How To Scale Your Fund Through Impact Investing

Impact Investing

Over the past decade, the amount of money within impact investing has sored from $5 billion to $50 billion! Philantro investing has 10Xd itself!

But what is ‘Impact Investing’ or ‘Social Investing’??

“Impact investing aims to generate specific beneficial social or environmental effects in addition to financial gains. The point of impact investing is to use money and investment capital for positive social results.”

This new kind of investing has become a promising niche in the last decade, and can exponentially increase the probability of your fund and your chance of securing investors!

Recently I was speaking with Adam Campbell, the CFO a $50M dollar family office.

I was telling him that as fund managers, in order to raise capital, we want to not only pitch to family offices, but also to do it in a way that will be most effective. He reports that:

“A lot of times these high net individuals have already made a significant amount of money. They’re looking for more than an ROI. They’re looking to make an impact. They’re looking for legacy.”

Impact investing has a decent return, but not the best out there by any means.

However, it has become so popular because it fulfills the innate human desire to live a fuller life through helping others.

One example one of my mentors shared with me was a small-home syndicate fund. This is where the fund gave people that couldn’t afford a home a chance to own one by giving them a lower bank then the bank would.

These less-fortunate people would move into a entry-level homes and pay off the mortgage– a rent-to-own kind of deal. This would help the participants improve credit and eventually become a home owner!

These were all cases where the banks didn’t want to get involved, but ended up changing the lives of these individuals.

The return on this fund was only 6-7%, but they had NO PROBLEM raising money because the investors loved the idea of being able to give back!

Talk about social change.

Most people have a similar philosophy:

“I want to get rich so I can give back.”

You’ve seen the organic eggs at the grocery store? Consumers are willing to pay more because they feel like they are contributing to the greater good.

Ride the trend!

Find what organizations your fund can give back to. This will not only increase the likelihood of people investing with you, but also give your money and time more PURPOSE.

Here’s another example: Your fund could guarantee that “for every dollar we raise we’ll give 10 cents to build houses in Honduras to build orphanages”. The when you do build those orphanages, bring investors along!

Impact investing can establish better relationships between you as the fund manager and you investors!

Utilize your knowledge and skill set to benefit and change the world for whatever you care about!

Pro tip: Of course make sure your financial standing as a fund is in line, but having a social cause can help you give back while making money in the process!

Happy funding!

Bridger Pennington

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