Searching for angel investors to help you finance your social enterprise? Make sure you know how to tell a compelling story and build a good website. Those are just two findings presented by unrelated research projects released recently in Canada.
A research team associated with the Carleton Centre for Community Innovation, in Ottawa, concludes that investors who learned online about a socially responsible investment product were eight times more likely to buy it than those who talked to their financial advisor.
Moreover, Dominique Diouf, in the working paper Exploring Factors that Influence Social Retail Investors, concludes individuals who learned about an SRI product in an advertisement or news article were similarly eight times more likely to buy it compared to those who contacted an advisor.
Diouf, and colleagues Tessa Hebb and El Hadji, studied data gathered online by Desjardins Funds between 2008 and 2012. Of the almost 900 participants in the online surveys, 90 percent held a traditional portfolio, while 12.5 percent held an SRI portfolio. Only three percent owned both traditional and SRI products.
Their findings also suggest that almost 20 percent of investors who hold an SRI product would choose to purchase such investments even if their financial returns came in 10 percent lower than traditional products.
How to measure social impacts
Deep-pocket investors who are searching for fresh investment opportunities that offer both financial and social returns often face challenges when trying to measure social impacts.
Purpose Capital, based in Toronto, recently released a guidebook to help accredited and institutional investors successfully navigate the life cycle of an impact investment.
The Guidebook for Impact Investors outlines a range of measurement approaches offered by social ventures. In a nutshell, they can range from simply measuring output — such as the number of families a project provides with affordable housing — to putting a dollar value on the impact delivered by the enterprise when families, for example, feel more financially secure and can better cover expenses for household needs beyond paying rent.
Many investors who seek to achieve social returns are heavily influenced by the enterprise’s ability to tell compelling success stories.
“People are going to invest in a venture because they believe in it,” says Hilary Best, a member of the research team. “Then they will measure value. It’s more than just a story.” The guidebook contains worksheets to help investors who are interested in impact investing, but don’t know how to get started, says Best.
Although intended to reach sophisticated investors, the guide will benefit a social enterprise hoping to build relationships with angel investors by learning about what motivates financial backers and how they may expect to measure social return on investment.
Nandy Heule owns www.heulecommunications.com, which represents Oikocredit Canada Central a leading provider of private capital to the microfinance sector.