Myth-Busting, Impact Investing Style

A few years ago, I was invited to join a conference in Atlanta hosted by the guys at Watershed Capital. Watershed, an impact-geared investment, and merchant bank, is doing some fantastic work in “field building” and capital flow accelerating through their well-regarded Five Fund Forums. If you don’t know these guys, take a minute to get acquainted, as they are becoming a quiet force in sustainable investing.

The Five Fund Forum is, basically, high-IQ speed dating for impact investors. Great for connecting entrepreneurs and fund managers with those with impact capital to deploy, but not a great format for the blocking and tackling that needs to be done to grow the discipline. This Atlanta conference was their first effort at pure education… preaching to the professionals rather than to the choir. As much as it was weird to be presenting to my peers in the investment world, the intent was bang-on target: to release capital flow into impact, advisors are going to have to be on board. If not entirely enthusiastic, they will at least need to understand the discipline and not reflexively, out of ignorance, reject their client’s desire to explore it. And since a big part of my commitment to impact investing is to help spread the knowledge base (I hate the word “evangelizing”, but it may actually be appropriate in this case), I accepted their invitation.

My role on the plenary panel was to be provocative, investment-oriented and skeptical. The Watershed team thought that this would engage the room full of investment professionals with a perspective, which, even if they couldn’t fully relate to it, might open their minds a bit to the idea of deploying capital with a triple-bottom-line armature. With this in mind, I decided to do a bit of myth-busting. But as I only had a few minutes, it was a limited list. I could have banged on for a long time on the subject. You can watch the video above or on Youtube.

A friend recently stumbled on the video, which had been posted to the Watershed website some time ago, and sent it to me. It was interesting to hear my thoughts echoed back to me across a slice of time. For, although the evolution of impact investing has force-fed a rapidly-changing stance on the discipline from nearly every perspective, the basics remain intact: investing is hard; there are innumerable ways to lose money; having a social agenda does not guarantee success: to be sustainable, one must be profitable; etc. These core concepts underlie the entire world of investing, and it is worth reminding ourselves that impact investing is, after all, a discipline derived from this world. It is still, underneath all the language of transformation, investing.

A side note: it would be an interesting exercise to self-video on a subject that is close to our hearts, to speak with passion about it, and then save the video for a future review. Even better would be to do a bit of futuristic navel-gazing and make some predictions. Then see how prescient we all are. My bet is that it would be a humbling exercise, but one that would be enormously useful for that very reason. We are still very much in “thesis validation” phase for much of impact investing. It will be fascinating to see how much of our thesis – that it is possible to invest for positive financial return as well as for intentional social and/or environmental value – will be proven over the coming decade(s).

And for a bit of YouTube fun riffing on this theme, check out this really, really cool video in which a 32-year-old guy has a “conversation” with himself as a 12-year old.