorporate real-world feedback effectively.
The Happiness Return framework represents a paradigm shift in investment evaluation. It goes beyond traditional financial metrics to incorporate social and environmental impacts experienced by stakeholders, creating a more holistic approach to assessing investment potential. This approach aligns with Happiness Capital’s focus on four key sectors: Sustainable Food, Health, Environment, and Trust.
By integrating well-established measurement methods*, from the impact management norms to customer satisfaction techniques, the implementation of the Happiness Return framework provides a 360-degree view of each investment’s financial, social, and environmental impact. This comprehensive approach ensures that investments not only yield financial returns but also contribute positively to stakeholder well-being and societal progress.
The framework’s scoring system, ranging from 0 to 2.0, offers a comparable metric to traditional venture financial returns. Scores below 1.0 indicate a reduction in stakeholder happiness, while scores above 1.5 suggest exceptionally high happiness returns. This nuanced scoring system allows investors to balance financial potential with broader societal impact.
Implementing the Happiness Return framework involves a systematic approach:
1. Identifying affected stakeholder groups and assessing the depth and duration of the impact of a venture on them.
2. Evaluating specific social and environmental conditions impacted by the investment.
3. Estimating, and in a sample of the portfolio measuring, stakeholders’ perceptions of these changes and their overall impact on happiness.
This evaluation process enables investors to make more informed decisions, from due diligence to business development and hold strategies. It also allows for a deeper understanding of the true environmental and social value generated by investments.
By adopting the Happiness Return framework, we hope to set a new standard in venture capital. This approach not only aims to achieve financial success but also strives to enhance stakeholder well-being and contribute to a happier, more sustainable world. As the investment landscape evolves, frameworks like Happiness Return are poised to play a crucial role in shaping a future where financial returns and positive societal impact go hand in hand.
Read more:
Harvard Business Review –
https://hbsp.harvard.edu/product/ST146-PDF-ENG
Stanford Social Innovation Report –
https://ssir.org/articles/entry/venture-capital-happiness
Introduction to the Happiness Return (Part 2) –
https://happinesscapital.com/introducing-the-happiness-return-part-2/
Introduction to the Happiness Return (Part 3) –
https://happinesscapital.com/introducing-the-happiness-return-part-3/
Reference:
OECD Better Life Index –
https://www.oecdbetterlifeindex.org/#/11111111111
PERMA Model –
https://ppc.sas.upenn.edu/sites/default/files/permawellbeing.pdf
Planetary and Societal Boundaries –
https://www.science.org/doi/10.1126/science.1259855
