The two women journalists looked at each other in stunned amazement, as they registered the news that they’d just found the half-million dollars they needed to take their business to the next level. We were networking over hors d’oeuvres and wine on the top floor of the St. Francis Hotel in San Francisco, at the opening reception of the Investors' Circle Spring conference, while the last strains of sunset played across the cityscape below.
Investors with a desire to make the world a better place meet social entrepreneurs with innovative, game-changing ideas at the semiannual Investors' Circle (IC) conferences. This year, 21 companies were selected from a pool of more than 330 applicants to deliver a seven-minute pitch and build relationships with potential investors. After a full day of pitches, the investors literally ‘circle up’ to evaluate the companies and prioritize them for further consideration and investment. Many well known, sustainability-focused companies, such as Niman Ranch, Zipcar and IceStone, have been funded by IC members.
The Investors' Circle is a diverse group, from angel investors to family investment offices, foundations and large funds such as Calvert and Trillium. With 225 members, the IC is “one of the oldest and largest angel networks in the country, and the only one dedicated to promoting sustainability,” according to their website. Since 1992, the IC has invested more than $130 million into 200 companies or small venture funds.
If you've ever wondered where your money goes when you invest in a socially responsible fund, this is how it works. Fund managers seek out promising new companies which pass their criteria of negative screens (e.g. no tobacco, alcohol, weapons) and positive screens (e.g. social or environmental mission), and find the ones that fit into their investment portfolio on the basis of mission, size and sector. While these criteria are necessary, they are not sufficient to win funding. Investors such as Terry Mollner, co-founder of the Calvert Social Investment Foundation, believe that “When you invest, you invest in people. You don’t invest in ideas.” Investors look for a combination of passion and experience in entrepreneurs and their teams, which together indicate they have the persuasiveness needed to build commitment and support for their ideas, and to inspire confidence that they have the skills and experience to succeed.
It was fascinating to watch the movers, shakers and dealmakers of the social venture world do their thing. My new friends, the women journalists, had endeared themselves to an angel investor who buzzed around the room, periodically returning to give updates on the deals that pieced together the $500,000 they needed while simultaneously dispensing advice about their business plan. He encouraged them to stay true their mission and even drop one of their proposed revenue streams because it could have been perceived as greenwashing and wouldn’t appeal to this group of investors. Watching this reinforced my overall impression of IC members as being deeply committed to the ideals of social entrepreneurship.
The following day-long conference included plenary sessions on the prospects for social enterprise and maintaining mission-alignment after exit, and breakout groups on such topics as the role of advocacy in social enterprise, emerging opportunities in water, embedding social metrics in corporate structures, how to cope with the economic downturn and “impact investing.”
One of the main takeaways was that sustainable and socially responsible investment (SRI) is large and growing. In a recent report titled ‘Investing for Social and Environmental Impact,’ the Monitor Institute estimated that social venture, or impact investing could grow to a market size of $500 billion over the next 5-10 years, representing 1 percent of global assets under investment in 2008. Jerome Engel, professor at UC Berkeley’s Haas School of Business, argued that there was no longer a conflict between strong return on investment and a social or environmental mission, and that SRI had finally left the fringe and entered the mainstream. While agreeing with Engel, Amit Bouri of the Monitor Institute also emphasized that impact investors tend to be more comfortable with “patient capital” because they value investing in a good cause over maximizing returns.
While there is often a strong anti-corporate sentiment within the environmental and social justice movement (and usually well-deserved), it was inspiring to see how the tools of business and finance are being used for the greater good. And especially against the backdrop of non-stop bad news on the economy, it was encouraging to see a crowd of people show up for this conference and put their money where their values are – in growing a bright green future for us all.
Lisa Chacón is an international sustainability and innovation consultant, currently based in the San Francisco Bay Area.
(Interested in reading more about social entrepreneurship? Check out last month's Reader Report from the Skoll World Forum)
Editor's Note: We encourage "Reader Reports" -- submissions from members of Worldchanging's global audience who volunteer to write up their notes from travels, conferences, workshops and other worldchanging happenings they participate in. If you'd like to contribute your own report, please email editor[at]worldchanging[dot]com.
Thankyou for your surprising information about the amount of money actually going into these environmentally green investments. It shows that consumer interest nationwide in green and sustainable resources is growing. With more money in the system, it is hopeful that more change will be seen. Not all Corporations are are evil, and I am glad that this article stated this. I am sure as more money goes into the investing of green products and services our country will grow closer to having both a more stable economy (due to a higher consumer confidence level) and greater resources to combating one of the major issues in our world today: Global climate change.
As more green companies receive more backing on the federal level, universities and sites of learning will become even more essential in the dispersion of valuable solutions such as sustainable business and ecological design. One such university, The Institute of Global Sustainability at the University of Vermont, (http://learn.uvm.edu/igs/ ) has many programs that teach citizens, students and social entrepreneurs how to maximize their potential in such a vital area of business management.