Game Changers 2020 Essay Series: When Faced With Times Like These, Turn to Impact Investing

At present, in a time when truth and trans­paren­cy seem ever-elu­sive, when divi­sive­ness appears a way of life, and social and envi­ron­men­tal threats loom large, a bright spot has emerged. That bright spot – Impact Invest­ing – curates both finan­cial and social return, accepts no sac­ri­fice between the two, and even asserts that the com­bined focus is additive.

In our impact invest­ing work at DBL, we have been able to work with entre­pre­neurs who don’t just want to build badass com­pa­nies. They want to bid adieu to bad oper­a­tors, to out­dat­ed solu­tions, and ush­er in a new age of inno­va­tion and busi­ness built for 21st cen­tu­ry needs. These entre­pre­neurs are pio­neer­ing in many fields get­ting fos­sil fuels out of cars, get­ting junk food out of school lunch­es, get­ting the coal and gas out of elec­tric­i­ty, get­ting opaque prac­tices that cost too much out of farm­ing, focus­ing on reuse to get the waste out of appar­el and fine goods, to name just a few Impact investing’s reach extends even to space, where new and cheap­er satel­lite views of our plan­et can cre­ate new tools that point us toward bet­ter solutions.

As these impact com­pa­nies grow, they cre­ate jobs for a diverse array of work­ers and attract the admi­ra­tion of the new generation.

The jobs that arise from build­ing elec­tric cars, installing solar pan­els, or stream­lin­ing crop mar­ket­ing depend on recent tech­no­log­i­cal advances, but are not just for those that know how to code. This is an inte­gral part of impact invest­ing: to democ­ra­tize access to qual­i­ty jobs across geo­gra­phies, racial iden­ti­ties, and gen­der. The “it com­pa­nies” of the future will be the com­pa­nies that crush it finan­cial­ly while solv­ing prob­lems that mat­ter, and their work­forces will be more inclu­sive. At DBL for exam­ple, some 64 per­cent of our found­ing lead­er­ship teams of start­up entre­pre­neurs include women, com­pared to an aver­age of 2 per­cent, accord­ing to the lat­est Pitch­Book data.

Impact invest­ing has skep­tics on both sides – those who feel it’s not impact­ful enough and those who think the finan­cial returns aren’t strong enough.

And yet, it con­tin­ues to attract large amounts of cap­i­tal, cat­alyze new funds from both new and estab­lished firms, and bring in the best and bright­est tal­ent from busi­ness schools and more tra­di­tion­al com­pa­nies all over the world. Ear­ly returns from com­pa­nies like Tes­la, Rev­o­lu­tion Foods, and Farmer’s Busi­ness Net­work are encour­ag­ing on both the finan­cial return and impact fronts and are already cre­at­ing whole new sec­tors in which to invest.

It is def­i­nite­ly not your grandfather’s invest­ment port­fo­lio any­more, just as it is not your grandfather’s set of prob­lems that vex us.

Our most press­ing chal­lenges to solve, from cli­mate change to income inequal­i­ty to polar­iza­tion, are dis­tinct­ly mod­ern, in need of mod­ern approach­es. This is the pow­er of impact. Not a ton­ic for every­thing that ails us, but a tool whose time is now.

Octo­ber 25, 2019 — Sil­i­con Val­ley Lead­er­ship Group