More Than Money: How I Built Investment Muscle Part III

Cherries -- the word cherries often connotes value. What value does our money bring beyond the investment?
Cherry! — or, investment value that’s more than money ©2018 Sonora Ortiz

In your travels, you might find yourself involved with a moving cause or encounter a dynamic entrepreneur; suddenly you feel compelled to find a way to give money to the cause or the business.

Or, as you dip your toe in the waters of impact investing, a friend asks you to help finance a specific social enterprise. Trusting, you follow their lead to gain your first values aligned investment experience.

More likely you come to the idea of investing with your values and solving social problems with market solutions even before you have a direct cause.

So, what are the next steps to gain experience and jump into the market doing well while doing good?

Next steps include being mindful of your investment strategies and how they count as more than the money.

A Quick Recap

In Part I of this series, I shared ideas about gaining skill through experiential learning, calling it What I Know (WIK) experiences.  In Part II, I explored how little amounts of money can help you hone your WIK intuition while making a big impact for a single entrepreneur. In Part III of this series, I’ll explore how investment (both little and big), does more than bring financial resources to the entrepreneur, how:

  1. Your investment Influences the growing marketplace
  2. The money flow can support the entrepreneur
  3. Your investment can make a difference for your fellow impact investors

More than Money

The standard bearer for helping us reimagine our money as more than money is the Robert Kennedy speech on GNP. Here’s a little preview:

The gross national product…. does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials.

It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile.

And it tells us everything about America except why we are proud that we are Americans.”

You can listen to the entire speech on YouTube here.

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Stewardship

Through experience with Slow Money, I’ve realized, again and again: our financial resources are so much more than money, and it’s important to wield these resources responsibly.

In addition to discerning our values and staying the course through an Investment Policy Statement (IPS), it’s essential that we’re also wise stewards. This is for the sake for the sake of our entrepreneurs and for growing a resilient, healthy impact investment marketplace and ecosystem. 

We might mean well in our investments, but without wisdom, our impact may be nothing more than disruptive.

Sometimes called dumb money, unschooled investments:

  1. Burden the entrepreneur with too much money
  2. Are often limited as investors are unable to give needed follow-on investments when business doesn’t happen as planned
  3. Does little to develop the ecosystem
  4. Set uncomfortable financial benchmarks for future mission-driven business owners.

On the other hand, not investing:

  1. Limits the growth of a developing field
  2. Misses the opportunity to inspire or synergize with fellow impact investors
  3. Loses the chance to develop our WIK – we gain more from actually walking the talk. Book learning as we explored in Part I of this Series, can only take us so far.

Your financial resources are resources.

You should use them responsibly.

As we look to financing, let’s examine, for a moment, what our money accomplishes for our community and our growing impact investment eco-system. Our investments play many roles beyond funding a business model for a worthy entrepreneur.

Money Plus

Beyond money, there are added the ways investors bring value to the investment:

Investors contribution

  1. Signaling
  2. Engagement
  3. Grow new or undersupplied capital markets
  4. Provide flexible capital
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So, what exactly do these terms and phrases mean?

Signaling

Signaling may suggest to other community members interested in impact investing that this is a worthy opportunity.

For example, a friend recently asked me to contribute to a fundraiser out of Northern California. I didn’t know the parties involved and declined to invest.

Several days later, another friend, this one in Southern California forwarded an email to me from the funders. The forwarding email noted how my friend had come to know these entrepreneurs, it signaled his plan to invest and included an offer to invite to several community members, including myself, who’d served as angels or champions of Slow Money minded investments.

This invite made me sit up and take notice.

My friend’s participation ‘signaled’ to me that this might be a business worth considering.

Engagement

Engagement is an easy way for me to support our local entrepreneurs. From my years working first as an advisor and now as an activist in the alternative economy, I have connections from all kinds of industries and communities. I enjoy reaching across my network to bridge communities and find opportunities.

Without making sizeable investments in these businesses, I’ve enjoyed the role of brand ambassador or served as a brand advocate and sometimes an investor/investment matchmaker. I’ve made connections to bring an entrepreneur to the next step in their business. Through the work, I’ve sat on two advisory boards and participated in crowd raises from across the nation and the globe.

Though the term smart money is often left to bigger dollar amounts, smart money is valuable at smaller dollar amounts too. This is where you bring more than your investment to any small business you choose to guide.

Grow Capital Markets

Using our financial resources to grow new or undersupplied capital markets is ecosystem development at its best. You can find these efforts for a number of social justice and environmental movements. Consider:

  1. African American and Latinx entrepreneurs, often find it difficult to obtain financing for their small businesses.
  2. The formerly incarcerated have a tough time qualifying for bank loans.
  3. Slow Money centers on the idea that sustainable food businesses have a difficult time finding money in both traditional banking relationships and with angels and venture capitalists. They turn to the impact investment to move some financial resources to shared values communities.
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This a significant aspect to all impact investing and one I’ll continue to explore in additional posts.

Provide Flexible Capital

A wise approach to providing flexible capital is another important skill and one I’ve developed through experiential learning in my Slow Money community. Conciliatory interest rates, terms indexed to cash flow, extended terms, follow-on investment  are additional ways we can structure our impact investments.

Ideas to Consider

These are important ideas to consider.

Somehow, folks looking to commit to impact investing, often feel overwhelmed. With an eye to making a commitment of big money towards their investments, they don’t know where to begin and worry about the risks and control over the values they want to see realized in the world through their investment.

Remember: investing in our shared values communities is about more than money.

It’s is a place to start.

Moving our financial resources is about relationships, networks, and eco-systems. If we immerse ourselves in the ideas and opportunities, the right money and the right amount of money will reveal itself.

Have you ever considered your investments as signaling, engaging or building an ecosystem?

Do you see a role for subsidies in ecosystem development?

Have you felt your network or support made a significant difference for an entrepreneur?

How did it feel? What was your experience?

I’d love to hear, let me know in the comments below.

 

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