January 3, 2017 • Carol J. Clouse
With the growing popularity of responsible investment, financial institutions have rushed to meet the demand from a widening swath of investors across the economic spectrum. It’s now easier than ever to find mutual funds dedicated to investing in public companies that do right by the environment and their employees. But the image of the “impact” investor, someone who makes private investments to “generate social or environmental impact alongside a financial return,” remains one of the super-rich—the millennial heir, for example, nudging her family office to commit to renewable energy in Africa. ImpactUs would like to change that. ImpactUs is an online broker-dealer that facilitates private debt and equity investments in impact products. It’s the brainchild of a group of community development practitioners who are working alongside financial professionals involved with socially responsible investing and community development financial institutions (CDFIs). Based in Washington, D.C., it launched its Impact-Us Marketplace for accredited investors in November and hopes to open the platform to the retail market in early 2017, according to Liz Sessler, the firm’s vice president. Through its online platform, ImpactUs seeks to streamline the investment process, from product sourcing to record-keeping to client reporting. The platform allows an investor or financial advisor to open a brokerage account online and invest in various impact products that all show up on one dashboard. The database is searchable by asset class, geographic location, risk/return profile, minimum investment and term length, as well as estimated yield. It’s also searchable by sector: affordable housing, education, environment, health care, sustainable agriculture, seniors, microfinance and small businesses. After kicking off with mainly debt products—with minimum investments between $2,000 and $25,000 and estimated returns ranging from 1% to 6%—ImpactUs expects to quickly expand its offerings and add equity funds, bringing the lowest minimum investment down to $500 and estimated returns on some products to double digits. Some of the first issuers include Shared Interest, a microfinance lender in sub-Saharan Africa, and Iroquois Valley Farms, a U.S. sustainable agriculture company that buys farmland and leases it to independent, organic family farmers. Finding impact investment opportunities has been one of the biggest challenges for interested investors because of a supply-and-demand imbalance. A recent research paper found the rate at which investors choose impact funds is 14% greater than the rate at which they choose traditional venture capital funds, according to Brad Barber and Ayako Yasuda of the University of California, Davis, and Adair Morse of the University of California, Berkeley, who conducted the research. In addition to centralizing impact investment products in one place, the ImpactUs platform seeks to make life easier for advisors. “A lot of advisors who have made the effort to help their clients with impact investments have had to jump through tremendous hoops in order to do that,” Sessler says. These include relying on a social network to find investment opportunities; undertaking a robust due diligence process; filling out a paper application; sending a check to a nonprofit, social enterprise or B corporation; and typically receiving a paper confirmation that has to be manually keyed into the advisor’s system. “We’ve think we’ve eliminated a number of hurdles, not all of them,” Sessler says. “There continues to be challenges in scaling due diligence and making that easier for individuals and their advisors’ firms in order to get more product diversity into the mix.” ImpactUs Marketplace was on track to have six investment products available by January 1, 2017, and Sessler says the firm expects that to grow significantly as it continues toward a full public launch.
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