Developing Partnerships With Family Offices - Cardano Development

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Developing partnerships with family officesRotterdam-Delft, August 2020

Introductory words to this report onapproaching family offices.This report details a strategy for developing partnerships between Cardano Development (CD) andfamily offices (FOs). It provides an answer to the question: What is the best strategy for CardanoDevelopment to develop partnerships with family offices in the United States and Europe? To thisend, it includes a market overview, a selection of family offices whose interests are aligned with CD’smission and a route to market.The market overview is largely based on a review of existing literature and reporting. Amongst others,it educates the reader on FO market size, segments and trends. Of interest is the observation thatimpact investing is on the rise, especially amongst the newer family offices and younger generations.The selection of FOs functions as a focus group for CD to proactively reach out to if they indeedchoose to pursue this market. An initial long list has been selected from the Prequin database on FOsand supplemented with other sources. It has subsequently been narrowed down to the final selection,containing only those FOs whose online profile points toward an interest in impact investing.The route to market is a synthesis of twenty interviews conducted by Young Advisory Group (YAG).Although it is a very private market, family offices and those in the extended ecosystem appearedvery willing to share their expertise. A degree of luck and a substantial amount of networking are keyto eventually obtain an investment. Moreover, it is important for CD to be an understandable conceptto investors, which is a challenge given the current structure. YAG has developed two alternativebrand images and has created a comprehensible pitch deck for CD in its current form.We would like to express our gratitude to Maria-Pia, Matthijs, Fleur and Joost for the challenge in thisinteresting field and their useful insights along the way. We look forward to similar fruitfulcooperation in the future.

It has been our pleasure to tackle this challenge for CDand we would like to stay in touch.OLIVIA KORTEProject manager MSc Financial EconomicsLLB Dutch LawBSc Tax EconomicsBSc Economics & BusinesseconomicsMARJOLEIN KERSTJENS MSc BiochemicalEngineering BSc Life Science &TechnologySACHA MARTINI MA Global PoliticalEconomy MSc Public Affairs BA International RelationsJASPER GROENEWOUD MSc Complex SystemsEngineering & Management BSc Systems Engineering,Policy Analysis &ManagementCOMMUNICATIONYAG has worked on this projectwith much enthusiasm. If thereare any additional questions orif there is curiosity as to whatelse YAG could do for yourorganization, please do nothesitate to contact us:Sacha Martinisacha.martini@yag.nl 31 6 20 71 16 38PROJECT TEAM3/48

Table of contents

The executive summary first lays out the strategy YAGadvises, after which the detailed analyses follow.TABLE OF CONTENTSINTRODUCTIONPROJECTTRIGGERMETHODSCH 1 – FAMILYOFFICEMARKETTABLE OFCONTENTSCH 2 –IDENTIFYINGPOTENTIALPARTNERSCH 3 – ROUTETO MARKETTABLE OF CONTENTS5/48

Project trigger

This issue tree elaborates on the questions and sets thescope for the project.HOW TO PARTNER WITH FAMILY OFFICES?ROUTE TOMARKETMARKETWhat are the market characteristics?Which players areinteresting partners?What would be asuitable route tomarket?Are theresubsitutes to CD?What are themarket dynamics?What size is themarket?Which type(s) offinancial support dothey provide?How shouldrelationships bebuilt?What are CD’scharacteristics andUSPs?Are therenewcomers?In terms ofcapital?What sizeinvestments arecommon to them?Are there gatekeepersto the process?Which are otherparties’ USPs?Is the marketgrowing?In terms ofplayers?Have therebeen/are therestrategic shifts?What is their “trackrecord” in CDcomparableinvestments?Which fora may beused?ISSUE TREE7/48

Methods

The market analysis draws upon desk research, theshortlist on databases and market entry on interviews.METHODCORE SOURCESCHAPTER 1:FAMILY OFFICE MARKETIndustry reports, complementedwith insights from interviewsMain sources were UBS &Campden Wealth andRockefeller & Campden WealthCHAPTER 2:POSSIBLE PARTNERSShortlisting based on databaseand networking via interviewsPreqin is a prominent investor databaseand includes a large family office database.CHAPTER 3:ROUTE TO MARKETFindings from interviews formthe advise on the route to market.20 interviews were conducted with peopleworking in the field of family offices. Thesewere mostly obtained from YAG’s and CD’snetwork, as well as from web searches.METHODS9/48

For a representative image of the FO world, knowledgewas gathered from twenty diverse FO experts (1/2).Interviewee 1VP and Head of BusinessDevelopment at a familyofficeInterviewee 2Senior Manager, familyoffice and Governance ata consultancy firmInterviewee 3Managing Partner/ Headof a family officeInterviewee 4Former CEO of animpact fund & CEO of apublic growth enablingorganizationInterviewee 5F amily office advisor &director at a family officecommunityInterviewee 6Impact InvestingManaging Director at afamily officeInterviewee 7Partner & Founder of afamily officeInterviewee 8Former CEO/employeeof three family offices &private investorInterviewee 9CEO/Founder emergingmarket platform &founder impactinvestment consultancyfirmInterviewee 10Former manager familyoffice, founder familyoffice advisory firmINTERVIEWEES (I/II)10/48

For a representative image of the FO world, knowledgewas gathered from twenty diverse FO experts (2/2).Interviewee 11Prof. PhD at a universitywith main focus onfamily businessesInterviewee 12Investor Relations &Business Development atimpact investingcommunityInterviewee 13Managing Partner at afamily officeInterviewee 14Founder impactcommunityInterviewee 15Founder & CEO at aglobal family officecommunityInterviewee 16Chairman of a familyofficeInterviewee 17Co-founder andPresident Director of animpact focused companyInterviewee 18CEO/Co-founder of animpact crowdfundingplatformInterviewee 19Co-founder & Partnerimpact investing firmInterviewee 20Director family officeINTERVIEWEES (II/II)11/48

Chapter 1: Family office market

This chapter presents conclusions on market size,market dynamics, impact investing and substitutes.WHAT DOES THE MARKET FOR FAMILY OFFICES LOOK LIKE?MARKET SIZEMARKET DYNAMICSIMPACT INVESTINGSUBSTITUTES TO CD5.9 trillion AUM in totalMost FO assets are in equity25%of FOs is engaged inimpact investingThe most important substitutesto CD are impact fundsOf which 1.5bn in MFO and802m in SFOThe real estate asset class isgrowing the most rapidlyMost investments are donethrough direct private equityReturns realized by impactfunds differ from 7 to 17%.FOs have grown 38% in the pasttwo years.Because of COVID-19 the focushas shifted to preserving wealthOne concern regards the lack ofknowledge in the field85% of fund investments aremarket rate returns seekingAverage self-reported return ofaround 5.4%In recent years impactinvesting has been on a riseAnother barrier is confusionaround these investments11% of impact fundsinvestments are in Fin services.*N.B. The market is very diverse and not one family office is alike. Office size, structure and investment strategy and criteria are the maindifferentiating factors. Therefore the uniqueness of the market should always be taken into account when acting upon these generalizations.FAMLIY OFFICE MARKET CONCLUSION13/48

CH 1 – FAMILY OFFICEMARKET1.1 MARKET OVERVIEW1.2 MARKET DYNAMICS1.3 FO UNIQUENESS1.4 IMPACT INVESTING VS.PHILANTHROPY1.5 SUBSTITUTES TO CDINHOUDSOPGAVE14/48

A family office serves the generations of a wealthyfamily by managing key areas of family assets.WHAT IS A FAMILY OFFICE?A family office (FO) is the private office for afamily of significant wealth. The number ofstaff working in the office can vary from oneor two employees to 100 or more staff,depending on the type and number of servicesit provides. For families with private wealth inexcess of USD 150 million, establishing a FOcould be an attractive move.Generally, FOs manage key areas of familyassets, including real estate holdings anddirect or indirect investments, taxconsolidation and estate management.They can serve as the central hub for a family’slegacy, governance and succession. They canfurthermore support the education anddevelopment of family members, coordinatecommunication and resolve issues within thefamily enterprise.TYPES OF FAMILY OFFICESA single family office (SFO) is a family office serving(multiple) generations of one single wealthy family.The SFO is designed to fit the specific needs andbeliefs of the family.A private multi-family office (MFO) is a familyoffice serving multiple families with often samecommon values or goals, with the benefit ofeconomies of scale.A public multi-family office (MFO) is a family officelooking after interests of multiple families with lesswealth. Unlike private MFOs, they are owned bycommercial third parties.UBS/Campden WealthMARKET SIZE (I/IV)15/48

Working with FOs has four general benefits, one of themis being more flexible than traditional investment firms.THESE ARE THE RESULTS OF THE MARKET REVIEW, INTERVIEWS OFFER A MORE NUANCED VISIONBENEFITS OF WORKING WITH FOsThe market for family offices has been increasing andmore and more businesses and companies are lookingfor family offices as an investment partner. In general,there are four major benefits of working with familyoffices.1. MORE THAN FINANCIAL CAPITALFamily offices are known for the ability to bring morethan financial capital to an investment.When thinking about investment partners, there arethe “three forms of capital”: intellectual capital,relationship capital, and financial capital, of whichfinancial capital is often the most fungible form. If theprincipal of a family office has extensive industryexperience and relationships that are relevant, having afamily office as business partner or investor can haveadditional benefits.UBS/Campden Wealth2. OPERATIONAL FLEXIBILITYFamily offices operate with much more speed and flexibility than otherinvestment firms. Unlike institutional funds, many family offices do nothave a formal mandate or an investment committee. Principals of thefamily office determine general goals, and as such, investments can be mademore quickly and unique structures can be deployed.3. FLEXIBILITY ON EXITFamily offices can be rather flexible on the exit of their investments: they areoften longer-term holders, which can be a valuable asset to have in a capitalstructure. Furthermore, family offices are often natural buyers as companiesscale and grow, especially to a family office whose principal has deep domainexpertise.4. NOT ALWAYS RETURN-DRIVENFamily offices can make investments on metrics other than those that arepurely financial. Whether it is a pet project in which they want to invest orbased on a relationship, family offices often make investments looking atoverall benefit and value to the principal, rather than pure IRR. Comparedto traditional investment firms, the focus is often less on generatingreturns, especially when looking at the short-term.MARKET SIZE (II/IV)16/48

An estimated USD 5.9 trillion worth of assets is held byan increasing number of family offices world wide.KEY FIGURESSIZE OF THE FO MARKET38%increase in FOs thepast two years6,500-10,500estimated number of FOsin 2018 5.9 trillionworth of assets under FOmanagementAverage assets under management (2019)1.5bn15001000917m802m5000Total average AUM (SFOs MFOs)SFO average AUMMFO average AUM The market for family offices is booming.The number of FOs is estimated to havegrown by 38%globally from 2017 to 2019. In 2018, Credit Suisse estimated thenumber of FOs to range between 6,500and 10,500. Because of the increase inwealth and the reported growth in FOs, thenumber of FOs is likely to be much higher. Globally, the FOs are estimated to holdover USD 5.9 trillion worth of assets undertheir management. There is no mandatory registration for FOsand one single investment adviser cantechnically already qualify as a FO.Therefore, the actual number of FOs andtheir assets can only be estimated. The average assets held under managementby a FO is USD 917 million, with bigdifferences between SFOs and MFOs.UBS/Campden Wealth, BNP PARIBAS (2020), Credit Suisse (2018)MARKET SIZE (III/IV)17/48

Equities and alternative investments constituted the toptwo asset classes FOs invest in in 2018-2019.COMMODITIES Agriculture Commodities Gold/metalsCASH Cash or equivalent1.4%1.0%0.8%Return of 1.9%Return of -2.1% – 3.3%ALTERNATIVE INVESTMENTS17.0% Private equity – direct7.7% Private equity funds17.0% Real estate – direct1.0% REITS4.5% Hedge funds7.6%Averageself-reportedFO portfolio returnQ1 2018 – Q1 2019BONDS12.0% Developed markets4.3% Developing marketsReturn of 2.3% – 2.9% 5.4%An extended period of low interest ratesand high volatility has led to a search foryield and drive for diversification,increasing FOs’ allocation to alternatives.Return of 2.3% - 16.0%EQUITIES Developed markets Developing marketsDecrease compared to 201825.0%7.4%Return of -1.1% – 2.1%N.B. Returns are subject to annual change and only provide an indication for the year 2018-2019.UBS/Campden WealthMARKET SIZE (IV/IV)18/48

CH 1 – FAMILY OFFICEMARKET1.1 MARKET OVERVIEW1.2 MARKET DYNAMICS1.3 FO UNIQUENESS1.4 IMPACT INVESTING VS.PHILANTHROPY1.5 SUBSTITUTES TO CDINHOUDSOPGAVE19/48

Several changes are happening in the family officesmarket regarding asset allocation and landscape.INFLUENCING MARKET DYNAMICS ASPECTS A shift happened towards closer scrutinityregarding FOs, because of a changing global taxlandscape and more (social) media attention. Investment performance of FOs fell, returning5.4% averagely in 2018, compared to recordbreaking 2017 with 15.5% and 7.0% in 2016.INVESTMENT ALLOCATION* The biggest and most yielding asset class is private equity (av.19% of portfolios compared to 22%in 2018, achieving 11-16%return). The real estate class is increasing the fastest by 2.1%, with anaverage return of 9.4%. Impact investing and sustainability have become more popular.GLOBALIZATION The rapid growth of Asian economies affects both the familyoffices and their investment opportunities. More global trade flows happen within and in betweenemerging markets. Interest from family offices to co-invest is increasing.NEEDS 20%of family offices experienced a cyber attack in 2019. There isa growing need for better cyber safety. A growing concern for family offices is the need for specialistskills and expertise in areas such as IT and HR. Additionally,FOs are more often seeking expert external audit advice.EXPECTED DISRUPTIVE FORCES Family offices indicate they are expecting technicaldevelopments (AI and blockchain) to disturb the market. Also, the US/China relations and Brexit are expected toinfluence the market. 55% of family offices predicted a financial recession in 2020. Even though the effects are not yet fully reported; COVID-19would be a disruptive force in the market.UBS/Campden Wealth 2019, Deloitte Private, UBS/Campden Wealth 2018MARKET DYNAMICS (I/II)20/48

Industry interviews indicate two current trends, namelyCOVID-19 and the ongoing shift to impact investing.COVID-19IMPACT INVESTING SHIFTDue to the Corona crisis, the economic performance isexpected to slow down, which has a diminishing effecton the returns of FO’s. Therefore, they will focus onpreserving wealth instead of on growing the familyoffice. A shift is thus happening, focussing onsurviving rather than on making impact investments.In recent years, impact investing has become morepopular amongst family offices due to: increased awareness of impact topics amongstyounger generations within the FO; proven successful impact investments; the realisation that impact investing is moreinteresting than philanthropy because of returns.Cardano Development could capitalise on theopportunity by attracting low-risk debtThis could be an opportunity to attract investment forlow-risk loans such as the ones which CD proposed forthe pith deck.A challenge to get a foot in the doorInterviewees indicated that they keep discovering newplayers in the field of impact investing despite beingquite active in the field. Getting attention and standingout can thus prove to be challenging.Interviews, Team analysisMARKET DYNAMICS (II/II)21/48

CH 1 – FAMILY OFFICEMARKET1.1 MARKET OVERVIEW1.2 MARKET DYNAMICS1.3 FO UNIQUENESS1.4 IMPACT INVESTINGAND PHILANTHROPY1.5 SUBSTITUTES TO CDINHOUDSOPGAVE22/48

In the family office world, all firms are unique and thereis no ‘one-size-fits-all’ description.UNIQUE VISIONS BASED ON UNIQUE BACKGROUNDSFamily’s historic trajectories are the largest determinant to their investmentpractices. In this chapter, speaking of sectors and segments is useful in discussingthe market, but it should be kept in mind that conversing with the officesthemselves will require more depth.IDIOSYNCRATIC PREFERENCES AND CRITERIAGiven the above, there is also not one set of ‘preferences’ or ‘criteria’ of familyoffices which could be compared. Whilst this chapter aims to provide anoverview, any approach or evaluation of family office should be tailor made.DISTINCTIVE STRUCTURES AND APPROACHESAlthough probably the most standardized of the three, the way family officesgo about their business in terms of structure and approach also differs.SINGLE VS MULTI FAMILY OFFICESMulti family offices are much more institutionalisedwith governance schemes often resembling asset management firms.Single family offices have simpler and less uniform structures where one principal is at the center of all actions and is the finaldecision maker.InterviewsFAMILY OFFICE UNIQUENESS23/48

CH 1 – FAMILY OFFICEMARKET1.1 MARKET OVERVIEW1.2 MARKET DYNAMICS1.3 FO UNIQUENESS1.4 IMPACT INVESTINGAND PHILANTHROPY1.5 SUBSTITUTES TO CDINHOUDSOPGAVE24/48

The way FOs use their AUM for impact investing andphilanthropy could be interesting for CD.1IMPACT INVESTINGDefinition: Impact investing is making investments withthe intent to generate measurable environmental or socialimpact, alongside providing a competitive financialreturn.2PHILANTHROPYDefinition: The voluntary act of giving by an individual ora group to promote the common good. Philanthropicgiving supports a variety of activities and causes, such asresearch, education, social justice, and poverty alleviation.In 2019Families give on average25% of all FOs 6.4 millionwere engaged in impact investing, allocating onaverage 14%to impact investing.through their FO to philanthropy on a yearlybasis .UBS/Campden Wealth, Rockefeller/Campden WealthIMPACT INVESTING VS. PHILANTHROPY (I/VI)25/48

Impact investing, mostly done through direct privateequity, is expected to grow over the next five years.THE SECTOR IS GROWINGIn 2019, the sector’s assets under management amounted toroughly USD 502 billion, which is almost double 2018’s estimate(albeit this was based on fewer organisations). Over the next fiveyears, family offices expect on average the percentage of theirportfolio allocated to impact investments to grow to 25%.Expected average portfolio allocation to impact investments%of FOs– five years from now40%investmentDirect private equityReal estatePrivate equity fundsInfrastructureDirect private debtPublic equityPrivate debt fundsCash & cash equivalentsPublic debt0%30%20%10%0%Percentage of FOs making use of the vehicle for impact%of portfolio in impact investing20%40%60%80%PRIVATE EQUITY IS POPULARFor family offices, private equity is the most popular asset class,with an average return of 16%for direct and 11%for funds-basedinvesting. For impact investing, this is no different, with directprivate equity as most common vehicle for this sector, which isshown in the figure above.UBS/Campden Wealth, Rockefeller/Campden WealthIMPACT INVESTING VS. PHILANTHROPY (II/VI)26/48

Philanthropic donations are mostly done regionally andfrom intrinsic motivation, via family foundations.Percentage of people making use of philanthropic vehicleCOMMENTS All of the philanthropic donations are voluntary driven,intending order to give back to society. Their purpose is toinfluence and activate. While most of the money on philanthropy is donated to thearea where the FO is located, European family offices tend torelatively give the most outside of their own continent. The most popular vehicles for donating are family foundations(64%), followed by direct donations to nonprofit organizationsand charities.Family foundationDirect donationDonor advised fundCorporate/business foundationsThird-party foundationFamily officeCommunity foundation0% 10% 20% 30% 40% 50% 60% 70%Outflow of philanthropic dollars as % of portfolio.(Remainder is donated nationally)100%80%Central and SouthAmericaEuropeReasons for philanthropic givingGiving back to society75%Engaging next generation36%Influencing social change55%Leaving a legacy34%To put values into action50%Environmental concerns28%60%Middle East40%Asia-PacificSocial inequality47%Reputation management8%AfricaPersonal family experience38%Legal responsibility3%Moral obligation37%Religious causes2%20%0%NorthAmericaAsia-PacificEuropeNorth AmericaRockefeller/Campden WealthIMPACT INVESTING VS. PHILANTHROPY (III/VI)27/48

Impact investing is increasing and philanthropy strategyis shifting to a more time-limited approach.IMPACT INVESTINGPHILANTHROPYLOWER RETURNS?The assumption that lower returns for impactinvestments have to be accepted is fading. “If youEUROPE VS NORTH AMERICADespite the average AUM and family wealthdiffering less than 8%, among European FO’s, theaverage annual philanthropic donation was USD6.0 mil and USD 7.5 mln in North America.do it the right way, you can achieve a return setto market.” – Principal, SFO, Europe.RISK AVERSEAlthough the family office investing approachremains relatively risk-averse, shifts are takingplace, not only between and within asset classesbut also regarding new motivations.PARTICIPATIONFamily office’s appetite for direct minority-stakeinvestments and more active participation in thestrategic management of these investments hasincreased.EXPECTATIONSIn 2019, for the majority of FOs, their impactinvestments have matched (61%) or outperformed (20%) expectations compared to theirtraditional investments of the same type.TIME-LIMITED VS. IN-PERPETUITYTwo kinds of strategic time horizons existregarding to philanthropy. The in-perpetuitytimeframe was twice as likely to be adopted (62%)as the time-limited timeframe (32%). Howeverthe popularity of the latter model is on the rise,with the number of those who have chosen itgrowing by nearly two-thirds since 2000.DECISION-MAKERSIn Europe, the key decision-maker in familyphilanthropy is the head of the family or founder(74%). In most US FOs, other family membershave this power (65%).Source: UBS/Campden Wealth, Rockefeller/Campden Wealth, ForbesIMPACT INVESTING VS. PHILANTHROPY (IV/VI)28/48

Regarding impact investing, the greatest barriers areconservative approaches and the lack of knowledge.CHALLENGESWhile nearly two-fifths (39%) of the family offices which currently makesustainable or impact investments are happy with their existingapproach, significant numbers report facing barriers when trying toinvest in this area. Most concerns pertain to the lack of knowledge in thefield and the confusion around these investments.At the and of the day, it is going to be very differentdepending on how the investor is looking at the money. Areyou looking at it for a real financial return or are youlooking at it as a replacement of philanthropy, where youcan justify lower returns versus looking at it on an applesto-apples basis.” – Portfolio Analyst, MFO, North America.Barriers to investing in sustainable or impact investments, as a percentage of FOs that recognize the barrierI'm happy with my existing investment approach39%These investments aren't well enough established33%I'm worried about having lower returns24%It's hard to know what impact these investments actually have22%I don't know enough about them16%Not based on values most cared aboutI have never been offered a sustainable/impact investment14%12%Switching requires sale of investments and paying taxes10%I prefer taking my investments and donating to causes I support10%Source: The UBS/Campden Wealth Global family office Survey 2019IMPACT INVESTING VS. PHILANTHROPY (V/VI)29/48

For time-limited philanthropic donations, administrativecomplications are the biggest challenge for adoption.As philanthropy is, in contrast to charity, seen as an approach to makethe world a better place rather than a one-time gift, it could become quitea challenge to find an office to assist CD. The FO will need to be able tosupport with issues such as setting philanthropic objectives, formulatinga giving strategy, technical advice, operational management and thepresentation of strategy initiatives.THE IN-PERPETUITY MODELWithin the in-perpetuity model, restricted fund dispersallevels is named as one of the big challenges. The fact thattraditional endowments allocate only 3%-10%of their fundsat any given time limits the impact of these initiatives.Challenges associated with the adoption of a time-limited philanthropic time horizon, as a percentage of FOs thatrecognize the challengeAdministrative complicationsGenerational transitionA short time frame complicating donationsPoor performance of the time-limited philanthrophic donationsA board of directors lacking skills and experiencePoor communication between the family and the recipientsPoor guidelines on where the money can be donatedNo real %Source: Rockefeller/CampdenIMPACT INVESTING VS. PHILANTHROPY (VI/VI)30/48

CH 1 – FAMILY OFFICEMARKET1.1 MARKET OVERVIEW1.2 MARKET DYNAMICS1.3 FO UNIQUENESS1.4 IMPACT INVESTINGAND PHILANTHROPY1.5 SUBSTITUTES TO CDINHOUDSOPGAVE31/48

Impact investment in access to finance could be seen asa substitute to Cardano Development.IMPACT INVESTING The most common areas of impact investing areeducation, agriculture/food, and energy andresource efficiency. When looking at impact investing, these are allsubstitute areas that family offices can invest in. Roughly 22%of FOs engaged in impact investinginvests in the area of “access to finance”. Considering Cardano Development’s focus onfrontier markets with the goal of implementingfinancial instruments that result in sustainable,resilient and inclusive markets in underservedeconomies, the area of “access to finance” withinimpact investing could be a good area to promoteCardano Development in.Examples of substitutes to Cardano Development: Social impact bonds/funds Microfinance loans Through organizations (e.g. RSF Finance, ImpactAssets) Venture capital/private equity investmentsUBS/Campden WealthPERCENTAGE OF FOs ACTIVE IN SECTOREducation45%Agriculture and food45%Energy end resource efficiency43%Healthcare and wellness38%Environmental conservation34%Housing and community development34%Sustainable consumer products29%Job creation26%Women’s empowerment26%Access to finance22%Sustainable infrastructure22%Infrastructure11%SUBSTITUTES TO CARDANO DEVELOPMENT (I/III)32/48

Impact funds can be seen as competing with CD and aresuggested as a potential source of investment.CHERRY PICKINGContrary to the data suggesting that most family office impact investments occur through direct private equity, most interviewees impliedthat funds are a more popular vehicle. It saves time and effort and requires less commitment from the family office to be actively involved.NUMBERSAverage gross realized returns by impact funds for private markets investments in 2018 GIIN has held a survey amongst266 impact investors duringJanuary and February 2019. Alldata on this slide is regarding 2018and plans for 2019. 85% of impact funds principallytarget market-rate or closer tomarket-rate returns, 15% targetreturns closer to capitalpreservation. 11% of impact funds AUM are inFin services (excludingmicrofinance).GIIN Annual Impact Investor Suvery 2019, InterviewsSUBSTITUTES TO CARDANO DEVELOPMENT (II/III)33/48

Family offices keen to donate with economic and socialimpact might be interested in the goal of CD.PHILANTHROPY The most popular causes that are beingphilanthropically supported are education andhealth, economic and social impact and theenvironment. For family offices that want to support causesphilanthropically, organisations focussed on causesshown from the table on the right can be substitutesto Cardano Development. Roughly 45%of family offices engaged inphilanthropy gives to organisations occupied with“economic and social impact”. Considering Cardano Development’s focus onhaving an impact on financial markets in frontiereconomies, a family office supporting the cause of“economic and social impact”, could be interested inphilanthropic giving to Cardano Development.Examplesto CardanoDevelopment:Examplesofofsubstitutesdirect substitutesto CardanoDevelopment withinLocalthiscompanies/charitiesin frontier economiescause: Organisations teaching financial skillsEducation and health- e.g. childhood development,primary/secondary education, furthereducation, health.90%Economic and social impact- e.g. financial inclusion, entrepreneurship,economic and community development,research, arts, culture, sports.45%Environment- e.g. climate change, conservation and animalrights, food security/agriculture.33%Political and civil- e.g. human rights/civil liberties, religiouscauses.17%Conflict and peace- e.g. international and global affairs,peace/conflict resolution, disaster relief.11%Other5%UBS/Campden WealthSUBSTITUTES TO CARDANO DEVELOPMENT (III/III)34/48

Chapter 2 – Identifying potential partners

This chapter contains the identification of FO partners;explaining the criteria

WHAT IS A FAMILY OFFICE? TYPES OF FAMILY OFFICES A single family office (SFO) is a family office serving (multiple) generations of one single wealthy family. The SFO is designed to fit the specific needs and beliefs of the family. A public multi-family office (MFO) is a family office looking after interests of multiple families with less wealth.

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