April 2, 2013

Investing with Purpose: Announcing the Launch of Purpose Capital


Purpose Capital launches today. For more information on our launch, please see the attached press release

We’re at an interesting time in the evolution of impact investment globally. There’s a lot of interest and emerging activity, an impressive amount of capital seeking to integrate impact considerations, and a range of fascinating business models that deliberately seek social or environmental returns. Yet, significant fragmentation persists along the value chain of impact investment and advisory, primarily driven (in our opinion) by an acute lack of qualified intermediaries who are both culturally attuned and appropriately registered/experienced to provide end-to-end strategy and deployment through global capital markets. Purpose Capital is our response to that challenge.

We’ve decided that the time is right to consolidate an experienced team to create an impact investment intermediary to address these challenges in multiple ways. Of course, we are looking to get the basics right: help investors and their advisors to integrate impact considerations in (or across) their portfolios, identify and vet opportunities to invest for impact, and work with them to help deliver the financial and social returns that are desired. We draw on our experience with advising social enterprises to become ‘investment ready’ to help investors understand the nuances around direct deals that resemble venture capital or private equity investments. As well, understanding what investors seek in an institutional product allows us to engage with a different set of asset owners and asset managers.

But we also see ourselves as market builders, and are committed to ‘moving the needle’ on impact investing. We have released public good research on raising the profile of impact investing, as well as new insights and tools for impact investors around social metrics. These products are informed by our work with clients through our practice areas, but also our deep understanding of impact investment globally. At the same time, we’re engaging the next generation of impact investing leaders and enablers through teaching at leading Canadian universities across several faculties.

How will we reconcile all these practice areas and activities into a coherent whole? Simply put: we think we have to make progress on each of these areas in order to make a lasting contribution to market development and legitimacy. Our research practice area helps to map the key trends, issues, and opportunities in impact investing across regions, sectors, and stakeholders. Our advisory and portfolio management practice helps investors and their advisors to appropriately situate themselves in this emerging market, by helping to define and implement impact investment strategies (for example, for foundations, all the way from Board discussions through to building impact investing policy statements). With this clarity on the nature and approach around impact investments, our impact banking practice helps clients to conduct due diligence on opportunities and/or structure transactions, with the aim of moving their capital to impact investment opportunities.

The ‘pipeline problem’ continues to be a challenge for impact investors, with the apparent lack of investment-ready opportunities on offer. There is no shortage of creativity in generating impactful ideas, and on an almost daily basis, new social businesses and initiatives are being launched. However, many of these initiatives aren’t designed in a way that makes them attractive to the investment community. We tackle this problem head-on by working with our clients to structure their business fundamentals in a way that infuses impact and maximizes profit. We then close the loop with the investment community by structuring the investment opportunity.

One of our comparative advantages is that we have an eye for cultivating market building and investment opportunities where none appear to exist. Tellingly, we’ve structured a practice area we call ‘Strategy + Design’ to respond to a set of needs that do not fall easily into other practice areas. Structured as our ‘sandbox’, S+D works with leading organizations to design, structure, and implement initiatives that aim to re-imagine and re-architect systems. These groups will often have some of the right building blocks for success in impact – passion, knowledge, business model, access to capital. However, aligning all of the necessary building blocks properly, and assembling them in the right manner, is complex and often overwhelming. We simplify this complexity by partnering with our clients to co-design and co-deploy impact-infused and investment-friendly initiatives. This also enables us to take a proactive stance in generating opportunities for the II market that meet the changing needs of various investors.

It is this ethos of ‘build, design, implement’ that allows us to co-create, co-design and co-deploy with our clients, and view our clients as partners. It is here that we weave projects across sectoral, cultural and geographic boundaries, the results of which are often unlikely and unprecedented partnerships that infuse impact into new frontiers. For example, a key challenge of the II market is that many non-profit and charitable organizations are unclear about the value of the assets they possess, and thus do not generate investment opportunities that are attractive to investors. One of our strengths as a company, as a bridge between the social sector and the financial sector, is to be able to identify the uncovered opportunities present for organizations and fashion them into offerings that are a fit for individual and institutional investors. We can do this by speaking the language of both the financial and social sectors, understanding the context and expectations on each side, and enabling connections between individuals and organizations that seldom sit at the same table.

Our hope is that we (together with our partners) will be able to bring to the marketplace a diversity of investable assets that are attractive for both their impact and their profit potential. Perhaps what is most exciting is that, after talking about impact investing for a few years, there’s finally a set of coordinated activity to match the interest. This is happening at the global level, across different sectors, and among non-traditional actors. We’re seeing this manifest within our own work – our partners include prominent financial institutions, leading impact investment funds, pioneering family and public foundations, and governments. At the same time, we’re building new pipelines of impact investment opportunities in ‘technology for impact, Aboriginal businesses, and collaborative innovation spaces.

We’ve assembled a strong team that brings significant experience in launching, funding and nurturing leading impact-focused initiatives across North America and globally. We’re seeking to partner with like-minded people and organizations across the spectrum – whether it is on building a more robust pipeline of investable opportunities, directing more impact investment capital into compelling financial structures, or ensuring that people are equipped with the skills and tools to work in impact investment. Get in touch with us to learn more about what we do and our current projects.