View from Seattle: Nine ways to create a bigger tent for impact investing in 2018



Impact Voices

SOCAP365 hits the road to dig up local insights from long-time impact investors

Michael Brown of Seattle Foundation and Lindsay Smalling of SOCAP Group discuss the power of philanthropy.

Impact Voices is an occasional series sharing the opinions of impact investing practitioners and leaders with ImpactAlpha readers. The views expressed in Impact Voices are the writers’ own, not ImpactAlpha’s.

With all the buzz about impact investing (see BlackRock’s letter), it’s no surprise that Social Capital Markets’ new SOCAP 365 impact investing conference in Seattle was sold out.

Investors, venture capitalists, family foundations and more joined to network, learn and make commitments in furthering the growth of the impact investing field. The day was filled with the realities of the impact investing industry, and what it would take to make its big promise of global change a reality.

Here are nine insights from Seattle to drive impact investing in 2018:

1. Think global, local and everywhere in between. Impact Investing first gained in popularity for its work in emerging economies and more underserved areas as a complement to philanthropy. But impact investing is as relevant locally in the US as it is internationally.

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As Uma Sekar of Capria shared in Seattle, the first step is to actually focus on what cause you care about and what outcome you are seeking. Then search for the best medium to achieve these goals.

One can influence healthcare in India by direct investment into startups, for example, or by investing in an Indian-owned and operated impact investment fund, or put your capital to use at a fund-of-funds that backs system changes across the country. However you want to invest, there are opportunities.

2. Diverse investors will create better investments. While Wall Street might be managed primarily by white men, impact investing needs to find its own, more inclusive path. In the same way that more diverse leadership teams and boards improve business performance for corporations, impact investment funds must do the same. “We need to inclusionize our economy, and we need to do it fast,” said Joel Solomon, chairman of Renewal Funds.

Step one? The investors, managers and leaders of funds need to be as diverse as the groups they invest in.

3. Risk taker or risk averse? All are welcome here. Impact investing vehicles are maturing — and diversifying.

Dave Richards, co-founder and Managing Partner of Unitus Seed Fund and Capria, posed a question to the crowd: “Do you want to be catalytic in your investment or is the impact portion of your investment designed to be risk averse?

Regardless of your assets, mission, or desired outcomes, there are opportunities to start impact investing. Following groups like SOCAP 365, GIIN, Toniic, ImpactBase, and InvestorFlow.org…(and ImpactAlpha!) will help you figure out where to go next.

4. Investors bring more than money. What will you do with your time, talent and treasure to find solutions to our greatest problems?

Solynn McCurdy from SVP Seattle

“Impact investors have more than money — they have invaluable expertise and networks that they can also mobilize to solve challenges,” says Solynn McCurdy of Social Venture Partners Seattle.

As impact investors — individuals and organizations — expand their impact investments, they must expand their services to help investees build capacity.

5. Capacity building has to be a part of the conversation. Michael Brown of the Seattle Foundation, which guides strategic philanthropy for nearly $1 Billion in assets, shared that many foundations, funds and donors are currently looking to impact investing to diversify and strengthen their portfolios.

Brown also emphasized that just as funds must be strategic in their giving, they must look as intentionally at long-term capacity building efforts as in their short-term screening.

6. Philanthropy can empower impact investing. Philanthropic dollars still have a place in impact investing.

“Impact investing goes to places where there is a market for creating change,” says Lindsay Smalling, producer and curator at SOCAP.

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When the market can support change, market-based organizations should be the ones driving it. But in many cases, you need philanthropic dollars to create impact investing opportunities by funding research, de-risking capital, and even supporting market creation.

7. Small is still beautiful. Investors need to question their own understanding of the term “investing.” Investments don’t have to be in large banks, institutions, and real estate. Even the smallest family offices, foundations and existing funds can easily step into impact investment using impact investment networks like SOCAP, ImpactBase, and Toniic.

8. A paradigm shift is needed on where AND how money gets invested. Impact investing holds promise but the same financial tools that got us here won’t get us there.

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Luni Libes, the founder and managing director of social impact accelerator Fledge, showed how different impact investing vehicles can align investor incentives with social impact (explained in greater detail in the book The Next Step for Investors).

One reliable option? Revenue-based financing.

9. The time to start impact investing was 100 years ago. The second-best time is now. According to the United Nations Development Program, despite unprecedented levels of citizen, government, business and civil society efforts towards solving humanity’s greatest challenges, there remains a massive funding gap for reaching the United Nations’ Sustainable Development Goals by 2030. In the same gap is a $12 Trillion market opportunity. To get there by 2030, you’d better start moving.

While impact investing might just be creeping on to the main stage, it is anything but nascent. SOCAP just celebrated its first decade of operations. Global Partnerships has been investing in this arena for over 20 years, and as Peter Bladin, the firm’s chief impact and research officer shares, impact capital can be truly catalytic when it its invested for change.

Make sure to follow SOCAP 365 to learn how you can engage!

#SOCAP365PNW Breakout Session at Impact Hub in Seattle

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