So, I’ve been spending a lot of time trying to understand and create my own definition of social impact, and I’ve come to an interesting conclusion. I think it’s a terrible idea to brand yourself as an investor or your investments as “social impact”. Here’s why:
- Industry focused investors won’t consider impact deals. Many, maybe even most investors have identified a narrow niche to focus on: software, clean tech, biotech, etc. As I learned the hard way when I was trying to garner interest for a software investment that had the potential for a significant financial AND social return, the minute I mentioned “social impact”, the software investors turned off. When the average angel sees 400 deals before investing, trigger words that suggest the investment is outside their scope will kill their interest.
- You may not be invited to the table. When you say you are interested in “social impact” investing, many view you as a philanthropist rather than an investor. If you are like me and want to see a financial return, it’s critical that other savvy investors consider you a “real” investor.
- Creating an impact investor silo is not a good idea. When I first started doing this, I thought it would be a good idea to create a community that exclusively focused on social impact investments. However, after seeing the amazing resources available to the broader angel community, I realized it made zero sense to do so. I now work closely with the tech angel community and the Rockies Venture Club, and the power of collaboration has been invaluable.
- Creating an impact entrepreneur silo is also not a good idea. Entrepreneurs should not only collaborate with those with similar values, but also with similar business models. The best example I’ve seen of this is the Surge accelerator. Their program is for software companies serving both the clean tech and fossil fuel market. Not only can these companies share business expertise, but the clean tech companies might even inspire their counterparts to be more sustainable. Brilliant.
What do you think? Is it a good idea to be branding investors and investments as “social impact”? Leave a comment.