Despite the incredible growth in enthusiasm and capital available for social enterprise, investors often struggle to find deals that are ready for investment. To bridge this gap, investors, enablers, and policy makers can consider ways to make it easier for investors and social entrepreneurs to connect.
“City First has always championed new ideas and recognized the need to support the creation of a platform that would better connect high impact financing intermediaries with more value aligned investors who can help entities like us provide more access to capital to projects and social enterprises.”
There is no dearth of social entrepreneurs looking for investment; however, impact investors often cite their main challenge as identifying viable social enterprises to invest in. Deal flow is stifled by a lack of centralized information about investment-ready deals, and as a result, social enterprises lose out on funding opportunities. Many financing intermediaries exist to help aggregate existing deals into fund offerings for large investors. However, retail investors still have limited access to these opportunities. Connecting retail investors to these opportunities could help support smaller capital raises for social enterprise funds and impact investing funds.
City First’s non-profit community development financial institution (CDFI) City First Enterprises, incubated ImpactUs, a new investing platform along with Enterprise Community Partners, one of the largest nonprofit CDFIs in the country. The ImpactUs Marketplace aims to make it easier to raise capital systematically from value aligned investors who currently have limited means to invest in social enterprises and other mission-driven projects either directly or through financing intermediaries such as CDFIs. The platform ultimately seeks to help social enterprises and other mission oriented institutions connect with retail investors through investment products they could buy on the platform. By aggregating investment opportunities, increasing the pool of values aligned investors who can access potential investments, and better preparing issuers for accessing the capital markets, ImpactUs is able to direct much needed capital to social entrepreneurs and other projects.
Four impact funds, some serving social enterprises, are using ImpactUs to raise capital, and there are more in the pipeline expected to be available through the platform on a rolling basis. More broadly, ImpactUs aims to have $150 million in assets listed on the platform in the first twelve months of operations with long term goals to have several hundred deals.
How it applies to your city:
Cities that are having trouble connecting investors to social enterprises might consider developing resources that can reduce the deal sourcing and transaction costs on both sides. Technology platforms that can aggregate opportunities and provide some transparency and standardization would help build confidence and ease the deployment of capital to worthy social enterprises.