Game Changers 2020 Essay Series: When Faced With Times Like These, Turn to Impact Investing

When Faced With Times Like These, Turn to Impact Investing

Nancy Pfund, Managing Partner, DBL Partners

At present, in a time when truth and transparency seem ever elusive, when divisiveness appears a way of life, and social and environmental threats loom large, a bright spot has emerged. That bright spot – Impact Investing – curates both financial and social return, accepts no sacrifice between the two, and even asserts that the combined focus is additive.

In our impact investing work at DBL, we have been able to work with entrepreneurs who don’t just want to build badass companies. They want to bid adieu to bad operators, to outdated solutions, and usher in a new age of innovation and business built for 21st century needs. These entrepreneurs are pioneering in many fields getting fossil fuels out of cars, getting junk food out of school lunches, getting the coal and gas out of electricity, getting opaque practices that cost too much out of farming, focusing on reuse to get the waste out of apparel and fine goods, to name just a few Impact investing’s reach extends even to space, where new and cheaper satellite views of our planet can create new tools that point us toward better solutions.

As these impact companies grow, they create jobs for a diverse array of workers and attract the admiration of the new generation.

The jobs that arise from building electric cars, installing solar panels, or streamlining crop marketing depend on recent technological advances, but are not just for those that know how to code. This is an integral part of impact investing: to democratize access to quality jobs across geographies, racial identities, and gender. The “it companies” of the future will be the companies that crush it financially while solving  problems that matter, and their workforces will be more inclusive. At DBL for example, some 64 percent of our founding leadership teams of startup entrepreneurs include women, compared to an average of 2 percent, according to the latest PitchBook data.

Impact investing has skeptics on both sides – those who feel it’s not impactful enough and those who think the financial returns aren’t strong enough.

And yet, it continues to attract large amounts of capital, catalyze new funds from both new and established firms, and bring in the best and brightest talent from business schools and more traditional companies all over the world. Early returns from companies like Tesla, Revolution Foods, and Farmer’s Business Network are encouraging on both the financial return and impact fronts and are already creating whole new sectors in which to invest.

It is definitely not your grandfather’s investment portfolio anymore, just as it is not your grandfather’s set of problems that vex us.

Our most pressing challenges to solve, from climate change to income inequality to polarization, are distinctly modern, in need of modern approaches. This is the power of impact. Not a tonic for everything that ails us, but a tool whose time is now.

October 25, 2019