Maggie Stohler

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The Rise of Impact Seed Funds

By Tasha Seitz

Last month, I had the pleasure of attending SOCAP (Social Capital Markets), the world’s largest conference on social enterprise and impact investing, at the Fort Mason Center in San Francisco, California. As a veteran attendee (this is my sixth SOCAP conference), I am always energized to be around smart people who are passionate about the potential of the intersection of impact and markets. At the conference, I spoke on a panel called “The Rise of Impact Seed Funds” with Wes Selke from Better Ventures, Shauntel Poulson from Reach Capital, Brian Dixon from Kapor Capital and Julie Lein from the Urban Innovation Fund. We discussed the evolution of seed-stage funds and talked about specific investment strategies, and how our focus on impact boosts performance. Below, I’ve recapped some of the key takeaways from our panel discussion (feel free to check out a video recording here).

Defining and measuring impact as an impact fund

Social impact is a loaded word and means different things to different people. While each fund on the panel considers themselves an impact fund, we each define it very differently. Brian Dixon from Kapor Capital shared that, “when we’re making an investment we’re not only thinking about whether this investment will get us a 3x return of the fund, but also how does this actually make a difference.” At Reach Capital, “we invest in missionaries, not mercenaries” said Shauntel Poulson. When it comes to impact, they focus on three things: a user base that targets underserved and under-resourced populations, usage penetration in terms of depth of usage and user satisfaction, and long-term improvement in student outcomes and achievement. […]

By |November 16, 2017|
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Impact Tech Opportunity Series (Pt. 4): Health

By Tasha Seitz and Chris Wu

As active impact investors, we’ve had the privilege of meeting hundreds of entrepreneurs doing incredible work across each of our four areas of focus: education, health, economic empowerment and resource efficiency. We’ve learned a lot about what opportunities exist to leverage technology for good and how various companies are solving these problems. As we celebrate our five year anniversary, we thought it would be valuable to share some of our observations with the broader impact investing field.

Part four in the series is an overview of what we’ve seen in the world of digital health. US healthcare spending overall represents 18% of GDP, and improving healthcare utilization by disadvantaged communities is an enormous opportunity to reduce costs and improve patient outcomes. The trend towards accountable care is driving investment in technology innovation, and we see many attractive and impactful investment opportunities in this space. We have observed four broad themes in the health sector.

Accessibility

The timely use of health services plays an important role in achieving the best patient outcomes. However, patients face many barriers to accessing services, including high costs, lack of insurance coverage, and lack of available services. Inadequate access to care can result in unmet physical and mental health needs, increased financial burdens, and preventable hospitalizations. Unfortunately, disparities in access persist along race and ethnicity, socioeconomic status, and geographic lines.

One of our portfolio companies, ConsejoSano, is deeply committed to breaking down barriers to adequate preventative and primary healthcare services for the 41 million native Spanish speakers in […]

By |October 26, 2017|
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5 Questions You Need to Ask Before You Start Hiring

By Lindsay Verstegen

Last month at Impact Engine, we celebrated our five-year anniversary with a celebration and showcase event with our investors, mentors, and portfolio companies. The following day, we continued the celebration with a gathering of our portfolio company CEOs. We were grateful to have Lindsay Verstegen, VP of Talent at ShopRunner, speak to our CEOs about recruiting and hiring, including the five questions to ask before hiring, below.

Hiring is a highly personal process, one that should be very specific to you and your company. It’s important to approach the hiring process with enough of a game plan that you’re organized, but also with agility that allows for feedback to shape the process as it plays out. I’ve outlined five key questions that get at guidelines to the hiring process that every organization should consider when expanding their team. (Keep in mind, these are not hard-and-fast rules, but rather tips that should guide you!)

1. Who are you?

Before you begin the hiring process, it is important to go inward and answer some crucial questions to understand who you are as a company. This is a time for self-reflection. Ask yourself who you are and what you value. Remember that Sigmund Freud once said: “Being entirely honest with oneself is a good exercise.” It’s an especially good exercise when hiring. You should also ask customers and existing employees how they see you, and synthesize that information to determine your “true north.” If you’re not headed in the direction you want to be, this is the […]

By |October 26, 2017|
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Impact Tech Opportunity Series (Pt. 3): Education

By Tasha Seitz and Brandon Boros

As active impact investors, we’ve had the privilege of meeting hundreds of entrepreneurs doing incredible work across each of our four areas of focus: education, health, economic empowerment and resource efficiency. We’ve learned a lot about what opportunities exist to leverage technology for good and how various companies are solving these problems. As we celebrate our five year anniversary, we thought it would be valuable to share some of our observations with the broader impact investing field.

Part 3 of this series provides insights into current trends we’ve seen in the education sector, the main drivers of those trends, and opportunities we see for impact.

Teacher Empowerment & Personalized Learning

Not long ago, a common solution to the problem of having a class with students’ proficiencies at different grade levels was simple, but ineffective. If a third of the class is performing above grade level, a third at grade level and a third below grade level, the most measured approach was to teach to the middle. While striking a seemingly fair balance, it effectively eliminated the attention of two-thirds of the class who thought it was moving either too quickly or too slowly, resulting in only one third of the class growing and learning. As technology has proliferated in classrooms across the country (almost half of classrooms use a digital device every day), teachers now have the increased ability to meet each student at current level of learning and help them grow from there. At the same time, there is increasing […]

By |September 29, 2017|
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Impact Tech Opportunity Series (Pt. 2): Resource Efficiency

By Tasha Seitz and Alex Frederick

As active impact investors, we’ve had the privilege of meeting hundreds of entrepreneurs doing incredible work across each of our four areas of focus: education, health, economic empowerment and resource efficiency. We’ve learned a lot about what opportunities exist to leverage technology for good and how various companies are solving these problems. As we approach our five year anniversary, we thought it would be valuable to share some of our observations with the broader impact investing field.

Part two in the series is an overview of what we’ve seen in the world of resource efficiency. Because Impact Engine is focused on software and data-driven companies, it can be challenging for us to find companies that are a fit, but we have made two investments over the past year and hope to make many more in years to come. Below, we’ve identified three broad themes we’re seeing.

Water

Regional droughts and water shortages, as well as aging infrastructure in places like Flint, MI, have cast a spotlight on clean water access and increased the urgency for farms and government agencies to find more efficient solutions. There is also a growing need for more innovative sewer system and stormwater management tools. To put things in perspective, the annual revenue for products and services in the water industry exceeds $600 billion. In this sector, we’ve found that water-focused startups have one of three major end goals: conservation, improvement of water quality (either for drinking or for wild sources like rivers, lakes, oceans) or improvement of […]

By |July 31, 2017|
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Foundation Impact Investing: Progress and Opportunity

By Jessica Droste Yagan

Last month, I attended the Mission Investing Institute (MII) at the Kresge Foundation in Troy, Michigan. Hosted by the Mission Investors Exchange, the MII is a “boot camp” of sorts for foundation leaders who are in the process of building or activating impact investing strategies. (Their annual conference will be coming to Chicago in 2018!)

To me, it’s a no-brainer that ALL capital designated for charitable purpose should be optimized to create public good (not just the grant dollars). I have been heartened to see more and more foundations dipping their toes in this space. At the conference, I saw great progress in two areas in particular: mission-related investments (MRIs) and place-based program-related investments (PRIs).

On the endowment side (MRIs), foundations are becoming more aware of the impacts of the investments in their endowment and how those impacts align (or not) with the foundation’s mission. Many are also intentionally investing in companies, funds or financial instruments that screen out negative impacts (socially-responsible investing) or drive positive impacts. Now, it’s easier than ever to learn from and follow leading foundations in this area. Foundations like the MacArthur Foundation are making impact investments and sharing their lessons learned. There are also a plethora of strategies and advisors who can help foundations with MRIs.

On the disbursement side (PRIs, as a complement to grants), foundations are being more flexible with the type of capital that will create impact. Most foundations actively investing in PRIs are doing so through place-based strategies, meaning they are making investments for the development of jobs or infrastructure in a very specific location. It helps that a well-established […]

By |July 21, 2017|
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How to Get Involved in the Impact Investing Sector, Part 2

By Elizabeth Coston and Alex Frederick

Last month, we teamed up with Net Impact to publish “How to Get Involved in the Impact Investing Sector.” The blog post explains paths to exploring careers in impact investing and links to Net Impact’s recently launched Impact Investing Portal, which includes an Impact Investing Career Guide, additional articles and resources on the sector, and an impact investing jobs board. At Impact Engine, we get lots of inquiries about where to look for and apply to impact investing jobs and always direct people to our Social Impact Jobs Board and our most recent blog post “Looking for Jobs with Social Impact?” We also have an internship program for MBA students, where interns get a hands-on role on our deal team identifying potential portfolio companies, mapping out the investment landscape in our four social impact focus areas, and much more. One of our current interns, Alex Frederick, and our senior associate, Elizabeth Coston, share their experiences working directly in the impact investing fund space and offer advice to those looking to get involved in the field.

Elizabeth Coston, Senior Associate

What is the experience like being an associate at Impact Engine?

I spend most of my time doing due diligence on prospective investments. During a diligence process, we are trying to understand the the value proposition of a given company’s solution, the size of the market opportunity, and the potential for both financial returns and impact. We also care about who the team is, their backgrounds, motivations, strengths and weaknesses. In order to come up with a well-rounded assessment of a company, […]

By |July 14, 2017|
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We 💖 Flyover Country

By Jessica Droste Yagan

In past blog posts, we’ve written about the next generation of social entrepreneurs in Chicago, why impact entrepreneurship is thriving in Chicago, and the newest players on the Chicago impact scene. Inc.com published a piece recently that said when it comes to social entrepreneurship and building companies with the intention of a greater good, there’s no better place to be than Chicago. Still, we get a lot of questions from investors on the coasts about why we’re based in “flyover country” — as if it’s a disadvantage.

Actually, it’s a point of pride and advantage. Being in Chicago doesn’t prevent us from investing in coastal entrepreneurs (who make up 39% of our current portfolio and, in several cases, held rounds open for us because they valued our participation as a member of their investment syndicate). But we also see a lot of startup companies in between the coasts led by great entrepreneurs with innovative and impactful business models, that get overlooked by investors on the coasts. We think being here means we get the best of both worlds.

We’re always happy to remind people why we love being based where we are.

Booming Tech

Over the last decade, the middle of the country has cultivated a community of thriving tech entrepreneurs and startups. We’ve seen the startup scene transform Chicago, bringing excitement and optimism, renewing our creative culture, and inspiring innovation. As Yazin Akkawi recently wrote, “the entrepreneurial spirit in Chicago has never been more alive…Chicago attracts get-shit-done, no-nonsense leaders.” Steve Case agrees with us: […]

By |July 12, 2017|
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Impact Tech Opportunity Series (Pt. 1): Economic Empowerment

By Tasha Seitz and Elizabeth Coston

As active impact investors, we’ve had the privilege of meeting hundreds of entrepreneurs doing incredible work across each of our four areas of focus: education, health, economic empowerment and resource efficiency. We’ve learned a lot about what opportunities exist to leverage technology for good and how various companies are solving these problems. As we approach our five year anniversary, we thought it would be valuable to share some of our observations with the broader impact investing field. This overview of what we’ve seen in economic empowerment is the first of what will be a four-part monthly series where we will cover each of our focus areas in turn.

We have identified five broad themes in economic empowerment.

Access to Jobs

One of the biggest issues we’ve noticed is a gap in the middle skills labor market, which requires education beyond high school but not a four-year degree. Candidates are being left behind, while some companies struggle to fill positions due to a mismatch of need and talent. Millions of Americans struggle to find jobs that meet their skill sets and only 25% of high school graduates feel they have the skills needed in the workplace. 98% of CEOs identify the skills gap as an urgent concern to business. In a market where $72B is spent on recruiting, $55B is spent on continuing education, $475B is spent on higher education, and $164B is funneled into corporate training, there is a huge opportunity for startups to address the skills gap.

We’ve seen many startups using technology to identify core competencies for job roles, to test candidates, and to provide learning modules […]

By |June 28, 2017|
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What Does 100% Impact Look Like?

By Jessica Droste Yagan

Last month, Impact Engine hosted breakfast with Richard Muller of Toniic Network, a global action community for impact investors from over 22 countries. Muller shared results from the T100 Project, a multi-year study of the portfolios of Toniic Network members who are committed to investing 100% of their portfolio for impact. The T100 project came out of a need for quantitative and qualitative data as a way to inspire and enable others to accelerate their impact investing journeys as well as to demonstrate a growing market for impact products and services. To date the group has deployed $2.6 billion of $4 billion committed to impact. The study reveals new insights from over 50 portfolios and highlights the various paths towards 100% impact (to read the entire report, click here). Below we’ve shared key takeaways from the report and answer the question: what does 100% impact look like?

100% impact portfolios are achievable today.

Early findings from 51 Toniic portfolios committed to 100% impact are promising: impact investments making up an average of 64% of all portfolios, with one-third of portfolios with over 90% deployed into impact. These impact investments include 36% thematic investments (see below), 19% sustainable investments (investments integrating environmental, social and governance factors into the decision-making process) and 9% responsible investments (investments screened for conflicts or inconsistencies with personal or organizational values, codes of practice, or other impact performance criteria). For thematic investments, Toniic shows the breakdown of the following impact areas on average across portfolios, including 32% environment, 12% poverty alleviation, 9% financial system, and 7% health.

100% impact portfolios can be constructed across all asset classes.

Another […]

By |June 1, 2017|

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