From Impact First to 100% impact portfolio
Why don’t you have a 100% impact portfolio in which all your asset classes are deployed in impact investments?
When I started investing I didn’t care a lot whether my investments had any positive impact or not; this was just an afterthought held somewhere in the back of my mind. I just was squarely driven by greed and mainly focused on identifying promising startups with engaged founders, a large addressable market, good product-market fit and the possibility to scale quickly.
My initial plan was to put some chips in startups raising funds at seed-stage and to eventually double down on the most promising follow-up rounds. I had no explicit financial returns requirements, but based on public information that I had gathered about angel investment return averages, I expected that on aggregate my investments could be returned at least 2-3x within 7-10 years.
As possibly many other impact investors, I didn’t discard per se the idea of supporting impact-oriented startups or social enterprises, it was just that I didn’t want to impose on myself any unnecessary constraints since that would likely result in additional time devoted to research.
Another reason – once again acknowledging that I practically didn’t make any efforts to identify any worthy impact investment opportunities – was that most of the startups that I initially interviewed were:
- trying to solve a problem that didn’t connect with any transcendental human problem, nevertheless offered a good risk/return opportunity (Weezic, Nudge, Fidzup, etc.); or
- addressing valuable socio-environmental challenges but spooking investors by announcing projected return targets less enticing than the vast majority of other non-impact-oriented startups.
At a certain point, probably associated with my mid-life crisis, I realized that my money could have a lot “more bang for the buck” if it went into impact investments. I was inspired by the idea promoted by Toniic T100 of deploying 100% of my investments – across all asset classes – in alignment with my social priorities, in pursuit of a deeper positive net impact and using the whole spectrum of my capital to do so.
We normally are embarking on a long journey when trying to change our minds about anything including why and how we invest. Personally, having a 100% impact portfolio is still work in progress(*) rather than a ticked off goal. Nevertheless, I now have a simple rule for any new seed investments which is also quite a high hurdle: it has to be impact-focused.
When you get to 100%, that’s when the real journey startsToni Johnson formerly at Heron Foundation
(*) This is the impact section of my current startup portfolio.