Welcome to a new era where Investing for Impact is driving the evolution of finance.
A brighter future hinges on our collective ability to efficiently allocate our limited resources in a way that yields the best possible blend of financial returns and social and environmental impacts.
Society is making great strides in this direction, but existing methods still lack the coherence and impartiality needed for greater success. By accelerating enhancements in how capital is allocated, we can catalyze a more promising, sustainable future for all.
In pursuit of this vision, over the past three years we embarked upon a journey of exploration, learning, and experimentation at the intersection of the worlds of impact and investment.
This experience has granted us invaluable insights into what distinguishes the most effective strategies from the rest.
We're excited to share with you the three principles we believe are essential for coherently investing for impact.
Be Scope Sensitive: Consider the magnitude of impact across all of its dimensions.
Account for Crowdedness and Scalability: Seek opportunities that are not overly saturated and that possess immense room for more capital.
Report Opportunity Costs: An opportunity's quality always depends on how it compares to the best alternative opportunities for impact and financial returns.
Each of these points is critical to assessing both impact and financial returns.
We encourage both existing and prospective 'investors for impact' to actively adopt these principles and we are seeking like-minded partners to apply them at scale.
Applying these principles can result in conclusions like:
Investing in a crowded Series A round of an amazingly impactful company may not have much of an impact at all.
Investing in a growing business that generates a healthy consumer surplus may be relatively impactful, even if it already has many investors.
The large variations on points 1 & 2 across opportunities makes careful analysis more important, not less, than in traditional finance and traditional philanthropy.
To facilitate the application of these principles, we have developed the concept of 'Impact Returns'. This powerful metric encompasses the above three principles and allows for a coherent comparison to traditional financial returns. This is key to leveraging existing knowledge and experiences from the financial world.
Impact Returns have important implications for everything from how you do qualitative investment screening to how you measure success. With them you can validly say things like:
“I’m expecting a 10% financial return on this investment plus a 10% impact return, for a total return of 20%, making it a better option than this alternative investment which only offers a 15% total return for the same risk.”
At heart, Impact Returns are a tool to uncover valuable insights and mitigate bias by generating a dialogue about different opportunities. They can be used to explain and to challenge any investment or strategy.
For those interested in the deep academic rigor behind this innovative approach, our comprehensive technical paper is available here.
We are actively seeking visionary partners who share our unwavering commitment to investing for impact and who have the ambition to collaboratively build a venture that propels the industry forward.
Join us in our mission to shape the future of investing for impact and make a lasting difference in the industry.
For inquiries and collaboration opportunities, please reach out to us at email@example.com.
Nancy de Ruiter