The Impact Angel Group has been doing a lot of thinking about this thing called “impact”. What is the impact that we want the group to have going forward? How narrowly defined and focused on impact do we want our investments to be? And what is our definition of impact? After a fair amount of research and deliberation, here are our revised thoughts. What do you think?
The Impact Angel Group is an angel investment group equally dedicated to making a difference and realizing a return. We make an impact by investing in high-growth, Colorado-based companies. We prefer companies with products and services that will make a significant social or environmental impact, but first and foremost, the companies must have the potential to make a venture return.
How do we make an impact?
We invest in early stage companies. We invest in entrepreneurs because we think that enabling people to make a living doing something they are incredibly passionate about is an important impact to make. We believe that investing in innovation and passion builds strong communities and empowers exceptional, motivated people to truly change the world.
We invest in Colorado. We like having a personal connection with our investments, and want to support our local economy and local ecosystem. We invest only in Colorado-based businesses and angel funds.
We invest for venture returns. Angel investments are extremely risky and we need to have the potential to see a significant return to outweigh our risk. Additionally:
- Thriving companies can create more impact.
- Proving it’s possible to make a difference and make money is a powerful motivator for change.
- If we invest well, we can reinvest our returns for more impact.
What kinds of companies do we consider?
Any company that is based in Colorado and has the potential to make a venture return can apply for funding from our group.
What is our definition of impact investing?
We use the GIIN (Global Impact Investing Network) definition: “Impact investing aims to solve social or environmental challenges while generating financial profit.”
And the World Economic Forum definition: “Impact investing is an investment approach that intentionally seeks to create both financial return and positive social or environmental impact that is actively measured.”
These definitions are very broad. Arguably, every company creating jobs is addressing a “social challenge” and in many ways, impact is in the eye of the beholder. However, it is the intentionality that separates impact investors. Therefore, we filter opportunities based on their ability to be financially successful and leave it up to our individual investors to determine whether companies are impactful enough to invest. Our role as an angel group is to assess the impact of the investment and share that information with our members so they can make informed decisions.
How do we assess the impact of our investments?
There are many ways that companies can make an impact beyond the products and services they provide. We use the B Impact Assessment Framework to assess the impact that companies have on their local community, environment, employees, suppliers and other stakeholders. We also ask prospective investments to complete a short questionnaire about their business model and local community impact. If we invest, we require our portfolio companies to complete the full B Impact Assessment five years after the investment is made.
How are we different from non-impact focused angel groups?
Our difference is defined by intention, information and understanding. We have a strong preference for companies that are going to make a significant social or environmental impact. We provide an impact analysis to help our members make informed decisions and we offer ongoing impact investing education. Additionally, by publicly stating that we care about more than the financial return of our investments, we hope to encourage more entrepreneurs and investors to be mindful of the impact they are making.