Venture Investments in Social Enterprises

Venture Investments in Social Enterprises: Balancing Social and Financial Returns was a panel session featuring speakers from several funds. The funds all occupied a different space on the financial returns/ social impact matrix. One of the speakers represented a Private Equity/ Venture Capital firm (DBL) that aimed to get a high financial return while making some social impact. The speaker argued that all companies have an impact on the world around them and that his funds leverage the assets of the companies in their portfolio to create an even greater impact. He used online music service Pandora as an example. Pandora insisted on keeping its headquarters in Oakland rather than moving to another city. As Pandora grew, they continued to give back to the city and helped to revitalize the area. The company makes it a point to source as much as they can locally. Pandora has also arranged for music to be taught at inner-city schools in the Oakland area. These schools would otherwise not have had the budget to provide music classes for their kids.

The two other funds (Calvert foundation, Nonprofit Finance fund) aimed for high social impact while settling for below-market financial returns. These funds see providing capital to companies that do not have access to commercial capital as their main purpose. By doing this, they hope to set a precedent, thereby creating new markets. The capital they provide is patient capital, but the goal is to eventually put a company in a position where it can get access to commercial loans. When asked about career opportunities for MBAs in this industry the panel noted that their are career opportunities on both the finance/investment side as well as on the operational side. Especially the impact-first funds do a lot of hand-holding with their clients to make sure they have sound financial, management, and governance practices. As a result, these funds tend to have fairly large departments that offer advisory services.

Finally, there seems to be a trend of seasoned professional investors moving into the impact investing space. As a result the (perceived) risk of impact investments has decreased.

Matthijs Reinders, Sustainable Business Practices, Class of 2012

 

This post is part of a series from the UO Net Impact student group that traveled to Baltimore for the 2012 Net Impact Conference. The UO Net Impact Blog can be found at http://www.uonetimpact.org/

Written by Andrew White

Andrew is an MBA Candidate in the Center for Sustainable Business Practices. A native of Massachusetts, he came to UO to refine his business skills and build his expertise in the sustainability arena. His primary interest is in helping organizations implement environmentally and socially sustainable strategies for long-term success, and he is a regular participant on many of the MBA intramural sports teams.