Exploration advocates for financial backing in cultural sectors through impact investments

The cultural and creative sector in the Netherlands has witnessed a significant growth trend in recent years, with an average annual growth rate of 2.9% between 2019 and 2022, outpacing the economy's overall growth rate of 1.9% during the same period. This positive development has not gone unnoticed, as various financial institutions and organisations have stepped forward to support this sector.

One such institution is Triodos Bank, recognised as the specialist bank in the area of loans for the cultural and creative sectors in the Netherlands. Another notable player is Aegon AM, which recently launched a climate transition bond fund.

In a bid to explore the potential of impact investing in the cultural and creative sectors, DOEN Participaties, the social investment arm of the DOEN Foundation, commissioned a feasibility study. The study, undertaken by independent researchers, aimed to determine whether impact investment could be a suitable form of financing for these sectors in the Netherlands.

The study identified six areas of opportunity for impact investing: new materials and crafts, ethical fashion, social design, cultural spaces, cultural productions and expression, and 'the culture'. 'The culture' refers to a movement of mainly urban entrepreneurs from diverse ethnic backgrounds who are trendsetters across a range of cultural and creative spheres.

The study found that there is sufficient deal flow in the Netherlands for impact funds to focus investment across these areas. It also recommended that funds, especially those with a narrower focus, consider broadening their geographical reach and invest across Europe.

In response to the study's findings, DOEN Participaties, funded by the Dutch Postcode Lottery, is planning the development of an impact fund for investments in the culture and creative sector. Mirjam Niessen, principal for impact investment at DOEN Participaties, stated that investment in culture and creativity was missing from its impact investments.

The study also suggested different fund structures to meet the various challenges in each of the areas identified, including a place-based fund for urban culture and a real estate fund for free cultural spaces.

Elsewhere, Japanese International Cooperation Agency (JICA) invested $40m in Aavishkaar Capital's supply chain fund, while Finnfund announced a €80m first close of a digital access impact fund. These investments underscore the growing global interest in impact investing across various sectors.

The fund launched by Aegon AM is posted in the category of Bonds and Energy transition, while the DOEN Participaties' proposed fund is posted in the category of Development finance, Financial inclusion, and Social impact. The investments are also posted in the categories of Blended finance, Development finance, Impact ecosystem, and Social impact.

The cultural and creative sector in the Netherlands continues to attract attention and investment, with the potential for impact investing to play a significant role in its future growth and development.