By Timothy Freundlich, President, ImpactAssets
It was 2014 when we realized seed stage impact investing was going to be a key part of ImpactAssets. That spurred Lindsay Smalling (now the Producer of SOCAP), Jed Emerson (ImpactAsset’s Senior Fellow), and me to write Seeding the Future, an issue brief that examined the landscape of seed stage investing through the eyes of entrepreneurs, accelerator leaders, seed stage funders, and foundations within the seed stage ecosystem of impact investing. Our goal in writing the brief was to provide greater clarity within the field in order to reveal previously unseen opportunities and gaps.
ImpactAssets was also propelled to offer a test selection of 10 VilCap and Better Ventures seed stage deals to our clients. We had started that year with just over $100 million in total assets. Since then we have built a portfolio of more than 250 early stage deals invested as part of a fast growing $440 million donor advised fund with almost 1,000 clients. What is even more amazing to me is that we averaged more than one early stage deal each week in 2017, and we see that accelerating.
Begin Preparing for The Next Wave of Impact Investors
It’s not so much a vision we have of seed stage as part of our future work, it’s more of an actuality careening at us. This is at the heart of what is compelling to the next wave of impact investors, and you build for it, lean into it, or it is going to either swamp you or go around you if you’re a donor advised fund that wants to cater to the next generation.
Because donor advised funds (DAFs) aggregate among multiple accounts, they can drive down minimums by grouping investments. Additionally, since individuals receive a tax deduction when they open a DAF (since it is in fact a charitable donation), one might view the tax benefit as an initial “return” of sorts at the point of investment. Individuals understanding this tax deduction nuance may catalyze more support for patience over the long term that these early-stage investments demand. And, by utilizing seed funds and accelerators, DAFs can further diversify to get more clients in at more manageable levels.
Take This Work to the Next Level at SEED 2018!
ImpactAssets is coming in force to the inaugural SEED conference, bringing entrepreneurs from our portfolio, and inviting clients and key wealth advisors, because we feel we need to take what we have prototyped to the next level. We want to make our platform excellent, compelling, and scalable as this client hunger heats up! We want to leverage this work for others that wish to fast follow us or partner, so we’re hoping that the donor advised fund market shows up in force to compare notes and figure out how to leverage common infrastructure and capabilities, syndicate deals across client bases, and build for the $100 billion donor advised fund segment.
And, we’re coming because we want to be in at the ground floor of what needs to be a happening and isn’t (until now, that is)…a gathering of the ecosystem players for seed stage impact investing and entrepreneur acceleration.
Tim Freundlich is a long-time innovator in new financial instruments in the social enterprise sector, which he applies as President and Co-founder of ImpactAssets, the boutique donor advised fund focused on impact investing. He also co-founded and serves as Managing Partner for Good Capital, was a co-founder of the SOCAP conferences and Impact Hub San Francisco, and previously was with Calvert Impact Capital for 12yrs. He lives in San Francisco.