A New Inning For Impact Investing

Forbes
April 27, 2015

By Jean Case, Con­trib­u­tor: For years, a nascent move­ment led by pas­sion­ate pio­neers out to change the world has been slowly but surely tak­ing shape. Qui­etly, these early fear­less lead­ers have been cham­pi­oning the idea that busi­nesses can be a tool for social good, beyond the jobs that they cre­ate. Specif­i­cally, they’ve been build­ing the move­ment for a new class of investors and entre­pre­neurs to lock arms and build com­pa­nies that pro­vide prod­ucts and ser­vices that address daunt­ing social chal­lenges, and gen­er­ate a finan­cial return for investors. These com­pa­nies are found in many sec­tors, includ­ing large mar­kets such as edu­ca­tion, energy, trans­porta­tion and health­care that are ripe for disruption.

It’s still early days. But as I’ve observed the incred­i­ble trac­tion and momen­tum in the impact invest­ing move­ment over the last 12 months, at this time of year, I can’t help but be drawn to a base­ball anal­ogy. From my per­spec­tive, the impact invest­ing move­ment has until recently been in spring train­ing. As we look at how the move­ment has advanced par­tic­u­larly in the past 12 months, I do know that the reg­u­lar sea­son is now well under­way – and while we may still be play­ing the early innings, a game is now in progress, and it has been a remark­able year of early home runs.

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All-​​Star Line­ups Are Forming

A grow­ing num­ber of widely respected pri­vate investors have made impor­tant bets on social enter­prises in the past year. Bill Gates, Evan Williams, Reid Hoff­man and oth­ers invested in the lat­est round for Change​.org. Gates, Desh Desh­pande, Jim Sorensen and oth­ers invested in the India-​​focused Uni­tus Seed Fund. Marc Andreessen, who once said he would “run scream­ing” from a B Corp, invested in Alt School, which is, you guessed it, a B Corp.

They join pio­neers like Vinod Khosla, who has been invest­ing in impact com­pa­nies for a num­ber of years and Nancy Pfund, founder of ven­ture cap­i­tal fund DBL Investors, who saw early suc­cess in two of her “dou­ble bot­tom line” investments—SolarCity and Tesla Motors— both of whom went pub­lic. Her port­fo­lio also incudes com­pa­nies like Rev­o­lu­tion Foods, Eco­logic and FivePrime. While DBL only invests in com­pa­nies with the poten­tial to gen­er­ate prof­its, investees must also iden­tify their social goals and report on progress twice a year.

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