Great Pitch! Can We See the Product?

By Roger Liew

After a positive initial pitch to Impact Engine, the next step typically involves asking for a product demo, because we love seeing the vision in your presentation come to life. You should put as much thought and preparation into the demo as you did into the pitch deck. Think of it as a continuation of that compelling story about your product and company that hooked us during the initial pitch.

During your demo, I’m interested in the features that deliver the product’s key value drivers, and form the basis of your company’s competitive advantage. Ideally, we walk out of the demo with a clear understanding of your secret sauce, and how your product solves a big social or environmental challenge. Be prepared for lots of questions during the demo process. We love to engage deeply with our companies, and the starting point for us is always to ask lots and lots of questions.

Begin the demo by setting the stage for what we’re about to see. Call out the most critical components of your product, explain why they are important and focus on showing those features to us. However, begin the demo by typing in the URL for the system we will see. Starting right from the beginning with something as simple as login demonstrates care and thoroughness and a complete product. I prefer to see the experience from the perspective of a user rather than an admin, and regular users tend to receive a more refined experience.

Let’s explore a specific […]

By |July 2, 2018|

Mind the Gaps: What’s Missing in Impact Investing Markets?

By Priya Parrish

When my former colleagues at the environment, social and governance (ESG) research pioneer, KLD Research & Analytics, launched the bellwether Domini Social Index in 1990, one purpose was to measure what socially responsible investing was going to cost an investor in terms of financial returns. The index, along with numerous academic studies, proved that ESG factor integration does not have to negatively impact financial performance. The evidence drove client demand and product proliferation across every asset class, sector, geography, and investment strategy. During this time, I led the effort to catalyze the creation of Northern Trust’s ESG fund offerings and witnessed nearly every other major asset manager roll out ESG strategies. Today, over 20% of professionally managed assets in the U.S. incorporates ESG factors in investment decision-making.

Impact investing, which has an explicit intention of generating a measurable social and financial return, is going through a similar transformation right now. Early evidence suggests the same conclusion: that all else being equal, impact investors do not give up returns. While impact investing can apply to a wide range of asset classes and investment strategies, its most common product offering (by number of products) is venture capital funds. As it gains traction among all investor types, the need for impact investment products across every asset class and strategy will be essential to meeting the growing demand.

My vantage point comes from the roles I have played as a family office Chief Investment Officer and personal impact investor. Having managed a multi-asset class portfolio across global private and public markets, […]

By |June 1, 2018|

Why We’re Thankful for Our Investors

By Jessica Droste Yagan

November is a month of reflection and giving thanks. At Impact Engine, we are especially grateful for our incredible investors. We launched our first accelerator in 2012 and our first venture fund in 2015 thanks to a dedicated group of experienced entrepreneurs and angel investors, philanthropists, and senior executives who believe in investing for both financial return as well as social impact. Many of them have also put their time with their money, supporting us and our portfolio with their expertise and networks. But we’re also incredibly proud of our investors for the work they do outside of Impact Engine, helping to lead the way for more impact. Below we’ve profiled just a few of our many investors who are linking business and social good in their own work.

The Entrepreneurs

Nicole Chavas

Nicole Chavas is CEO and Co-Founder of Fresh Coast Capital, an urban revitalization firm that develops green stormwater infrastructure as a vehicle to deliver social, environmental, and economic impact to the communities that need the most support toward achieving equitable climate resiliency. Since inception, Fresh Coast, a certified B-Corp, has raised over $3M in capital from across the impact investment spectrum, including equity, convertible debt and grant capital, from investors and funders such as the Kresge Foundation and the USDA Natural Resources Conservation Service.

Mike Evans

Founder of GrubHub, Mike Evans, started Fixer to get stuff fixed, easily, on his own schedule. Fixer is a same-day and scheduled handyperson app that makes it easy for clients to schedule a prompt, competent professional to fix stuff around the house. “Fixers” are full time employees with benefits who are given extensive […]

By |November 30, 2017|

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|

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|

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. 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|

Chicago: The Homegrown Impact Investing Hub

This article originally appeared in Social Innovations Journal: Issue 33 Chicago Edition on April 24, 2017.

From early conversations in 2011 to the deployment of our $10 million impact fund today, Impact Engine has grown and evolved in parallel with the companies in our portfolio driving innovation and impact. Today, we operate as a venture fund that invests financial and human capital in early-stage, for-profit technology businesses improving education, health, economic empowerment and resource efficiency. Our fund is backed by a group of engaged, like-minded impact investors who support our expanding portfolio of impact companies. Our strength is in our dedicated, supportive and engaged community of impact entrepreneurs and impact investors in Chicago. We’ve shared our journey here in the hopes that other communities may learn from our path.

At Impact Engine, we have worked over the past several years to build a market for impact investing around these two firm beliefs: (1) there are many talented entrepreneurs using for-profit business models to tackle social and environmental challenges that are also large, profitable market opportunities, and (2) there are a growing number of individuals that are realizing the power of their investment dollars and seeking to direct that power toward positive social and environmental outcomes at scale. We have approached this journey with a learning mindset, an openness to change, and a lot of scrappiness.

Our founders, Linda Darragh, then Director of Entrepreneurship at the University of Chicago’s Booth School of Business, and Jamie Jones, who was leading the social entrepreneurship program at Northwestern University’s Kellogg […]

By |May 31, 2017|

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|

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|

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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