When investors talk about generating deal flow, the emphasis is often on quantity. More prospects mean more opportunities, right? This is a sales perspective. But high volume doesn’t necessarily translate into high value. Add the imperative for social and environmental impact and the pool shrinks further. You can spend a lot of time and resources chasing transactions that are a poor fit from the outset and unlikely to close. Even investment organizations with the widest investment net, who may see three hundredpitches annually, still only make a handful of investments per year.
So how do impact investors achieve the balance between quality and quantity?
Be better communicators.
Entrepreneurs sometimes struggle to communicate the problem they are trying to solve. They’re also often accused of lacking a clear value proposition or financial assessment, two fundamental aspects of a strong pitch. Yet, investors also often fail at communicating our investment thesis, or the problem we’re trying to solve. TAF puts significant effort into evaluating and refining our investment ‘strike zone’ and advertising it regularly on our website. Check out Greensoil PropTech Ventures for another example of a crystal-clear investment thesis. We can’t expect a convincing or accurate response to business questions if we can’t express in plain language what we want to invest in.
The solution is to be transparent and up front about what you will and won’t invest in. For foundations and non-profits, be clear about preferred returns. While your mission may support grants, the expectation shouldn’t be for concessional finance. Impact investing is still investing.
The better we are at defining what we are looking for, the better entrepreneurs will be at assessing their own fit. Remember, entrepreneurs don’t want to spend their time on wasted pitches either.
Be patient partners.
Impact investing can be about the long game. The classic VC moniker ‘bet the jockey not the horse’ references that entrepreneurial ideas are abundant, but entrepreneurs who can execute on those ideas are uncommon. When you find a good one, nurture the relationship even if the deal is premature. Following along on the entrepreneurial journey and providing sound advice places you in a position to make the right investment decision at the right time.
Networking remains the primary source for deal flow, so it’s similarly important to build relationships with other successful investors. While the Canadian impact investing sector is relatively small, both in terms of the number of players and the investment capital available, we have the advantage of being a supportive and collaborative bunch.
Entrepreneurs are rightly expected to focus their attention on the activities where they add the most value. Investors should do the same. We can do more to differentiate our own value proposition. Influential fundraisers can help secure additional capital. Seasoned financiers can help identify the best investment structures for the business context. Experienced company builders can pass on knowledge already gained through facing the same challenges. For TAF, it’s about being flexible and creative. We want to provide capital with the structure and vehicle that’s best for the entrepreneur. A very different, but innovative and effective approach is taken by Solar Flow-Through Funds, an organization merging renewable energy development with a tax-based investment structure.
Just as no two opportunities are exactly alike, no two investors should be either. Quality deal flow will come to those that offer great service beyond simply providing capital.
We won’t always find perfect opportunitiesthat meet our investment requirements. Being clear about our investment thesis and value proposition, and having a partnership mentality can help make the right connections and achieve our desired outcomes. Being clear about our investment thesis and value proposition, and having a partnership mentality can help make the right connections and achieve our desired impact. In addition to TAF’s carbon reduction objectives, we’re now adding social impact to our deal evaluation process. It’s new ground for us, and it might even shrink the volume of deal flow, but we’re working on the relationships to reveal those unique, quality investments.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
