What is Impact Investing?
Is Impact Investing basically Philanthropy?
Impact Investing is the principle of incorporating social or environmental impact into your investment decisions.
It can be as an umbrella term for all investments that achieve this. This includes established public-market concepts such as Sustainable & Responsible Investing (SRI) or Environmental, Social & Governance (ESG) Investing, but at OurConservatory we are focusing on private investments into companies that actively drive positive change.
For a more fundamental look into the topic, I would recommend
this SSIR article by Paul Brest & Kelly Born, which provides one of the most elegant, informative and readable introductions I have come across so far.
Is Impact Investing too good to be true?
Admittedly, it can sometimes be a somewhat greedy option - to do well by doing good - and in practice, successful impact investing may only be applicable to a specific subset of companies and projects.
More crucially, impact investing may come with a very specific and idiosyncratic set of quantifiable and unquantifiable risks. This makes the decision-making much more complex and nuanced.
This is also why OurConservatory has made the discovery and support of advancing investments our mission, and our white glove brokerage model attempts to encapsulate the highly customised nature of these transactions.
How do I get into Impact Investing?
First - say email@example.com!
We believe that impact investing is a philosophy - the holistic approach of combining social / environmental impact into your investment decisions can be applied to all existing portfolios. For more discussion, you can look into
our blog, especially our discussion of Jed Emerson's Impact Investor Handbook.
Is my company/project investment ready?
Each case is unique - hence our customised approach - but you can start by asking yourself:
This list is not exhaustive, and nor do we believe you should have all the answers ready. But thinking about these would help build conviction and develop a longer term business strategy - both of which are crucial for your project, even if you do not seek investments.
We can also help you think through these - so definitely say
Does my project clearly express a mission to drive positive outcomes for society?
What is the end goal for this project? Could it be profitable at that point?
Does my project currently generate revenue? Or even profits?
What kind of "free" money (e.g. Social Enterprise Competitions, angel investors, your mum) do I have access to? How much work does it require to raise these "free" funds? How much would this sustain my project?
How would more money transform the scope of your project?
Are you ready to onboard a long-term partner? This is especially relevant for equity fundraising - consider it as marriage. You should never do it simply for the money!
What instruments can we consider?
At OurConservatory, we believe that debt and convertible debt instruments are most appropriate for our companies.
To align stakeholder interests, we also support pay-for-success and related structures; in the simplest form we believe that performance-dependent interest and principal repayments could be an effective tool to accommodate flexibility.
Which area is OurConservatory focusing on?
Thank you for your interest!
We are focusing on startups and social enterprises (socents) which sit at the cusp of philanthropy and investment.
These are often mission-driven founders with limited access or financial know-how, who may benefit the most from active advisory support, deliver the greatest impact from investment, and most likely to gain the ability to repay.
hello@ourconservatory to discuss in further detail!
What kind of return should I expect?
Here at OurConservatory, we argue that philanthropy and for-profit investments are two ends of the same risk-adjusted investment curve, which factors in:
When you make a charitable donation, in 100% of probability outcomes your projected financial return remains zero. How much money you are willing to allocate to this is thus purely dependent on how you value the positive impact that this charity creates.
When you buy a stock, you are assessing the projected return under different scenarios, then assigning a probability for that scenario happening. You do not factor in any positive or negative value for the impact that the company may cause to society or our environment. Your expected return is therefore dependent only on the combination of this probability and the projected return.
In impact investing, you are combining all 3. In the case of positive impact value, this serves to amplify the overall return you stand to receive for your investment. Theoretically, therefore, assuming the overall return you demand from mission-driven and mission-agnostic investments are the same, then an impact investment may generate a lower financial return, but still create equal intrinsic value to you.
Toniic's 2018 T100 report shows that, amongst their members who run 100% impact portfolios, over 70% of these portfolios manage to deliver at- or above- market rates.
Of course, perceived social value, how this enhances the attractiveness of the investment , and overall return targets are all highly subjective. This is another reason why OurConservatory adopts a high-touch, curated approach to ensure we maximise outcomes for both the investor and the investee.
Projected financial return
Value of the social impact that the investment creates