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 up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
