You've heard it from impact investors: there just aren't enough investable deals. And you've heard it from impact entrepreneurs: where's the capital we need to get our business off the ground?
In this Returns on Investment podcast from ImpactAlpha, Cathy Clark, director of Duke University's Case Initiative on Impact Investing (Case i3), says the key to bridging that disconnect is a series of “handoffs” from investors in one stage to the next.
Listen to Cathy Clark discuss impact investing's ‘pioneer gap' on the new Returns on Investment podcast.
Initial funding for a social enterprise may come from grant makers who are interested primarily in the impact of the business. The seed stage investor, however, “is less interested in that data than in your unit model and if you’re going to have a business that’s investable,” says Clark. “There is a transition that needs to occur to thinking about how you communicate with an investor that’s very different than thinking about how you communicate with a grant maker.”
Absent that handoff, the “pioneer gap” stops many promising social enterprises in their tracks. And that narrows the pipeline of deals for later stage investors — and the potential for progress against urgent challenges.
Case i3 works with entrepreneurs in the U.S. and around the world to navigate the handoff between investors at different stages of an enterprise's development. You can find a wealth of resources on their website and in her book (with Jed Emerson and Ben Thornley), “The Impact Investor.”