4 Strategies for Impact Investing With Confidence

Posted on by Morrison Shafroth

Impact investing has moved from fringe to mainstream, but individual investors still have many moving parts to consider.

Above: Jed Emerson: “SDG Heroes” is an original SDG Photography series by Ralph Reutimann 

If you’re committed to impact as well as wanting to protect your financial future, you can attain various levels of financial return together with the generation of social and environmental impacts. And, you can direct your resources toward not only providing for your future but for the future of your children and community. Here are four actions investors can take to help mobilize an impact investing strategy with confidence.

1. Fortune favors the prepared mind.

Good investing involves some level of luck — that the markets move up with you, that you select the right managers at the right time, and so on — but the fact is proper preparation can help increase the odds you’ve made the right decisions at the right times for the right reasons. Rather than attempting to “time the market” looking to take advantage of short-term ups and downs, stay focused on your long-term goals and plan for those goals through a sound strategy.

2. Impact investing is a lens — not an asset class

Simply put, impact investing is a lens through which one approaches the full spectrum of options and asset classes in the market and for one’s portfolio. Impact investing is not an asset class, and mistaking it for one does a disservice to the investor who may then be forced to compartmentalize the application of best practice. Instead, we should seek to let its practices and our pursuit of it flourish across the full spectrum of portfolio opportunities before us.

3. Impact investing is an evolving field — grow with it

This is the brave new world; be part of it along the way. Activated investors approaching impact across the full spectrum of their portfolio, demanding excellence and sustained value from the funds and companies they invest in, are well-positioned to benefit from and help in the creation of greater depth in the field of impact investing.

4. Don’t judge a book by its cover

As you explore the growing array of offerings, don’t get too wrapped up in whether or not something is called “impact.” What matters is not what someone says, but rather how an investment strategy is managed; what types of companies they invest in; the degree of intentionally and depth to their approach; and your ability to assess the kinds of extra-financial, social, and environmental value any given strategy advances. Remember: Some folks who claim positive impact don’t generate it, and some who have never heard the word are creating real sustainable value. Assess all those who claim to “do” impact investing, and you be the judge of what they do — not what they say.

4 Strategies for Impact Investing With Confidence

Posted on by Morrison Shafroth

Impact investing has moved from fringe to mainstream, but individual investors still have many moving parts to consider.

Above: Jed Emerson: “SDG Heroes” is an original SDG Photography series by Ralph Reutimann 

If you’re committed to impact as well as wanting to protect your financial future, you can attain various levels of financial return together with the generation of social and environmental impacts. And, you can direct your resources toward not only providing for your future but for the future of your children and community. Here are four actions investors can take to help mobilize an impact investing strategy with confidence.

1. Fortune favors the prepared mind.

Good investing involves some level of luck — that the markets move up with you, that you select the right managers at the right time, and so on — but the fact is proper preparation can help increase the odds you’ve made the right decisions at the right times for the right reasons. Rather than attempting to “time the market” looking to take advantage of short-term ups and downs, stay focused on your long-term goals and plan for those goals through a sound strategy.

2. Impact investing is a lens — not an asset class

Simply put, impact investing is a lens through which one approaches the full spectrum of options and asset classes in the market and for one’s portfolio. Impact investing is not an asset class, and mistaking it for one does a disservice to the investor who may then be forced to compartmentalize the application of best practice. Instead, we should seek to let its practices and our pursuit of it flourish across the full spectrum of portfolio opportunities before us.

3. Impact investing is an evolving field — grow with it

This is the brave new world; be part of it along the way. Activated investors approaching impact across the full spectrum of their portfolio, demanding excellence and sustained value from the funds and companies they invest in, are well-positioned to benefit from and help in the creation of greater depth in the field of impact investing.

4. Don’t judge a book by its cover

As you explore the growing array of offerings, don’t get too wrapped up in whether or not something is called “impact.” What matters is not what someone says, but rather how an investment strategy is managed; what types of companies they invest in; the degree of intentionally and depth to their approach; and your ability to assess the kinds of extra-financial, social, and environmental value any given strategy advances. Remember: Some folks who claim positive impact don’t generate it, and some who have never heard the word are creating real sustainable value. Assess all those who claim to “do” impact investing, and you be the judge of what they do — not what they say.

10 Impact Investing Strategies

Posted on by Morrison Shafroth

Impact investing has moved from the fringe toward the mainstream, but individual investors still have many moving parts and challenges to consider.

If you’re committed to impact as well as wanting to protect your financial future, you can attain various levels of financial return together with the generation of social and environmental impacts. And you can direct your resources toward not only providing for your own future, but the future of your children and community. Here are ten actions investors can take to help mobilize an impact investing strategy with confidence, from The ImpactAssets Handbook for Investors.

If you like this, subscribe here for more stories that Inspire The Future.

1. Fortune Favors the Prepared Mind

Good investing involves some level of luck—that the markets move up with you; that you select the right managers at the right time and so on—but the fact is good preparation can help you increase the odds you’ve made the right decisions at the right times for the right reasons. Rather than attempting to “time the market” looking to take advantage of short term ups and downs, remember to stay focused on your long term goals and plan for those goals through creating a sound strategy.

2. Impact Investing is Additive – Not Restrictive

Impact investing is about taking traditional, sober and conservative fundamental investing practice and augmenting it with considerations of social and environmental impact. At its best, it is taking what works about traditional investment practice and integrating it with considerations of “off balance sheet” risk and opportunity that may be identified by considering social and environmental factors that could effect your investment. And a good impact investing strategy may also include looking for opportunities to invest that optimize positive impacts for your community and our world.

3. Impact Investing is a Lens – Not an Asset Class

Impact investing is, simply put, a lens through which one approaches the full spectrum of options and asset classes in the market and for one’s portfolio. Therefore, impact investing is not an asset class; mistaking it for one does a disservice to the investor who may then be forced to compartmentalize the application of best practice. Rather, we should seek to let its practices and our pursuit of it flourish across the full spectrum of portfolio opportunities before us.

4. Define Your Process and Commit to Your Plan

Building upon investment practices of the mainstream, adhering to your plan while executing it in a flexible manner as you proceed, you will be able to responsibly manage your investment process and improve the possibilities of success.

5. Understand What Risk Means for You – Not the Investor Next to You!’

You may want to live on the edge or you may want to stick closer to the wall, but either way you alone must decide what is reasonable and what is the best approach for you. Listen to what other impact investors are talking about, understand how others are approaching their investment process—but never forget your goals, your level of risk and that your strategy is about what you want to do, not what others are promoting.

6. Impact Investing is an Evolving Field – Grow with It

This is the brave new world, be part of it along the way. Activated investors approaching impact across the full spectrum of their portfolio, demanding excellence and sustained value from the funds and companies they invest in, are well positioned to both benefit from and help in the creation of greater depth in the field of impact investing.

7. Start with What You Know And Learn – What You Need to Know

We have found that the ‘personal’ translates well as an onramp into impact investing. What do you care about? Why are you specifically motivated to approach impact investing? Is there a particular impact theme you have experienced or that has touched your life as an issue? Or is it a family member who is pushing you to engage in exploring it? Use the answers to those questions to help focus your approach.

8. If You Don’t Understand What The Investment Strategy Is – Don’t Invest!

Impact doesn’t trump a good business model, just as a good business idea is often less important than a good management team. If you can’t understand the fundamentals of why an investment is impactful, how it will make money and find its market, and which excellent people are going to be at the wheel… you shouldn’t invest!

9. Invest for Long Term Not Short Term Returns (both Financial and Impact)

Value is well correlated to patience and the pursuit of long term strategies. This applies to both impact and financial value creation for the investor and the world. Invest for the long term, but get going with a healthy dose of impatience in terms of putting the trains on the tracks of integrating impact as broadly as possible in your portfolio.

A dollar far off in the future is much less certain or more risky, with its buying power eroded by accumulating inflation. We should approach the time value of impact from a similar perspective. Positive impact is far more valuable now than later. The best fund managers and companies will increasingly deliver these to investors, if and as they understand them to be a “must have” requirement.

10. Don’t Judge a Book by Its Cover

As you explore the growing array of offerings before you, don’t get too wrapped up in whether or not something is called “impact.” What matters is not what someone says, but rather how an investment strategy is managed, what types of companies they actually invest in, the degree of intentionally and depth to their approach and your ability to assess the types of extra-financial, social and environmental value any given strategy advances. Remember: some folks who claim positive impact, don’t generate it and some who have never heard the word are actually creating real, sustainable value. Assess all those who claim to “do” impact investing and you be the judge of what they do—not what they say!

If you like this, subscribe here for more stories that Inspire The Future.

 

10 Impact Investing Strategies

Posted on by Morrison Shafroth

Impact investing has moved from the fringe toward the mainstream, but individual investors still have many moving parts and challenges to consider.

If you’re committed to impact as well as wanting to protect your financial future, you can attain various levels of financial return together with the generation of social and environmental impacts. And you can direct your resources toward not only providing for your own future, but the future of your children and community. Here are ten actions investors can take to help mobilize an impact investing strategy with confidence, from The ImpactAssets Handbook for Investors.

If you like this, subscribe here for more stories that Inspire The Future.

1. Fortune Favors the Prepared Mind

Good investing involves some level of luck—that the markets move up with you; that you select the right managers at the right time and so on—but the fact is good preparation can help you increase the odds you’ve made the right decisions at the right times for the right reasons. Rather than attempting to “time the market” looking to take advantage of short term ups and downs, remember to stay focused on your long term goals and plan for those goals through creating a sound strategy.

2. Impact Investing is Additive – Not Restrictive

Impact investing is about taking traditional, sober and conservative fundamental investing practice and augmenting it with considerations of social and environmental impact. At its best, it is taking what works about traditional investment practice and integrating it with considerations of “off balance sheet” risk and opportunity that may be identified by considering social and environmental factors that could effect your investment. And a good impact investing strategy may also include looking for opportunities to invest that optimize positive impacts for your community and our world.

3. Impact Investing is a Lens – Not an Asset Class

Impact investing is, simply put, a lens through which one approaches the full spectrum of options and asset classes in the market and for one’s portfolio. Therefore, impact investing is not an asset class; mistaking it for one does a disservice to the investor who may then be forced to compartmentalize the application of best practice. Rather, we should seek to let its practices and our pursuit of it flourish across the full spectrum of portfolio opportunities before us.

4. Define Your Process and Commit to Your Plan

Building upon investment practices of the mainstream, adhering to your plan while executing it in a flexible manner as you proceed, you will be able to responsibly manage your investment process and improve the possibilities of success.

5. Understand What Risk Means for You – Not the Investor Next to You!’

You may want to live on the edge or you may want to stick closer to the wall, but either way you alone must decide what is reasonable and what is the best approach for you. Listen to what other impact investors are talking about, understand how others are approaching their investment process—but never forget your goals, your level of risk and that your strategy is about what you want to do, not what others are promoting.

6. Impact Investing is an Evolving Field – Grow with It

This is the brave new world, be part of it along the way. Activated investors approaching impact across the full spectrum of their portfolio, demanding excellence and sustained value from the funds and companies they invest in, are well positioned to both benefit from and help in the creation of greater depth in the field of impact investing.

7. Start with What You Know And Learn – What You Need to Know

We have found that the ‘personal’ translates well as an onramp into impact investing. What do you care about? Why are you specifically motivated to approach impact investing? Is there a particular impact theme you have experienced or that has touched your life as an issue? Or is it a family member who is pushing you to engage in exploring it? Use the answers to those questions to help focus your approach.

8. If You Don’t Understand What The Investment Strategy Is – Don’t Invest!

Impact doesn’t trump a good business model, just as a good business idea is often less important than a good management team. If you can’t understand the fundamentals of why an investment is impactful, how it will make money and find its market, and which excellent people are going to be at the wheel… you shouldn’t invest!

9. Invest for Long Term Not Short Term Returns (both Financial and Impact)

Value is well correlated to patience and the pursuit of long term strategies. This applies to both impact and financial value creation for the investor and the world. Invest for the long term, but get going with a healthy dose of impatience in terms of putting the trains on the tracks of integrating impact as broadly as possible in your portfolio.

A dollar far off in the future is much less certain or more risky, with its buying power eroded by accumulating inflation. We should approach the time value of impact from a similar perspective. Positive impact is far more valuable now than later. The best fund managers and companies will increasingly deliver these to investors, if and as they understand them to be a “must have” requirement.

10. Don’t Judge a Book by Its Cover

As you explore the growing array of offerings before you, don’t get too wrapped up in whether or not something is called “impact.” What matters is not what someone says, but rather how an investment strategy is managed, what types of companies they actually invest in, the degree of intentionally and depth to their approach and your ability to assess the types of extra-financial, social and environmental value any given strategy advances. Remember: some folks who claim positive impact, don’t generate it and some who have never heard the word are actually creating real, sustainable value. Assess all those who claim to “do” impact investing and you be the judge of what they do—not what they say!

If you like this, subscribe here for more stories that Inspire The Future.

 

Millennial Perspective: A Generation of Investors Demanding Profit with Purpose

Posted on by Morrison Shafroth

With every generation, attitudes shift and trends emerge that define an era. As the Millennial generation comes into adulthood, countless researchers and journalists are expounding on the behaviors and attitudes of this “Next Generation.”

Though opinions differ, there is a growing consensus that global events and rapidly changing technology have combined to create a perspective among Millennials that is unlike that of their parents or grandparents.

Nowhere is this more evident than in financial markets, where the Millennial perspective is already influencing how assets are put to work. Millennials are demanding more integration of their money and values by seeking personal fulfillment in their careers, applying a global consciousness to their purchases and investing in sustainable, impactful business models.

They may be the first generation to recognize that ‘all investing is impact investing.’

“NextGens are saying we need to look at opportunities; investing rather than divesting,” said Philippe Cousteau, President and Co-Founder of EarthEcho International. “This is a positive opportunity. It is an empowered mind set.”

 “NextGen,” “Generation Y,” or “Millennial,” refers to the approximately 80 million U.S. individuals born between 1980 and 2000. Millennials are the largest generation in American history, with approximately 20 million more people than the Baby Boomer generation.

The oldest in the generation are now entering their 30s, and experienced their formative years around the turn of the millennium. While other generations were forced to adapt, Millennials have always known rapid globalization and technological innovation. Millennials are the first generation therefore to be “truly global,” sharing experiences across cultures and geography, connected by technology more than any generation before them.

Critical Factors Shaping the NextGen Perspective

Consider the major events that occurred in their relatively short lives; Millennials have experienced major boom and bust periods, including the prosperity of the nineties dot-com frenzy and the financial markets’ collapse in 2008.

On the other hand, they’re the children of the Baby Boomers. By many accounts, they’ve been insulated from the world, coddled, celebrated and awarded trophies simply for participating. At the same time, technological advances and the proliferation of mobile and social media have provided them with unprecedented access to information and networks.

It all adds up to a generation that is confidently self-directed, but seeks out expertise from a variety of sources. For those interested in understanding this new perspective, it is important to peel back the layers of the NextGen worldview and the circumstances that influence them. Here’s why.

Wealth Transfer to the Millennial Generation

A tremendous shift of financial and generational influence is on the horizon. It is estimated that over the next several decades, $30 trillion in financial and non-financial assets will pass from Baby Boomers to their heirs (including Millennials) in North America alone.

They’ll look to put those assets to good use, with the emphasis on good. Articles and white papers have noted that Millennials consider social responsibility to be a major factor in evaluating investments, far more than previous generations, and have a keen interest in impact investing.

“I’m not willing to invest my financial resources in ways that create problems for us to solve down the road,” said Millennial investor Courtney Hull. “It just doesn’t make sense.”

In a phrase, while many of those in the Great Generation sought to work during the week and be a part of community on the weekends, and the Boomer Generation sought personal fulfillment and social change, many of those in the Next Generation seek profit with purpose.

These unique attitudes and investment preferences of Millennials are not a fad, nor are they indicative of an immature approach to investing; they are the logical and engrained response to the global environment in which they came of age. In a world where financial markets have been opaque and unstable, skepticism and caution are survival tactics.

And while they seek financial security, MIllennials want it to happen through sustainable investments they hope will help solve some of the world’s toughest challenges.

“How we manage our money has to reflect our values and vision for a better world,” said Blue Haven Initiative Founders Ian Simmons and Liesel Pritzker Simmons. “As a young couple, this is part of our family’s future legacy—to set an example that wealth is a privilege to be managed for more than personal gain.”

With uncertainty and isolationism feeding fears in the U.S. and globally, fresh views to solve problems are needed more than ever. Fortunately, many Millennials are already bringing creative and impactful solutions through work and play. As they earn and inherit wealth, demand for socially responsible and impact investing will continue its rapid growth among this next generation that realizes that social, environmental and financial outcomes are inextricably linked in an increasingly globalized world.

 

Millennial Perspective: A Generation of Investors Demanding Profit with Purpose

Posted on by Morrison Shafroth

With every generation, attitudes shift and trends emerge that define an era. As the Millennial generation comes into adulthood, countless researchers and journalists are expounding on the behaviors and attitudes of this “Next Generation.”

Though opinions differ, there is a growing consensus that global events and rapidly changing technology have combined to create a perspective among Millennials that is unlike that of their parents or grandparents.

Nowhere is this more evident than in financial markets, where the Millennial perspective is already influencing how assets are put to work. Millennials are demanding more integration of their money and values by seeking personal fulfillment in their careers, applying a global consciousness to their purchases and investing in sustainable, impactful business models.

They may be the first generation to recognize that ‘all investing is impact investing.’

“NextGens are saying we need to look at opportunities; investing rather than divesting,” said Philippe Cousteau, President and Co-Founder of EarthEcho International. “This is a positive opportunity. It is an empowered mind set.”

 “NextGen,” “Generation Y,” or “Millennial,” refers to the approximately 80 million U.S. individuals born between 1980 and 2000. Millennials are the largest generation in American history, with approximately 20 million more people than the Baby Boomer generation.

The oldest in the generation are now entering their 30s, and experienced their formative years around the turn of the millennium. While other generations were forced to adapt, Millennials have always known rapid globalization and technological innovation. Millennials are the first generation therefore to be “truly global,” sharing experiences across cultures and geography, connected by technology more than any generation before them.

Critical Factors Shaping the NextGen Perspective

Consider the major events that occurred in their relatively short lives; Millennials have experienced major boom and bust periods, including the prosperity of the nineties dot-com frenzy and the financial markets’ collapse in 2008.

On the other hand, they’re the children of the Baby Boomers. By many accounts, they’ve been insulated from the world, coddled, celebrated and awarded trophies simply for participating. At the same time, technological advances and the proliferation of mobile and social media have provided them with unprecedented access to information and networks.

It all adds up to a generation that is confidently self-directed, but seeks out expertise from a variety of sources. For those interested in understanding this new perspective, it is important to peel back the layers of the NextGen worldview and the circumstances that influence them. Here’s why.

Wealth Transfer to the Millennial Generation

A tremendous shift of financial and generational influence is on the horizon. It is estimated that over the next several decades, $30 trillion in financial and non-financial assets will pass from Baby Boomers to their heirs (including Millennials) in North America alone.

They’ll look to put those assets to good use, with the emphasis on good. Articles and white papers have noted that Millennials consider social responsibility to be a major factor in evaluating investments, far more than previous generations, and have a keen interest in impact investing.

“I’m not willing to invest my financial resources in ways that create problems for us to solve down the road,” said Millennial investor Courtney Hull. “It just doesn’t make sense.”

In a phrase, while many of those in the Great Generation sought to work during the week and be a part of community on the weekends, and the Boomer Generation sought personal fulfillment and social change, many of those in the Next Generation seek profit with purpose.

These unique attitudes and investment preferences of Millennials are not a fad, nor are they indicative of an immature approach to investing; they are the logical and engrained response to the global environment in which they came of age. In a world where financial markets have been opaque and unstable, skepticism and caution are survival tactics.

And while they seek financial security, MIllennials want it to happen through sustainable investments they hope will help solve some of the world’s toughest challenges.

“How we manage our money has to reflect our values and vision for a better world,” said Blue Haven Initiative Founders Ian Simmons and Liesel Pritzker Simmons. “As a young couple, this is part of our family’s future legacy—to set an example that wealth is a privilege to be managed for more than personal gain.”

With uncertainty and isolationism feeding fears in the U.S. and globally, fresh views to solve problems are needed more than ever. Fortunately, many Millennials are already bringing creative and impactful solutions through work and play. As they earn and inherit wealth, demand for socially responsible and impact investing will continue its rapid growth among this next generation that realizes that social, environmental and financial outcomes are inextricably linked in an increasingly globalized world.

 

Mindful Investors Founder: My Journey to Becoming an Impact Investor

Posted on by Morrison Shafroth

 

An interview with Stuart Rudick, founder of Mindfull Investors.

While Stuart Rudick (pictured below) has been an impact investor for about 25 years, the term “impact investing” was only coined less than a decade ago. The practice of investing for social and environmental return, as well as financial return, has evolved through various iterations, and Rudick has been one if its pioneering leaders.  

The interview below offers an overview of how one investor (Rudick) evolved from a traditional, finance-only focus to an impact investor focused on social entrepreneurs that provide health-focused solutions to pressing issues.

 

How did you begin engaging in impact investing? What were the first steps you took?

In 1980, I moved to San Francisco and was hired by a local brokerage company which provided me the flexibility to focus my investments in areas of my personal interest and passion.

While a partner at Bear Stearns in the mid-1980s, I funded private companies focused on building businesses with positive social impact. Examples are the first environmental magazine (Buzzworm), agriculture technologies that reduce water and pesticide use (Esselborn Farms) and the first venture fund focused on investing in environmental technology solutions (Global Environment Fund).

Can you describe the types of impact investing in which you’ve engaged?

Over the past decade, I’ve focused on healthy living companies with a sustainable focus. I am grateful to have an investment in Seventh Generation, the true pioneer of sustainability and positive impact personal-care and cleaning products. I am also very excited about my investment in Organic Girl, the fastest growing organic salad and produce brand in the United States  Some of the newer companies we  are invested in include Juicero, Atheer, The Next Thing Co, FloWater, Soma, Urban Remedy and Interaxon/ Muse. 

What are some of the things that you wish you had known when you first began?

The key to a successful business and successful investing is the management team that’s leading a company. The main reason companies fail in achieving their vision and potential is due to the failings of senior management.

What differences do you see between a traditional investment process and an impact investment process?

Ultimately, you’re investing in the founders and their team, whether it’s a conventional or a social impact investment. This is the determinant of success. The due diligence process, understanding the competitive landscape, and getting to know management is fundamental to making any investment. Evaluating an impact investment also requires taking into consideration how any socially rewarding efforts may impact an investor’s internal rate of return.

How do you respond to the concerns of those who feel approaches to social impact investing are too risky or unproven?

Risk is commensurate with reward, whether it is in social impact or a traditional investing arena. As an early, pioneer investor, I have developed an expertise and generated above-market returns over the past three decades. I exercise discipline by investing solely in industries and companies in which I have personal passion and expertise.

Have you had to accept below-market rate financial returns as you’ve pursued impact?

To the contrary, I believe companies that are based on sustainability and positive impact have the opportunity to generate a premium value and return on their products and business. In recent years, we have seen brands founded on positive social impact realize premium valuations when they are acquired or experience liquidity events.

What do you feel is the key development still to come in order for impact investing to reach its potential?

The key issue for impact investing is attracting additional capital. Capital is needed to fund growth opportunities that will demonstrate investment success and continue to attract new investment capital. 

If you could give an investor who is new to the impact investing field three points of advice, what would they be?

Invest in the management team. Invest in the management team. Invest in the management team. And I would have two other key recommendations:

  • Take an active, ongoing role in the investment as a board member or advisor to the company.
  • Diversify your investment in a portfolio of companies and consider investing in a professional social impact fund.

What are some of the more promising areas for impact investing that you see developing in the future?

New enabling technologies that focus on innovations for health, the environment and a sustainable lifestyle are my primary focus right now, as this aligns with my values and interests.  I’m looking at an investment pipeline of bold new startups that are creating solutions that will make our world a better place.

Stuart Rudick is the founder and general partner of Mindfull Investors, L.P., a hybrid public and private market hedge fund. Jed Emerson is Chief Impact Strategist for ImpactAssets, and senior advisor to two families executing “total portfolio” impact investment strategies.

Mindful Investors Founder: My Journey to Becoming an Impact Investor

Posted on by Morrison Shafroth

 

An interview with Stuart Rudick, founder of Mindfull Investors.

While Stuart Rudick (pictured below) has been an impact investor for about 25 years, the term “impact investing” was only coined less than a decade ago. The practice of investing for social and environmental return, as well as financial return, has evolved through various iterations, and Rudick has been one if its pioneering leaders.  

The interview below offers an overview of how one investor (Rudick) evolved from a traditional, finance-only focus to an impact investor focused on social entrepreneurs that provide health-focused solutions to pressing issues.

 

How did you begin engaging in impact investing? What were the first steps you took?

In 1980, I moved to San Francisco and was hired by a local brokerage company which provided me the flexibility to focus my investments in areas of my personal interest and passion.

While a partner at Bear Stearns in the mid-1980s, I funded private companies focused on building businesses with positive social impact. Examples are the first environmental magazine (Buzzworm), agriculture technologies that reduce water and pesticide use (Esselborn Farms) and the first venture fund focused on investing in environmental technology solutions (Global Environment Fund).

Can you describe the types of impact investing in which you’ve engaged?

Over the past decade, I’ve focused on healthy living companies with a sustainable focus. I am grateful to have an investment in Seventh Generation, the true pioneer of sustainability and positive impact personal-care and cleaning products. I am also very excited about my investment in Organic Girl, the fastest growing organic salad and produce brand in the United States  Some of the newer companies we  are invested in include Juicero, Atheer, The Next Thing Co, FloWater, Soma, Urban Remedy and Interaxon/ Muse. 

What are some of the things that you wish you had known when you first began?

The key to a successful business and successful investing is the management team that’s leading a company. The main reason companies fail in achieving their vision and potential is due to the failings of senior management.

What differences do you see between a traditional investment process and an impact investment process?

Ultimately, you’re investing in the founders and their team, whether it’s a conventional or a social impact investment. This is the determinant of success. The due diligence process, understanding the competitive landscape, and getting to know management is fundamental to making any investment. Evaluating an impact investment also requires taking into consideration how any socially rewarding efforts may impact an investor’s internal rate of return.

How do you respond to the concerns of those who feel approaches to social impact investing are too risky or unproven?

Risk is commensurate with reward, whether it is in social impact or a traditional investing arena. As an early, pioneer investor, I have developed an expertise and generated above-market returns over the past three decades. I exercise discipline by investing solely in industries and companies in which I have personal passion and expertise.

Have you had to accept below-market rate financial returns as you’ve pursued impact?

To the contrary, I believe companies that are based on sustainability and positive impact have the opportunity to generate a premium value and return on their products and business. In recent years, we have seen brands founded on positive social impact realize premium valuations when they are acquired or experience liquidity events.

What do you feel is the key development still to come in order for impact investing to reach its potential?

The key issue for impact investing is attracting additional capital. Capital is needed to fund growth opportunities that will demonstrate investment success and continue to attract new investment capital. 

If you could give an investor who is new to the impact investing field three points of advice, what would they be?

Invest in the management team. Invest in the management team. Invest in the management team. And I would have two other key recommendations:

  • Take an active, ongoing role in the investment as a board member or advisor to the company.
  • Diversify your investment in a portfolio of companies and consider investing in a professional social impact fund.

What are some of the more promising areas for impact investing that you see developing in the future?

New enabling technologies that focus on innovations for health, the environment and a sustainable lifestyle are my primary focus right now, as this aligns with my values and interests.  I’m looking at an investment pipeline of bold new startups that are creating solutions that will make our world a better place.

Stuart Rudick is the founder and general partner of Mindfull Investors, L.P., a hybrid public and private market hedge fund. Jed Emerson is Chief Impact Strategist for ImpactAssets, and senior advisor to two families executing “total portfolio” impact investment strategies.

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