Insight

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Please Communicate With Your Investors!

By Jessica Droste Yagan

Many entrepreneurs don’t prioritize communicating with their investors… and that’s a mistake. At Impact Engine, we know how important the investor-entrepreneur relationship is. We have our own investors in our fund, dozens of investments in portfolio companies, and have supported many entrepreneurs in managing relationships with their other investors. We also know that when investors are out of the loop, they can get disengaged or frustrated. When something inevitably goes wrong in your business, investors will be more skeptical about your ability to handle it, and less likely to re-invest. On the upside, when investors are in the loop and engaged, they can add a lot more value. Many investors will go out of their way to help if they know what you need.

We’ve observed some best practices in investor communications that we thought would be valuable to share. If you’re an investor, you could share this with CEOs that may not be communicating well. If you’re an entrepreneur, we hope you can take something valuable from this and use it to your advantage.

Err on the side of transparency (at a high level).

While there really are no rules about what should be included in an investor update, there are definitely some key pieces of information that you should be communicating. First, always include the quantitative metrics that actually drive your business. Information like bookings, revenues, customer engagement, and customer retention (depending on your business) are required. Generally, there’s no need to include level of cash flow and runway with those outside of your board, but you should give investors a heads up if you will need to […]

By |May 1, 2017|
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Impact Due Diligence: The Questions We Ask

By Elizabeth Coston

Impact Engine’s Chief Investment Officer Tasha Seitz recently wrote about the evolution of term sheets and the growing trend of investors requiring alignment of values or commitment to specific impacts. We ask entrepreneurs to sign a mutual commitment to impact, which comes towards the end of the investment process, but we also integrate an impact “deep dive” earlier in our due diligence process. In addition to alignment with our core areas of focus, we evaluate specific criteria to make sure each company we invest in is making a sustainable, lasting impact in its designated impact area. We’ve outlined a few of the questions we ask of ourselves and of prospective companies below.

+ How aligned is the impact with our core areas of focus where we believe we can make the best judgments and provide the most support?​Our focus is in education, health, resource efficiency and economic empowerment. When selecting our portfolio companies, we want to make sure we have the experience, resources and connections to provide valuable, effective support for the entrepreneurs we invest in, so alignment is key.

+ How “baked into” the business model is the impact? We make sure that impact is an integral part of each company’s product or service offering, so that impact grows hand in hand with revenue. We want the impact to be very difficult to decouple from the business, and highly likely to survive a corporate acquisition. This means that we do not invest in “buy one give one” models, where revenue generation is separate from […]

By |April 4, 2017|
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Can Financial Advisors Embrace Impact?

Impact Engine has been fortunate to work with a lot of first-time impact investors. While we may be their first introduction to impact investing, we very much want to support them in doing more, and often share content or host events meant to introduce them to the range of possibilities across asset classes and impacts.

Unfortunately, because impact investing is not (yet) broadly embraced, investors can find it challenging to get started by working with their financial advisors. While some advisors are strong advocates for impact investing and very knowledgeable, many are not jumping up and down to help, either because they don’t know what to do or don’t want to do it, or both. If you’re not one of the lucky few who has great support from your advisor, here are three approaches that we’ve seen work.

Convince your advisor to learn.

While not all financial advisors understand or offer impact investing options, some of them will put in the effort to learn if you push hard enough. If they are willing to make the effort, you may want to be patient and be a partner in exploring with them: you could learn together and perhaps create even more impact by supporting the development of expertise and products that could then be offered to other clients, thus moving even more assets in the direction of positive impact. If you want to go this route, try showing them why it’s in their interest or that it’s been around long enough to demonstrate competitive financial returns. Once they’ve indicated they might try, you could share articles like “How Wealth Advisors Can Facilitate Impact Investments” […]

By |February 28, 2017|

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