The second event in our Chicago Impact Investing Showcase series took place on Tuesday, April 12th. The focus of this session was the role of individuals as impact investors. Jessica Droste Yagan served as the moderator and made some opening remarks to help frame the discussion. She began by defining some commonly used terms such as socially responsible investing, ESG, and impact investing. Jessica also gave a primer on the 5P Framework, which is a helpful framework for understanding the impact in impact investing.

After the opening remarks each of the panelists made some introductory remarks, beginning with Noelle Laing, the CIO of Impact Investing at Builders Asset Management. Builders Asset Management is part of Builders Vision, the impact platform for Lukas Walton. The goal of Builders Vision is to build a more humane and healthy planet through four impact focus areas: Oceans, Climate & Energy, Food/Ag, and Community. The organization takes an integrated approach to driving system-level change; they use a combination of grants, impact-first investments, market-rate investments, advocacy, and coalition building as a means to achieve that goal. The Builders platform is organized into three strategies:

Builders Asset Management - The asset management team invests strategic, patient capital responsibly across an ambitious, diverse portfolio. The team generates returns that are reinvested to drive long-term impact.
Builders Private Capital - The direct investing team provides capital, mentorship, and value-added resources to entrepreneurs innovating to build a better future. S2G Ventures is part of the direct investment team, they back entrepreneurs across the supply chain from soil to shelf.
Builders Initiative - The philanthropic team seeks to accelerate and catalyze change through grant-making and impact investing in people and organizations on the frontlines of change. They have a special focus on Chicago and the Midwest.

Noelle explained that you need multiple tools at your disposal in order to solve the complex challenges facing our planet. Their platform allows them to take an “Issue First - Tool Second” approach. Builders Vision starts first with the issue that needs to be solved, then sets out to go find the best tool in their toolkit that they have to help solve it. Noelle gave some examples of some of the endowment investments they have made recently. They had invested in an access fund focused on low-to-moderate income (LMI) communities. Chicago place-based bonds is another specific focus area. They have funded an affordable housing unit in Englewood, and also invested in intergenerational housing for seniors that take care of you and for youth that are aging out of foster care. These investments are particularly meaningful to them because those closest to the problem are best equipped to solve it. Some of these opportunities are offered through mutual funds, so folks have access to it even if they’re not a high net worth individual (HNWI).

Noelle then invited Kate Danaher, Managing Director of S2G Ventures Ocean and Seafood to talk about the work they’re doing to make our oceans more sustainable. Kate has spent her career in impact investing. She is also passionate about giving unaccredited investors a chance to become impact investors. Kate joined S2G because the Builders Vision is an incredibly powerful tool for change. Kate gave an example of one of their impact investments, profiling a company called Aquatic Protein based in Beardstown, Illinois. The company is addressing two critical issues: 1) the proliferation of invasive asian river carp in the river basin there, and 2) the need for low cost fish meal for pet food and other land animals. There is a big need to replace wild catch with a sustainable low cost solution. The government spends millions of dollars to try and get rid of the invasive carp. Aquatic Protein creates a business case for the restoration work by actively fishing the carp. Aquatic Protein holds a proprietary zero waste process for producing the fish meal. They focus on remediation and partner with local fishers and give incentives, and have been removing more carp than anyone else in the area. The company’s technology is highly scalable, and can be applied to other invasive species outbreaks in waterways and other regions beyond the midwest. It has been a strong investment for S2G’s venture capital arm because the impact that is enabled by the growth of the business (similar to product-based impact as described in the 5P Framework). If this company is successful, the core of its business could have a meaningful impact on the health of the IL river basin.

Next, Jane Direnzo Pigott, Managing Director of R3 Group, spoke about her personal journey as an impact investor. At R3, Jane specializes in providing leadership, change, and talent consulting to organizations. Prior to R3, Jane practiced law for over 20 years, most recently at Winston & Strawn where she served as chair of the global Environmental Law practice group. Jane became an impact investor because it allows her to align her investments with her personal values. Jane actively invests both directly in companies as well as in funds, with a focus on opportunities where she can utilize her expertise and resources to support enterprises with women and BIPOC founders and leaders. While her personal impact investment thesis centers on improving equity and access, she utilizes the 5P Framework to identify where there might be compelling opportunities. Jane believes that equity has an impact on every single investment, whether it’s a climate change or health investment, and that diverse teams outperform. When assessing opportunities, she looks to define the impact, quantify the level of risk, set a minimum ROI, and to back disruptive technologies. Jane initially looked towards traditional institutions to source investment opportunities and measure impact, but learned that she had to take a more active, hands-on approach. She works with a group of others to help source and diligence deals, and she takes more personal responsibility for looking at exactly what she will measure for impact and be willing to walk away from opportunities that don’t fit her criteria. If she is presented with a strong investment opportunity that does not have diverse teams or at least have a strong plan for addressing DEI, it would not meet her criteria.

Jane highlighted First Women’s Bank as one of her impact investments and introduced Melissa Widen, the bank’s CAO and General Counsel. Melissa discussed how the women’s economy lacks access to capital they need to grow. Women own 42% of all businesses in the US. 50% of those are owned by women of color. This represents 13 million businesses, it’s an intersectional issue. The women’s economy (women-owned and women-led) together needs capital to grow and thrive. Gender disparity is holding women back. Only 16% of all commercial loans go to the women’s economy, that represents just 4% of the total dollars lent. The First Women’s Bank addresses this, it aims to level the playing field to promote financial inclusion across the board, empower women economically. The path to forming First Women’s Bank was challenging, they were viewed as a group of women with no track record, fundraising in the middle of a pandemic within a highly regulated industry. Despite all those challenges, they were successfully able to raise $32.6M in capital.They received their charter from the state of IL last year, arranged FDIC insurance, and had a grand opening in the fall of 2021. Their unique banking practices are now disrupting traditional banking. First Women’s Bank offers a different way to think about your banking relationship. Banking clients are increasingly asking questions like: How diverse is this bank’s board? What are they using my money for? What does the bank stand for, what are their values? Does it align with mine, what is their stance on DEI? In terms of approach, First Women’s Bank leans heavily into SBA lending, which is ideally suited for the small business economy and a great fit for the women’s economy, which tends to be service related businesses.

The session wrapped up with a Q&A session discussing how to balance due diligence between impact and financial return. The panelists also shared resources on how people can begin to dip their toe into the water of impact investing. The list of resources include:

Find more sessions on the 2022 Chicago Impact Investing Showcase page.

Information presented in this document is intended solely for informational purposes and should not be interpreted as a recommendation or offer of securities or any other financial instrument. Unless otherwise indicated, the information contained herein is current as of the date of publication of this document and is believed to be reliable and has been obtained from sources believed to be reliable, but no representation or warranty is made, expressed or implied, with respect to the fairness, correctness, accuracy, reasonableness or completeness of the information and opinions.