I have written before about the importance of creating a social capital market in order to truly make social innovation possible. A social capital market provides the same depth and breadth of financial vehicles to social entrepreneurs (both nonprofit and for profit) that traditional businesses enjoy. This means that financial vehicles such as debt, growth capital, seed funding, equity deals and so on would be in ready supply to those organization’s whose business model includes a social impact component. The upcoming Social Capital Markets Conference (the second annual this September in San Francisco) is a step in the right direction by bringing philanthropists, social investors, social entrepreneurs and others together to talk about how we bring such a market to fruition.
But there are many other examples of entities that are already out there experimenting with new financial vehicles. Investor’s Circle is one of these. Investors’ Circle is a network of over 200 angel investors, professional venture capitalists, foundations, family offices and others who are using private capital to promote the transition to a sustainable economy. It is the largest and oldest network of early-stage investors dedicated to funding mission-driven companies. Since 1992, Investors’ Circle has facilitated the flow of over $130 million into 200 for-profit companies and small funds addressing social and environmental issues. Investors’ Circle members have been behind Zip Car, TerraCycle, United Villages, and Verdant Power among others.
Investor’s Circle is an exciting example of what a social capital market begins to look like. The capital investments that these investors make are different than traditional angel or VC investments. For these investors, the social impact is critical, so they are willing to be patient about the financial return in order to make sure that it comes with social return. As one of their investees, Jere Kolstad, CEO and President of Montana Renewables, has said:
IC Members are…investors who share our vision for more sustainable industry, and who express their commitment with patient, long-term investments. It’s about more than money for this group—they want you to succeed financially, but not at the cost of forfeiting your social and environmental values.
Investors’ Circle is currently doing a Call for Applicants for its Fall Conference and Venture Fair to be held November 15th – 17th, 2009 in Washington, DC. If you are an early or expansion-stage companies whose business addresses significant social or environmental issues and are in need of capital submit an application by July 31st. Companies that are selected to present to the investors receive:
- Pre-event coaching on your presentation from IC investors
- The opportunity to present to 150 angel and institutional investors interested in socially-responsible deals
- Extensive formal networking opportunities with investors
It’s a pretty great opportunity. And a great model for bringing more capital into the social innovation space. I’d love to see more groups like them, especially in the Southwest.