By Leila B. Boulton

For all the recent hoopla about impact investing, there appears to be some resistance to investing in impact funds. A recent meeting of social investors and impact fund managers in Boulder, Colo. explored some of the reasons why.

For starters, impact investing--which is about making a positive social or environmental difference while earning a profit--takes patience. "If you want a quick return on your money, go to Las Vegas and gamble," said Robert Fenwick-Smith, founder and managing director of Aravaipa Ventures.

Fenwick-Smith spoke at the inaugural Social Impact Fund Showcase, where five innovative Colorado-based funds gave their best elevator pitches to 22 accredited investors. The event, which took place earlier this month, was co-hosted by The Impact Angel Group and HUB Boulder.

Perceived Risks And Misimpressions
Fenwick-Smith told the audience that potential investors in his fund often have a number of inaccurate impressions such as that impact investing necessarily provides lower returns, that all green technologies are high risk and capital intensive, and that Colorado is "too small to matter." Fenwick-Smith's fund has raised $8.75 million to date and is targeting $20 million. The minimum investment is $100,000.

The fund focuses exclusively on Colorado early-stage efficiency technology companies, which Fenwick-Smith said should provide higher returns--with lower risk and less capital--than many other types of green businesses.

One of the fund's portfolio companies was selected to provide the information technology backbone for the Bill & Melinda Gates Foundation. The company has a new way of collecting and analyzing data that will enable the foundation to keep better track of its many undertakings. "Within a year, they will be using the system to manage all their projects. The impact on development around the world will be substantial," said Fenwick-Smith.

Lack of investment opportunities is definitely not a factor for Greenlite Labs. The firm is raising a seed capital fund to establish a TechStars-affiliated accelerator for "cleanweb" startups whose business models leverage digital technologies to increase the adoption or efficiency of clean technologies.

Managing director Duer Reeves told the audience that the accelerator will select eight to 10 promising ventures and put them through a 13-week boot camp to prepare for the rigors of pitching to sophisticated investors who can provide additional capital for the next phase of growth. Reeves said the minimum investment is $25,000, but $50,000 to $75,000 is more typical.

According to Reeves, a main concern of potential investors in his fund is "selection risk"--that is, investors fear that it will be difficult for Greenlite Labs to find great early-stage companies to invest in. He thinks the concern is overblown. "Consumers adopting sustainable lifestyles and primary investment in cleantech are creating myriad opportunities for entrepreneurs in the cleanweb space," he said.

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