At a time when the world’s problems seem more intractable – in light of the California wildfires and Las Vegas shooting – there is hope that social capital will be leveraged to address the climate change, poverty, access to healthcare and improving education. It certainly is a rising trend, as recent data shows that the impact investing market in the U.S. has a floor of $114 billion, although the actual market size is much larger.
While a critical mass of impact investors gathered in San Francisco for Social Capital Markets (SoCap), the world’s leading conference on impact investing and social enterprise, the NVCA seized the opportunity to bring participants in the venture ecosystem active in this space together to discuss its opportunities and challenges. Not surprisingly, the event attracted more than 70 attendees from a wide spectrum on the investing scale: both new and established, large and small venture capital firms, limited partners, entrepreneurs and foundations.
As both a venture philanthropist at the Draper Richards Kaplan Foundation and a board member of NVCA, I was thrilled to moderate the panel and discussion at the event, which included leading players in this emerging market:
- Arjuna Costa of Omidyar Network, a family office founded and led by Pierre Omidyar, the founder of eBay, shared the journey from the Omidyar Family Foundation to the Omidyar Network, “from OFF to ON.”
- Ira Ehrenpreis of DBL Partners shared his conviction that there is no need to compromise financial returns for impact – that in fact a double bottom line is attainable.
- Brittany Hargest of Greenspring Associates announced the launch of an impact fund of funds, just one of a suite of products.
Because the definition of impact investing continues to evolve, I asked our panelists how their organizations define impact and specifically to share a few investments as examples. ON details their approach to investing across the return spectrum. Specifically, Arjuna focused on FinTech, where he described the need for a credit score in the developing world where FICO scores do not exist. By investing in Lenddo, Cignifi and EFL, ON hopes to address a market gap and unlock financial services for a new segment of consumers. Ira also shared recollections from the early days of backing Tesla as well as insights into how Telsa contributes to environmental gains, as well as providing jobs and equity to Tesla employees in Fremont. Britany explained that Greenspring defines impact broadly across five sectors: sustainability and agriculture technology, healthcare, educational technology, financial technology, and collaborative economy. Also, as a general partner making direct investments, in companies like Everfi, an edtech company that focused on teaching, assessing, badging and certifying students in critical skills.
The panelists also discussed the importance millennials place on socially responsible organizations, whether that’s from the perspective of wanting to work there or purchase/affiliate with its products or services. Brittany added context to this, citing statistics from a PwC report that found 59% of millennials said they would seek out employers whose CSR values that reflected their own and a Nielsen report that found almost 75% of millennials would be willing to pay for sustainable offerings.
Our conversation also highlighted the demand for more impact investing from both LPs and GPs, but especially from the LP side. Ira, who noted that his fund was oversubscribed, asserted the need for a higher supply of impact-driven entrepreneurs, calling on the need for more investors to commit to funds investing in this segment. In addition, Brittany referenced that Greenspring has identified approximately 300 active impact investors in a market map of an investable universe.
With impact investing becoming a vertical with more depth and breadth within the VC industry, NVCA is getting deeply involved in the impact space. NVCA organized last week’s event to facilitate the conversation around where impact investing is going and to get more people from across our industry involved in the discussion. It was wonderful to see NVCA attract such a well-informed group of attendees, including those from traditional VC firms that had a strong interest in impact investing.
I am excited to see the NVCA taking a leadership role in this vertical. Through my work on the NVCA Board of Directors, I look forward to rolling up my sleeves and working with the NVCA team to build out NVCA’s work with impact investors by convening them and showcasing their great work.