Current Trends in Impact Investing

Here is a brief snapshot of some of the trends I’m seeing:

Intersection of crowdfunding and impact investing. Crowdfunding is not a new thing amongst community ventures. I’ve heard of many grassroots examples of community capital coming together to support local businesses, particularly over the past 8 years in the UK, US, and Canada (happens to be where my network is concentrated – I’m sure there are examples from elsewhere). However, legislation and regulatory changes in the US and Canada in the past 18 months and technology-supported solutions may make crowdfunding of community and impact ventures more visible and scalable. Vancity, a major Canadian credit union that is positioned as a leader in supporting, serving, and financing impact-focused business, recently circulated a survey to its members and the broader community asking whether they were interested in crowdfunding products and services.
In Canada, there continues to be strong interest in impact investment opportunities and products at the lower end of the risk spectrum – such as community bonds and real estate-backed opportunities.
Intersection of diversity, inclusion, and gender issues with impact investing.
Intersection of traditional venture and impact.
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Rise of revenue-based financing. I recall speaking with ‘Luni’ Libes about this in 2012. He employs a revenue-based financing structure at Fledge, LLC and it a structure of financing that is gaining visibility in Canada, particularly for impact-based businesses.

Where I haven’t seen much dialogue:

The impact investment community’s response to rise of AI, automation, job losses as a result of cost reduction measures, and basic income trials.
A sense of unrest and feelings of scarcity made more visible in 2016 by major political shifts underway (US election and EU referendum).

We are at the cusp of another big change. There is a lot of momentum behind technological advancements and traditional industries (in particular financial services) are slow to respond. Trends point to economic growth slowing. Decisions about impact capital need to be patient, risk aware, and balance the needs of right now with the needs of the future.

This post was first published on Quora on June 22. Have a question about impact investing? Leave a question in the comments below.