There’s a new impact investing financing vehicle social entrepreneurs might want to know about. It’s also the latest in a series of innovations in the impact investing world, ranging from the Ford Foundation‘s committing up to $1 billion in mission-related investments to new online impact investment marketplaces.
Called Capital Aggregation, it’s a recently launched business line for Calvert Foundation, aimed at mission-driven companies, as well as financial advisors and their accredited clients who are interested in fixed-income impact investment deals.
For accredited investors, the goal is to offer an efficient way to invest directly in private market, fixed-income deals with measurable social returns, as well as the usual financial ones. “Right now, most accredited impact investors who want to invest directly need to business develop it, underwrite it, paper it, structure it,” says Jennifer Pryce, president and CEO of Calvert. “This makes it a lot easier operationally for investors who can come to us and get access to multiple investments in different areas, geographies and rates of return.”
Also, impact investing funds or intermediaries can use Calvert for support in everything from structuring vehicles to raising capital. For most small funds raising between, say, $10 million to $50 million, it’s a complex and time-consuming, one-to-two year process. By tapping Capital Aggregation, they can hand the capital raising and structuring process over to Calvert, according to Pryce.
So far, there have been five transactions aggregating over $70 million, with about three to five more in the pipeline, according to Pryce, who says the organization spent about a year piloting the program. One example: the Greenline Ventures Small Business Capital Fund, which provides affordable capital to small businesses operating in distressed U.S. census tracts with the goal of creating quality job opportunities for low income populations. It’s a $20 million fund, with minimum investments of $500,000. Pryce also expects to fund larger deals down the line.