- Positive impact AND positive returns? You betcha! Funds investing for social and environmental purposes CAN have positive impact AND positive returns.
- Financial-first or impact-first? It’s BOTH! We weight social and financial returns equally.
- You want me to measure impact? How do I do that? Measuring social impact is not only possible…it is essential for selecting and managing a portfolio of early-stage impact companies.
- Going, going…staying? Social ventures have higher staying power than their non-impact early-stage peers.
- Diversify, diversify, diversify. Like in traditional investing, portfolio diversification is key.
- Know thy co-investors! In impact investing it is important to understand the different due diligence and post-closing capabilities of co-investors.
- The three “R’s”: risk, return, and revenue. Pre-revenue companies take a lot more investor time and should be kept to a smaller percentage of the portfolio.
- “We’ve perfected the product. Now we just need $25 million.” High capital expenditure business models can be difficult to finance, so be selective.
- Aim high and make sure you have the gunpowder to fire the cannon. It’s important to have dry powder for the life of the fund to double-down on the emerging winners and have defensive capital when needed.
- You made the investment — now the work begins. True value-added time spent with portfolio companies leads to better follow-on investment decisions and higher positive impact and positive returns.
Read the full article on impact investing at ImpactAlpha
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