Many businesses aren’t just out to make a buck; they have values they hold dear. Many pledge to treat workers fairly, not pollute, go organic, fight poverty, or fairly compensate suppliers. Often these socially responsible businesses want to work with like-minded people, even when it comes to funding their companies.
Businesses can find investors that have similar philosophies by seeking out socially responsible venture capital firms and angel investors. Where traditional VCs might pressure a company to abandon its creed to gain higher profits, social investors want companies to uphold their values as they grow.
Socially responsible investors expect returns on two fronts: social and financial. In other words, though they want to help make the world a better place through their investments, they’re in business to make money. These VCs and angels typically get involved in the companies they fund to provide not only expertise in business fundamentals but also technical advice on how to operate in a socially positive way.
Starting Your Search
While no readily available statistics exist on the number of socially responsible investment firms, it is a growing movement within the venture capital community. Major venture firms that invest in sustainable businesses include Good Capital, Parnassus Investments, Calvert Investments, Domini Social Investments, Underdog Ventures, and CEI Ventures.
Along with these established firms, an industry of investment consulting has sprung up to advise investors on how to use their money to reap financial returns while making social progress. Portals such as Social Funds, Social Investment Forum, and SRI-adviser.com provide education for investors looking for ways to align their investing with their values.
Some social VC firms focus on a specific area they’re looking to change; so do your research before contacting a given firm. While some direct their investments toward causes that fight poverty, for instance, others invest in companies that promote organic living and conservation.
Companies seeking socially responsible venture capital can land big money, too. One VC firm, for example, participated in a $50 million funding round for a clean-energy technology company.
University and retirement fund endowments are an emerging source of socially responsible investment funds. Though they may be better known for making plain-vanilla, conservative investments, such institutions increasingly invest a portion of their funds in higher-risk ventures, in hopes of earning higher returns, including investments in growing businesses. Recently, the Social Investment Forum released a guide for colleges and universities interested in learning how to earn market-rate returns while investing for the good of their communities.
It’s also possible to find a socially inclined angel investor, but it may take a bit more sleuthing. Angel groups have been less active in promoting themselves specifically as socially responsible investors, but many focus on areas such as green energy or organic food that tend to have social missions. The Angel Capital Association is a good resource for locating like-minded angel investors that are a fit for your company.
Business reporter Carol Tice contributes to several national and regional business publications.