The Challenge of Impact Investing

The Challenge of Impact Investing

June 14, 2022 by investor

The Challenge of Impact Investing

Impact investing seeks to make the world a better place through its investments.

As with all investing, it comes with its own challenges.

Most impact investments underperform the market. 

The focus on providing social or environmental benefits degrades the financial return.

Some researchers claim that impact investing receiving market returns is not having an impact, and those delivering an impact end up with below-market returns.

The challenge is finding an impact investment opportunity that provides enough of an impact to offset the lower return.

It’s important to measure the impact the company provides and follow it over time to know that it is making a real difference.

In many impact startups, the social or environmental impact is not clearly defined. 

The impact investor must identify a company actually providing the stated impact, then the investment must actually increase the company’s measured impact.

Impact investing encourages companies to provide a social impact, but there must be a measured result to determine how effective it is.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

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Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.

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