On February 5th Greentown Labs held the fourth event in its strategic partnerships speaker series. This time the focus was on impact or mission investing—investors seeking returns that are not solely financial. Peter Mitton, Director of Greenseed Angels and Principal Software Architect with Altaeros Energies moderated our panel of Boston investors. Panelists included:

Sarah Kearney
Founder and Executive Director, PRIME Coalition

David Miller
Executive Managing Director, Clean Energy Venture Group

Earl Jones
Member, Liberation Capital

Ed Walters
Partner, Tamerisc

Despite record-breaking snowfall, over fifty attendees came to participate in the conversation. The audience and moderator took turns asking questions. and the panel touched on the role of impact investing, impact investors’ metrics for success, and other related topics. Here are some of the highlights:

 

Q: What is the role of mission-oriented capital in the larger ecosystem?

Even within this subcategory of investors there is a variety of different investor types. Single family offices, fund managers, angel groups, and others are looking for different things. “The interests of these organizations are very diverse,” said Kearney. To understand how impact investors fit into the larger ecosystem you need to consider the specific values of individual impact investors and how you would fit into their portfolio.

Miller, from Clean Energy Venture Group, explained his perspective, saying, “We start with the mission, but we feel the best way to address climate change is to invest in corporations that scale.” By contrast, Jones and Walters both pointed out that when talking with families, if the story is strong enough, financial discretion can be tempered by an interest in the person or idea. Fundamentally, the question is figuring out what you are looking for in an investor and then finding the investor type that fits your needs.

 

Q: How is this different than traditional investing?

Interest, story, and personal connection can have a much larger impact in determining funding. Kearney commented that there are many gatekeepers, but talking with asset owners directly is often best. This personal connection can pay dividends by getting people excited about your organization.

 

Q: How do your various organizations measure success?

Everyone on the panel mentioned the importance of financial metrics. Additional metrics—number of lives saved, amount of CO2 conserved, or anything else—need to be quantified and backed up with data. Jones and Kearney both commented on the importance of going through this data in detail, especially if you are pitching as a mission-driven organization. Walters countered that while the mission is important, entrepreneurs that lead with mission lose credibility with investors because it sends the message that the entrepreneur doesn’t care about finances. A nuanced appreciation for balance is required.

 

Q: Are there company structures you can’t invest in?

Many investors prefer traditional C-corps. Miller commented that if an organization isn’t a C-corp, there will be questions about corporate structure. Jones, however, pointed out that L3Cs fill an intriguing niche for people looking to support organizations that “do good” and not just throw their money away to non-profits. Especially for family offices or high net-worth individuals, this might provide an opportunity to get funding based on mission.

 

Q: What are some final thoughts for thinking about mission investing?

 There is an immense opportunity for growth in this field over the next decade. People are becoming increasingly interested in putting their money to work not just to make more money, but also to support a cause. Walters commented that over the next 15 years there will be trillions of dollars transferred into the hands of a generation that cares about more than just making a return on investment—those dollars could have a transformative impact on fields like cleantech that are seeking new investment sources.

 The conversation helped frame the context for impact investing, the similarities and differences to other forms of investing, and the outlook of mission-investment moving forward. The chance to discuss and connect around these issues helps cleantech entrepreneurs understand their options as they seek to bring next-generation technologies to market.  

 Stay tuned for further panels and speaking events to continue the discussion!