Social Impact Investing: How to get Started
HEDDA PAHLSON-MOLLER IS AN INTERNATIONAL IMPACT INVESTOR AND CO-FOUNDER AND CHIEF CATALYST OF TIIME, AN IMPACT ADVISORY AND ADVOCACY ORGANIZATION. SHE INVESTS PRIVATELY AS A BUSINESS ANGEL AND SITS ON THE BOARDS OF SEVERAL ANGEL FUNDS AND NETWORKS. SHE IS A VOCAL PROPONENT OF DIVERSITY AND GENDER COMPLEMENTARITY THROUGH EQUILIBRE.LU.
Investment activity, particularly early-stage investing, has considerable risk and you should be aware of all possible outcomes – including losing your money, your time… and more. Depressing disclaimer aside, all investments have a risk/return ratio – and the risk is higher when it comes to early stage investing but so is the reward!
In terms of concrete suggestions for newcomers to the impact investment scene, I would recommend to first explore areas of social/environmental impact that resonate with them personally. The joy of early-stage investing is being part of value creation from the ground up – being part of the journey. The adventure! Having a personal connection to the project and its purpose and mission will make the investment and engagement even more meaningful. And obviously the relationship with the entrepreneur is critical at this early stage - you invest in the team and their vision more than anything else.
Impact investing is value creation well beyond financial. The fundamentals of impact investing are based on the same principle of managing returns, but we also incorporate social and environmental impact intentionally (by design, not default). Basically, you are including an additional dimension to your risk and return approach.
It is exhilarating and rewarding to help investors and entrepreneurs alike understand that they can combine measurable positive impact while applying profitable investment and business strategies. We encourage business angels to look at their investment strategies, add impact return criteria, and truly earn their wings.