Whereas in prior crises foundations and funds may have rallied to support specific causes or to help affected communities, many private market investors have expanded their field of action to include impact investing in private early-stage innovative companies. Impact investing expanding the field of action. This time around, however, there is more at stake as investors feel the pressure to seek more tangible and meaningful impacts from their investments to realize our just and peaceful coexistence on this earth, and not just shift portfolios towards slightly less dystopian futures.
Early-stage investing is on a continuum of expected returns. For clarity, this article focuses on private impact companies ranging from seed to Series A and B rounds to steady growth companies that may be seeking an exit or transition to a new structure. Yet all seek benefits beyond mere financial returns and have defined a vision to address environmental or social aims. Goals can follow the Sustainable Development Goals (SDGs) framework or can be defined to create an impact in a specific community or around certain underdeveloped industry sectors.
Within an investment continuum of expected returns, social impact investing runs the gamut from below-market returns and exponential growth depending on the specific complex problem and the social, technical, and cultural change required to achieve the intended goal.