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Venture Capital Funds all have a thesis about what makes them tick and why institutional and individual investors would join them as Limited Partners.  Social and Environmental Impact Funds often struggle to articulate their social or environmental impact thesis because of a variety of conflicts within the impact investing space – not the least of which is the false dichotomy of “purpose over profit”   while others struggle with being hyper-focused on one cause vs. taking a holistic approach.

Here is a chance to read an Impact Venture Capital Fund’s thesis that reconciles this dichotomy and offers a way for investors to make significant and measurable social and environmental impact while also achieving top quartile market rate returns.

The Fund is the Rockies Impact Fund, based out of Denver, Colorado.  The Fund is launching in 2020 with a mission to invest in the most innovative impact companies in the U.S. Led by an experienced management team with over a hundred investments, this new fund is pioneering a way to make the most impactful investments targeted at top quartile market rate returns.  Read on to learn how they do it.

Rockies Impact Fund Investment Thesis:

Our thesis is that we will achieve top quartile venture capital returns while focusing our investments innovative companies that are the drivers of human growth creating measurable impact in social and environmental sectors  such as healthcare and life sciences, education, food and employment security, and cleantech. 

The Rockies Impact Fund thesis unpacked.

Our thesis is comprised of five elements, each of which has deep thinking behind it based on our experience in the venture capital investing world, intensive work in social and environmental impact companies and our engagement in the world of impact investors and how they think about “impact”. 

We’re concerned about attitudes about “impact investing” and general confusion about what this means exactly.  We find little in common between early stage venture impact investing and public “ESG” (Environmental and Social Governance) companies.  The differences are far more substantial than just size and corporate structure. The “ESG” companies are rarely innovative in the way that startups are, and worse, their impact may actually be negative overall.  We’re skeptical of the greenwashing that companies like Exxon, ConocoPhillips, CocaCola, Nestle, Clorox and others use when they raise the ESG banner over their names. There is simply no way that the net impact of these companies is positive, despite their ability to comply with ESG metrics that somehow don’t take the massive negative environmental and social impacts these companies create into consideration.

The Rockies Impact Fund seeks to distance itself from these companies, and the disfunctional metrics that allow them to be considered “impact investments.  The Rockies Impact Fund is in search of high returns in truly innovative companies that are solving problems for the future of all of us, our children and our children’s children.

Please take a moment to consider the perspective of these five elements of the Rockies Impact Fund’s thesis to better understand where the leaders in impact investing are headed.

1. “Our thesis is that we will achieve top quartile venture capital returns”

Top quartile returns in the VC industry have ranged from 18% to 37% in annual growth over the past decade with an average across vintages of 25.59%.  The current investments in the Rockies Venture Family fall squarely within the upper quartile returns spectrum, based on year over year increase in Net Asset Value. Our experience has been that impact companies in our portfolio have actually slightly outperformed other sectors such as SaaS technologies, Artificial Intelligence and E-Commerce.  The surprising conclusion is that impact companies don’t need to have reduced expectations of growth or investor returns that many people in the impact world seem to expect. 

Our thesis is that if we’re investing in a company that creates positive measurable social or environmental outcomes, everyone involved should be working to grow this company as large as possible to create positive returns and exponential growth in impact and financial return upon acquisition.  The more these companies grow, the more good we create in the world. It’s that simple.

Many impact funds and investors believe that “zebras are better than unicorns” and focus on small business.  While there is a place for this, our belief is that it is not a place for venture capital. The concept of “concessionary” returns for impact companies which may seek to return only one to five times the investment is simply not necessary when companies that are creating true innovation and are driving human growth in so many ways, while also having the potential of returning 10X the investment or more.

Rockies Impact Fund has had a geographical secret weapon for creating better returns that other Funds may not have in their arsenal.  While the Fund may invest in the best companies anywhere in the U.S., its portfolio is weighted towards Colorado and the Rocky Mountain Region.  Companies here are valued at up to 30% less than similar companies in Silicon Valley or New York. Silicon Valley Bank has done research for us showing this discount is consistent over time, but that as companies move towards acquisition, their valuations converge with those of coastal firms, thus resulting in potentially higher returns for portfolio companies in our region.

The Fund also benefits its individual Limited Partners by primarily investing in QSBS stocks that qualify for Section 1202 tax free status for individual investors.  The Fund additionally passes through Colorado tax rebates of 25% on qualifying investments, also to individual Limited Partners who are Colorado taxpayers. These tax favored structures benefit individual L.P.s with increased cash on cash returns without detriment to institutional investors who may not qualify for these tax breaks.

To create top quartile returns, we have a portfolio strategy that includes diversification into approximately 25 portfolio companies.  We believe that smaller portfolios increase concentration risk to Limited Partners and defeat many of the reasons for investing in a managed fund.  We also believe that significantly larger portfolios suffer from a lack of the hands-on engagement with management teams and boards which has been shown to increase returns. The “spray and pray” method of investment does not foster best investment and portfolio practices and makes thorough due diligence and management difficult.

Our portfolio theory also holds that a significant portion of the Fund, ranging from 50-66%, should be held in reserve for follow-on investment.  Our first round investments typically include rights to participate in follow-on rounds. We believe that after investing and working closely with a portfolio company, we have better inside information than new investors, and we are in a better position to invest (or not) in subsequent rounds.  By continuing to invest in follow-on rounds, we reduce overall risk to the fund, by shifting a portion of the capital to increasing later stages of company development where many of the early stage risks have been mitigated. Additionally, this strategy allows for any of our portfolio companies to grow to the point that just one company can “return the fund”. 

2. “Focusing our investments on innovative companies”

The companies we invest in are truly innovative and are bringing new technologies, products and services to markets that don’t have the ability to develop innovation on their own.  We have a saying, “M&A is the new R&D”. Large corporations are no longer innovating as much as they did in the past, and they are using M&A to acquire innovation instead of developing it in house.  This simultaneously reduces risk for them, and creates opportunities for social and environmental impact companies that have created scalable impact solutions.

While R&D budgets have been on the decline, a combination of the 2017 corporate tax breaks, cheap access to plentiful capital, and large corporate cash reserves, have all led to an increase in acquisitions in recent years.

Impact investments in so called ESG companies in the public markets don’t provide the same level of impact innovation that early stage startups can, so Limited Partners in early stage impact funds can have a chance to support game-changing technological advancements rather than incrementalism of the incumbents.

As an example, one of our portfolio companies, PharmaJet, Inc. based out of Golden Colorado, is innovating in healthcare vaccine delivery in ways that create multiple positive social and economic benefits.  Their patented, innovative needle-free delivery system for both subcutaneous and intramuscular vaccines is game-changing in providing the following health care benefits:

  1. The needle-free system engages more members of the community who may have been needle-phobic, to get vaccinations, resulting in higher overall public health outcomes.
  2. The needle-free system eliminates needle-prick infections for healthcare practitioners, resulting in significant savings.
  3. The needle-free system results in elimination of needle re-use, especially in third-world countries where a single syringe may be used ten or more times, with resulting infection increase.
  4. The PharmaJet cartridges have zero waste vs. up to 35% vaccine waste in traditional needles and vials.  This makes a huge community impact for vaccines such as polio which are currently in a world wide shortage.
  5. The PharmaJet delivery methodology pierces the skin, and also the cells below the skin.  This makes delivery of new DNA based vaccines extraordinarily more effective because of the need for these vaccines to interact with the DNA within the cells.  Traditional delivery methods require much more of these expensive and difficult to manufacture vaccines to achieve the same results.

3. “Companies that are the drivers of human growth”

A unifying theme of the Rockies Impact Fund is that the companies we are investing in are all driving factors of Human Growth in one way or another.  Right now we are facing an unprecedented number of global challenges to human growth, despite exponential technological advances. 

We are investing in a portfolio of companies that look at human growth from many different angles rather than a hyper-focused impact theme.  We believe that a holistic approach is necessary to tackle the complex, multidisciplinary challenges that the world is facing.  

Human growth is a multi-disciplinary area that moves through Maslow’s Hierarchy from bottom to top including decent standards of living, housing, availability of healthy food and clean water, education, smart cities, reliable clean energy systems, equality of opportunity, and communities that foster freedom and dignity for their members.

The concept of human growth is one that has expanded significantly in the past decade.  Social OR Environmental concerns were previously articulated by many organizations. Today we need to think of Social AND Environmental concerns as it becomes clear that environmental change IS social change.  We are on the brink of seeing massive social change, migration, shifts in wealth, previously unseen environmental health impacts, and battles for limited resources – all caused by changes in environment. 

Human growth is the most important theme for all of us in the coming decades, amidst massive change and a comprehensive approach versus point solutions is the way we must be thinking about how to solve the complex problems the world is facing.

4. “Creating Measurable Impact.”

There’s no sense in creating impact if you can’t measure it.  

The Rockies Impact Fund has been a student of Impact Measurement over the years and has evolved from rejecting the one-size fits all “metrics” that really don’t measure much at all in a way that investors can usefully compare investments to generally adopting the  processes and standards as described in the Impact Measurement Project. www.impactmeasurementproject.com  The IMP provides general guidelines which ultimately lead to metrics that are targeted to the core impacts of the portfolio company rather than generic metrics, that even when modified to be sector specific, never seem to adequately measure what the company really does to create positive impact.

Our interest in impact investing is to invest in “Primary Impact” companies who create positive social or environmental impact through their primary business model.  These companies are doing good every day and by measuring their corporate output, we can also measure their social and environmental impact. Some measurement models focus on Secondary Impact which measures “how” the company operates vs. “what” the company does to create impact.  We support the measures that secondary impact metrics support such as supply chain transparency, recycling and energy use, fair pay, and more, but these are good guidelines for all businesses vs. metrics that track true innovation. For example, we can calculate the positive social impact of PharmaJet based on some of the criteria listed above.  The more PharmaJet sells of their product, the more positive measurable good we can find. We happen to know that they recycle and have fair employment and supply chain practices, but we invest because they are creating massive improvements in healthcare delivery.

Measuring positive outcomes is a good idea for impact investing, and this includes having a clear framework for measurement of a company on a pre-investment basis to determine if it is sufficiently impactful to call it an impact investment.  We’ve found in our own portfolio, that impact comes in shades of gray and some companies are more impactful than others. Without a pre-investment impact criterion, an impact fund could consider every potential investment to be an “impact” investment.  We have seen this happen and have developed a point system to help us to determine how impactful our investments will be, and reserve only the most impactful for our fund.  

The Rockies Impact Fund measures three criteria to determine impact before investment.  1) Depth of impact – how much of an innovation is this company producing? Is it a 10% improvement, or is it game-changing?  2) Breadth of impact – how many people will be affected by this impact? Is it thousands, millions, or potentially a billion people?  3) Financial impact – will this company return 10X the investment or more on strictly financial terms?   

The Rockies Impact Fund requires a score of at least 19 out of 30 in order to meet all three of these criteria for impact before it makes an investment.  This scoring system helps us to calibrate impact compared to all of the investment opportunities available to us.

By going through this exercise we can create an “impact proforma” for each company we are considering adding to our portfolio.  Just like all venture capital funds need to analyze the company’s proforma to determine its investability, we can model the impact as well as the financial returns.  Using a Triple Bottom Line (Social, Environmental and Financial) analysis is a well understood concept, and by translating the triple bottom line principles into an impact proforma is not a common practice among impact investors.  The Rockies Impact Fund has studied the Impact Proforma concept in order to ensure alignment among investors and founders as well as to help it to prioritize the companies for its portfolio that provide both high Return on Impact as well as Return on Investment.

5. “In social and environmental sectors such as healthcare and life sciences, education, food and employment security, and cleantech.” 

The United Nations Sustainable Development Goals have become the lingua franca of the impact investing world.  We are in support of all seventeen of the goals and the Rockies Impact Fund can effectively address any of the goals via a direct or indirect investment thesis. 

While we believe that a holistic approach to impact is important, we also believe that nobody can be an expert in all things.  

The Rockies Impact Fund has a deal flow funnel larger than most Impact Funds.  We see about 1,500 deals per year and dig deep into about 250 of those in order to make about ten or twelve investments a year.  Having a large deal flow funnel allows us to be picky and to invest in the companies that we know the most about and that match our thesis.

The Rockies Impact Fund has a large set of hundreds of resources who help to source, diligence and manage our investments, yet like any organization, we have more strength in some areas over others.  Looking at our historical investment behavior, we have invested heavily in the life sciences and healthcare, education, agriculture and food tech, companies that provide access to capital, decentralized employment and employment security, cleantech, energy and water.  

The Rockies Impact Fund is perhaps one of the most exciting impact investment vehicles available for individual and institutional investors today. It is addressing an important gap that traditional public market focused ESG funds have missed – early stage innovation investments.  If most of our investments continue to go to these large ESG focused funds and ETFs, then true innovation in social and environmental issues will suffer.  

Capital in the impact world has become “gentrified” by moving upstream to bigger vehicles and publicly traded funds.  This “gentrification of capital” has left a significant gap in the most important sectors of impact – the early stage innovators who can take the risks to make a big impact in ways that the large public incumbents can’t.

If you would like to consider joining the Rockies Impact Fund as a Limited Partner in our mission to create True Impact, please contact us at:

info@rockiesimpactfund.com

Or

Peter Adams, Managing Partner, at (720)353-9350  peter@rockiesimpactfund.com

Or

Visit http://www.rockiesimpactfund.com

All impact investing can be divided into primary or secondary impact and impact investors should understand the difference.  We define “primary impact” as impact that is caused by the company carrying out its mission.  Whenever a primary impact company sells its goods or services, there is social and/or environmental good that comes from it. Secondary impact companies, on the other hand, are measured by their practices rather than their business product.

We make the distinction between primary and secondary impact by noting that primary impact is created by “what” the does as opposed to “how” they do it. For-profit companies that have positive environmental impact by creating carbon-free energy, for example, create impact by the very act of carrying out their business and reducing carbon emissions. The more that the company grows and carries out its mission, the more positive impact there is in the world. 

Many impact investors focus on secondary impact, or “how” the company carries out its mission, than the mission itself. Certified B Corporations (B Corps) are a good example of this.  The qualifications to be a B Corp focus primarily on metrics surrounding business operations such as diversity, pay disparity, green business practices, etc.  These are laudable goals and are accompanied by rigid sets of metrics to assure compliance. 

Socially Responsible Investing (SRI) became popular in the 1970s and was known more for what investors did NOT want to invest in. An example of this is the elimination of investment dollars by SRI funds into the tobacco, alcohol and other industries perceived as negative by SRI practitioners.  ESG, or Environmental and Social Governance strategies, are more sophisticated and believe that companies that intentionally measure and act with environmental and social outcomes will do well in the long run.  Many practitioners however have found ways to meet the standardized ESG metrics while not passing the “sniff test” of more discerning impact investors.  Examples include British Petroleum, Slumberger, Clorox, Coca Cola, Conoco Phillips, Nestle and XCEL Energy. Clearly, there’s something that could be improved with ESG metrics and the companies that can manipulate the data to fit them while potentially harming society and the environment.  This practice of using metrics and certifications to make carbon generating companies like British Petroleum and Conoco Phillips is called “greenwashing” and impact investors should keep their eyes out for true impact vs. greenwashed impact.  By distinguishing between primary and secondary impact, we eliminate much of the opportunity for greenwashing.

Measurement of primary impact,  tells us what the company does and how it impacts communities, economies and the environment.  Take, for example, PharmaJet.  This is a company that makes a needle free injection system for vaccines.  The PharmaJet injector is small, requires no batteries or electricity to run, can be operated with minimal training and can be used thousands of times before replacement is needed.  The PharmaJet capsules that hold the vaccine have no needles, so every time one is used, there is a diminished likelihood of needle pricks suffered by health care practitioners.  They also cannot be reused by drug abusers or reused by healthcare practitioners in undeveloped countries.  Other benefits include PharmaJet’s more efficient delivery which cuts the amount of Polio vaccine needed by up to 30% for each injection.  Given the world-wide shortage of Polio vaccine, the impact of being able to inoculate 30% more people with a given amount of vaccine is significant.  The time to administer a shot with PharmaJet’s system is almost half of that of using needles, so healthcare workers can provide twice as many vaccinations in a community in a given period of time.  Additionally, many people are needle-phobic and they fail to get regular vaccinations for influenza and other diseases, leading to global health vulnerabilities when significant populations are unvaccinated.  The pain free, needle free PharmaJet system eliminates the excuses for these people to avoid vaccinations and can have massive impacts in global health outcomes. 

These are all Primary impacts that come from using PharmaJet’s system.  The company is not B Corporation, SRI or ESG certified, but it does more good with each unit sold than BP does in a year.  If we are going to understand what we mean by impact, we will need to distinguish between Primary and Secondary Impact, because they are clearly very different metrics and will have very different impact outcomes.

To be clear, ESG, SRI and B Corporations have done good things to raise the bar for business practices in many companies but impact investors should understand the risks or relying too heavily on these metrics.  But a company can do both primary and secondary impact – Just because a company creates primary impact through carrying out its mission does not mean that it cannot also carry out secondary impact by following best practices for sustainable practices within its organization.

 By focusing on primary impact, impact investors could avoid the challenges of ESG metrics systems and the potential for greenwashing that they enable.  Investing in companies whose primary mission entails doing social and environmental good avoids the greenwashing and self-justification that dated metrics systems could allow. 

Rockies Impact Fund - Venture Capital Fund focusing on full market-rate returns on early stage Primary impact companies.

If you’re interested in learning more about impact investing in your portfolio, are an accredited investor, fund, foundation, family office or CSR investor, please contact us about becoming a Limited Partner in the Rockies Impact Fund.  The Rockies Impact Fund is a full market-rate return targeted Primary Impact Venture Capital fund that targets early stage private impact companies in the UN SDGs focusing on healthcare, education, agtech, economic development and sustainable cities.

Peter Adams is co-author of Venture Capital for Dummies and serves as the Executive Director of the Rockies Venture Club, the longest running angel investing group in the U.S. 

Peter serves as an Officer on the Board of the Angel Capital Association, the North American association of professional angel investing groups.

He also runs the Rockies Venture Fund, an early stage venture capital fund and Rockies Impact Fund, investing in social and environmentally oriented companies. 

Peter is also the founder of The Rockies Venture Institute, the Women’s Investor Network, and BizGirls.org, a non-profit CEO Development Program for young women.

When you think of entrepreneurship, innovation and startups – what words first come to mind? I bet it’s not “government,” but in Colorado, maybe it should be on the list. Read more

 

Impact Investing Metrics

Rockies Venture Club Impact Investing

Impact Investing is a term that has a wide range of interpretations. In order to have credibility, consistency and clear understanding about what constitutes success in impact investing it’s important to have a clear set of metrics to understand the social, environmental and economic impacts of impact investments.

Impact is Big Business

The impact investing industry is growing fast with over a trillion dollars of investment over the next decade according to JP Morgan research reported in Business Ethics magazine.   Funds that are investing for others find more and more reasons that they need to have clear metrics to demonstrate that they are carrying out the mission of the investors.   While each fund may develop their own metrics individually, there are huge benefits to utilizing an agreed upon set of metrics across the industry to allow for apples-to-apples comparisons among funds.

Using standardized metrics provides a framework in which larger and larger amounts of investment can be made by sophisticated funds.  The result of this is that impact investing funds can eclipse philanthropic efforts in improving health, education, environment and quality of life for underserved markets.  There will always be a place for philanthropy, but research has shown many for-profit organizations have been able to bring greater impact with greater long term sustainability than those non-profits that provide one-time support.

While individual impact investors don’t have concerns about accountability or credibility, they should also be using metrics to help them understand and evaluate the deals that they are considering and to be able to hone their investing strategies to balance financial and social/environmental outcomes.  Individuals will want to understand their investing goals, but will also want to be able to select impact investments that match and support their own values.

Global Impact Investing Ratings

In 2011 B Labs worked with over 200 impact investing funds to create GIIRS (pronounced “gears”), the Global Impact Investing Ratings System and its IRIS Registry for impact funds.  Since then, GIIRS has become the defacto standard for measuring social and environmental impact on investments that are clear and verifiable by third parties.  Impact companies that want to know how they’re doing can take a free impact assessment provided by B Labs that will let them know how they are doing and to test their future strategies against industry benchmarks.  The ability to compare each company’s results based on standardized measures opens up huge new opportunities for B Corporations and for funds alike.  Just as having standardized GAAP accounting guidelines makes investment analysis for public companies efficient, having the GIIRS standard opens the door for large scale investment in impact companies.

Rockies Venture Club Impact Investing

To learn more about B corporations and hear pitches from active impact companies, , consider attending the RVC Impact Investing event Tuesday, December 10th 5:00-7:30PM at the Colorado State University Denver Center Event Atrium 475 17th Street, Suite 200 Denver, CO. Click Here to Register

http://rockiesventureclub.wildapricot.org/Default.aspx?pageId=1349467&eventId=698729&EventViewMode=EventDetails

Impact Investing is not new and has been around since the 1960’s, if not before.  Since that time we’ve seen a lot of success stories coming from impact investments.  With these successes we’re also seeing significant amounts of dollars under management by impact investing funds with returns of 25% and up PLUS social and environmental impact.

Given the lack of early stage startup funding for impact companies, uncertainties with cleantech technologies, lack of governance in developing countries, lack of structured capital markets and exit opportunities in third world countries and the need to provide social and/or environmental impact, it’s a wonder that impact companies can return anything at all to investors.

In our research we’ve found many funds and foundations that have achieved financial success in making impact investments, but it’s sometimes difficult to find specific impact investments that have hit it big.  What is the next “Instagram” of Impact Investing?

Here is a story of a company that hit it big.  The good news is that they are not alone and that impact companies are doing well all the time.

dlight S300-Product-Thumbnaild.light (http://www.dlightdesign.com)  has created a product line of solar powered lanterns that bring light and power to third world communities where community electricity is not available.  D.light makes high quality, affordable solar lanterns that are distributed world-wide with over half a million units delivered each month, delivering light to over 20 million individuals and families.  The users pay less for solar lighting than traditional kerosene lanterns, plus  the lighting allows for greater productivity and income generation when people can work beyond daylight hours.  Students benefit from better study environments and homes are safer and healthier without kerosene fumes.  Finally, the reduction in carbon emissions is significant.  The statistics below show the social and environmental impacts of this company that is turning a good profit at the same time.

25,315,130 lives empowered

6,328,782 school-aged children reached with solar lighting

$767,644,065 saved in energy-related expenses

7,219,013,138 productive hours created for working and studying

1,794,878 tons of CO2 offset

30,807,967 kWh generated from renewable energy source

 

d.light has won numerous certifications and awards and is backed by an impressive collection of venture funds and foundations – all expecting to turn a profit on their investments.  D.light is a “B Corporation” which means that it is a for profit corporation, but that it must meet rigorous standards of social and environmental performance, accountability and transparency.

 

At Rockies Venture Club we hope to find companies like this each December at our Impact Investing Event and support local companies that are doing good all over the world.

To learn more about impact investing and to meet the founders of four great impact companies, consider attending the RVC Impact Investing event Tuesday, December 10th 5:00-7:30PM at the Colorado State University Denver Center Event Atrium 475 17th Street, Suite 200 Denver, CO. Click Here to Register

http://rockiesventureclub.wildapricot.org/Default.aspx?pageId=1349467&eventId=698729&EventViewMode=EventDetails

 

 

Impact-Investing1December is the month in which 25% of American philanthropic dollars are donated.

December is also a month in which investors are making investments, balancing

portfolios and taking profits and losses for tax purposes.

This is a time for investors to be asking themselves whether they can accomplish their

philanthropic and investing goals at the same time.

 

Impact investing has become increasingly popular not only for foundations and family

offices, but also now for individuals.

 

What is “Impact Investing?”

 

The term Impact Investing has been coined to describe investments that have social or

environmental impacts in addition to the economic impacts for the investor’s portfolio.

There has been much debate about what constitutes an Impact Investment though,

since even the most profit minded investment may help communities with job growth

and possible environmental benefits. Sophisticated impact investors typically use

metrics to evaluate the potential social or environmental impacts, and individuals have

access to these as well, though individuals more often rely on a gut feeling to tell them

which investments they prefer.

 

Another debate in Impact Investing circles is how much, if any, reduced profit

expectations should the investor have when making impact investments. Corporate

investors and CSR (Corporate Social Responsibility) programs have developed

sophisticated guidelines for balancing the costs of social and environmental impact with

expected financial costs or returns. They use a “Triple Bottom Line” system to measure

social, environmental and economic impacts of their decisions. Individuals may use

their own guidelines that may apply to all impact investments they make or which may

be applied on a case by case basis. I have seen everything from “I’m just hoping to get

my money back some day” to those who show preference for impact investments, but

who also expect the same types of returns relative to risk that they would see on the

rest of their investment portfolio.

 

At Rockies Venture Club, we hold an impact investing event on the second Tuesday

of every December. We recruit expert speakers on the topic as well as four impact

companies seeking early stage investment. The criteria we use are very close to those

that we use every month when evaluating venture companies for investment. The

companies should have experienced and capable teams, a disruptive technology,

product or service, and a substantial market demand. The outcomes we’re looking for

include an “exit” for investors within about five years with a potential return of up to ten

times the original investment.

 

Rockies Venture Club also supports EFCO (the Entrepreneurs Foundation of Colorado)

Which helps start ups to donate one percent of their founders stock to community

organizations. In this way every company that achieves a successful exit can be an

impact company.

 

To learn more about impact investing and to meet the founders of four great impact

companies, consider attending the RVC Impact Investing event Tuesday, December 10th 5:00-7:30PM at the Colorado State University Denver Center Event Atrium 475 17th Street, Suite 200 Denver, CO. Click Here to Register

http://rockiesventureclub.wildapricot.org/Default.aspx?pageId=1349467&eventId=698729&EventViewMode=EventDetails

 

imact investing returnsOne of the main questions we get regarding impact investing is whether impact investing should be considered to be philanthropy with little or no returns or whether impact investing can be expected to have the same kind of returns that other investment opportunities on the market can offer. We like to think that with a good amount of deal-flow, we can provide a number of impact companies that are also great investments. Research from the Global Impact Investing Netowrk and J.P. Morgan corroborate this, with fully 65% of investors expecting market rate returns.
It’s interesting to note that 36% of those who indicated that their impact investments should return market rates also said that they would consider impact investments at below market rates. I think this is the general opinion of most Rockies Venture Club investors. They’re looking for market rate returns, but for impact companies with a great mission and an ability to demonstrate significant social or environmental impact, they are willing to consider a slightly lower return.
This attitude reflects the “triple bottom line” analysis that corporate CSR departments have implemented in which economic returns may be balanced with social environmental returns when proper metrics are in place to ensure a balanced return to the organization.
An interesting aside to this flexibility in returns for impact companies is an article in the November 25th Wall Street Journal citing a higher degree of happiness among those who regularly donated to philanthropic organizations. We hope that RVC investors who invest in impact companies have a quadruple bottom line return with economic, social, environmental and happiness impacts!

To learn more about Impact Investing and to hear speakers and pitches from Colorado Impact Companies, consider attending the RVC Impact Investing event Tuesday, December 10th 5:00-7:30PM at the Colorado State University Denver Center Event Atrium 475 17th Street, Suite 200 Denver, CO. Click Here to Register

http://rockiesventureclub.wildapricot.org/Default.aspx?pageId=1349467&eventId=698729&EventViewMode=EventDetails

impact investing
When we talk about Impact Investing, we’re talking about investments that make an impact on our communities. There are many ways that this can happen, but the two most common categories are social and environmental impact. My intuitive guess was that environmental impact investing would comprise the greatest portion of investment, but what The Global Impact Investing Network (GIIN) and, J.P. Morgan found in their study “Perspectives on Progress: Impact Investor Survey” January, 2013, was that environmental and social impact investing were almost equal, with slightly more investing going to social impacts.
It’s interesting to note that these two areas have typically NOT been addressed by business interests and therefore must be dealt with by governmental or philanthropic organizations. (In fact Rockies Venture Club gets a lot of applications for “Impact Companies” who “create jobs” or further economic development through their capitalistic activities. While it’s great that these companies do impact their communities, we’re looking for the companies that do something materially different than the normal day-to-day companies out there.
Environmental impact companies are often “clean tech” or “green tech” in their approach. They’re addressing environmental needs in many ways such as wind and solar, energy storage and delivery systems, biofuels, alternative energy sources such as generating energy from waste dumps. These companies are now becoming successful at both returning a profit to investors as well as reducing our carbon footprint, reducing energy costs, and furthering energy independence. That’s a big impact that our big oil and gas companies have not been able to effectively deliver in the past – primarily because there was so much money to be made in traditional energy delivery. Environmental impact companies are making a difference by making alternative energy sources economical, often without government subsidies.
Social impact investments are often more difficult to quantify the returns, yet they account for fully 50% of impact investments according to GIIN, J.P. Morgan. Social impact investments that can provide a return often take the form of jobs programs, education with immediate returns in productivity, water and sanitation systems that create jobs and health benefits for communities, healthcare delivery in remote areas and more. Rockies Venture Club has seen tremendous creativity and energy spent in addressing global community needs by companies that are innovating and finding lower costs of delivery and sustainable income that returns profits to investors while benefitting communities.
To learn more about Impact Investing and to hear speakers and pitches from Colorado Impact Companies, consider attending the RVC Impact Investing event Tuesday, December 10th 5:00-7:30PM at the Colorado State University Denver Center Event Atrium 475 17th Street, Suite 200 Denver, CO. Click Here to Register

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