A Helping Hand for the Green Investor
The socially-conscious investor with $5,000 to put at risk can choose from a variety of specially tailored mutual funds and financial planning services. But suppose the green investor has $5 million in family money and needs some specialized attention in deciding where it should go?
The San Francisco-based nonprofit Investors’ Circle (IC) is a relatively exclusive club, requiring that its members have at least $1 million ready to go to work. To date, its 160 members, chosen on an invitation-only basis, have circulated $44 million in investment capital among 100 socially-responsible companies. IC, founded in 1991, holds two Social Venture Fairs each year, and 15 startups lucky enough to survive the cut (thousands apply) are allowed to make presentations to an audience they know have checkbooks at the ready.
According to Jeanne Trombly, IC’s manager of west coast operations, some members have inherited wealth, others are cashed-out entrepreneurs or foundation fund managers. “We have members who aren’t savvy in venture capital investing, but they have the tools, the means and the money,” says Trombly, who adds that IC holds regular investment seminars and other programs.
At IC’s Social Venture Fairs, the “hit rate” for new investments ranging from $25,000 to $3 million is 44 percent, considered to be extremely high in the world of investor capital. According to Bruce Holm, the chief financial officer of Agra Quest, an agricultural biology company that made a pitch at a recent fair, “After the presentation, we were swarmed by interested potential investors. Our booth used up almost all of our information packets and business plans.”
Mike Korchinsky is president of Wildlife Works, a for-profit animal conservation company that sells organic cotton clothing to support its 20,000-acre wildlife sanctuary in Kenya. Korchinsky is probably unique in that he is both an IC member and an IC presenter. Wildlife Works raised $150,000 through its presentation at an IC fair.
Korchinsky has also invested himself, in a startup that sells shade-grown coffee over the Internet. “The great majority of companies that present to us are socially-responsible businesses, environmental remediation companies or women- or minority-owned firms,” he says. “The challenge is creating value for the very small membership with such a diverse group of investment opportunities. Most of the companies that make presentations do receive some funding, but there are thousands more we can only read about in a brief prospectus.”
In the future, Korchinsky would like to see IC do a better job of publicizing its existence. “Right now it’s one of the best-kept secrets in the financial world,” he says. He also wants the group to develop more of an advocacy role in nurturing socially-responsible startup companies.
Advocating for startups—and networking investors—is the central mission of the Social Venture Network (SVN), which is not only located in the same San Francisco building as IC but is also, in many ways, its parent company. IC spun off from SVN to put investors together with investment opportunities.
“We’re a network of socially-conscious business and social entrepreneurs,” says SVN President Kim Cranston. “Our general mission is to help create a more sustainable, just and humane society by changing the way the world does business. There’s some overlap with Investors’ Circle, but 75 percent of our members are business owners looking to become more socially responsible; only 10 percent are investors.”
Founded in 1987, SVN develops tools for business leaders, including a set of principles that define social responsibility in the workplace. Through its Social Performance Project, it also offers templates so businesses can judge just how successful they’ve been at implementing the principles. “Businesses are increasingly seeing the need to be concerned about the environment and disparities of wealth,” Cranston says. “It’s a real trend.”