THE PATIENT CAPITAL COLLABORATIVE
REGENERATIVE QUALITIES OF THE PATIENT CAPITAL COLLABORATIVE
Wealth Viewed Holistically / Empowered Participation / Robust Circulatory Flow
Wealth Viewed Holistically / Empowered Participation / Robust Circulatory Flow
“We like to find companies that have an opportunity to be commercially viable but also will make a difference. We would like them to keep going even if the business side of things gets tough – and we are continually impressed with the determination of the entrepreneurs in this space. “ — Tom Baldastarre, co-manager of the Patient Capital Collaborative
If we are to achieve the economic shift to a more just and sustainable economy, we need to differentiate our
collective investment decisions along qualitative criteria, not just based on modern portfolio theory’s simplistic and flawed
risk-adjusted financial return metrics. The Patient Capital Collaborative pools the expertise of a passionate community of
investors to catalyze deal flow into holistic value enterprises.
collective investment decisions along qualitative criteria, not just based on modern portfolio theory’s simplistic and flawed
risk-adjusted financial return metrics. The Patient Capital Collaborative pools the expertise of a passionate community of
investors to catalyze deal flow into holistic value enterprises.
FROM THE PATIENT CAPITAL COLLABORATIVE FIELD GUIDE STUDY In 2007 Sky Lance should have been enjoying the fruits of a lucrative, 20-year investment management career that had culminated in his co-founding of a successful, growing private equity firm. Instead, he found himself searching for ways he could use his investment skills for a higher purpose as he became increasingly restless working in a commodity-like market where deal-making mattered more than relationship-building. Today Lance is one of two General Partners in an innovative investment practice, the Patient Capital Collaborative, which brings to bear the collective expertise of a group of angel investors to help nurture and fund start-up and early-stage companies attempting to make a meaningful social and environmental impact in the world. HOW PCC GREW OUT OF SHIFTS IN CONSCIOUSNESS AND PARADIGMS
“I was moving farther and farther away from the relationship-oriented investing that I had loved,” says Lance, reflecting on his growing dissatisfaction working with ever larger private equity funds where the investment targets were $400 to $500 million dollar corporations with lots of other funding options. “I looked back at my early career at Bank of Boston and recalled how much I had liked working with small companies. I was only 25 years old at the time but still these companies were eager for my council and advice, and I missed that.”
A friend in whom Lance confided his aspirations told him to check out the angel investor group Investors’ Circle. Social venture capitalist Susan Davis had founded Investors’ Circle in 1992 using a networking strategy modeled on natural systems. By the mid 2000s, IC had established an admirable track record, facilitating the flow of over $145 million into more than 220 companies and small funds addressing social and environmental issues. (Today Investors’ Circle is under common management with long-time impact industry participant SJF Institute.) “When I joined Investors’ Circle I saw there had been a paradigm shift in the general marketplace,” Lance reports. “Twenty five years ago the people who were attracted to starting up companies doing good were people with their hearts in the right place but the quality of companies they established were marginal. As I looked at the companies that were presenting at IC I realized there were people with real management experience moving into this area of social and environmental benefit.” Meanwhile, as Lance had begun exploring the universe of IC companies, a former high tech entrepreneur and new IC member Suzanne Biegel had begun the fieldwork with fellow member Tom Balderston to explore creating an investment fund that would provide an orderly process for coordinating the due diligence and aggregation of deals related to the investment opportunities that presented at IC’s biannual conferences. They connected with Lance and in 2007 he created SustainVC to become the general partner of a subsequent series of impact investment partnerships called the Patient Capital Collaborative (“PCC”). Balderston, a seasoned advisor to and manager of venture capital funds, served on the Investment Committees of the early PCC funds, and in 2010 formerly joined Lance as a partner in SustainVC. |
THE PATIENT CAPITAL COLLABORATIVE UPDATE
December 2013--Tom Balderston, managing principal along with Sky Lance of SustainVC, LLC, the General Partner of the first three Patient Capital Collaborative funds, reports that with the formation of its Patient Capital Collaborative 2013 Fund the PCC has made two important changes.
First, the PCC has expanded its investment management team, adding two new members, Chris Bentley and Justin Desrosiers. Chris was co-founder of GoodCompany Group in Philadelphia and coordinates the Philadelphia Network of Investors’ Circle. Justin is Director of Investments at IC and was previously an entrepreneur in the environmental space. Second, the Patient Capital Collaborative’s 2013 Fund has been structured so that a new subsidiary of Investors' Circle is the Fund’s GP. In turn, the team (including Justin, Chris, Tom, and Sky) are engaged to oversee the fund. The decision to bring on Justin and Chris and the reorganization of PCC formalizes a close relationship with IC that has existed since the PCC’s inception in 2007. “We did this to reinforce the tight connection between the PCC franchise and the IC community,” says Tom. “We wanted to put the PCC on a good track for ongoing continuity and potential growth with new investors and wealth managers who approach IC. And at the same time, we believe this partnership will strengthen the IC community.” PCC’s 2013 Fund has just closed on two new investments that presented at the IC San Francisco Conference on May 8 and 9 of this year. The first is Portland, Oregon-based entrepreneur Sam Pardue’s Indowindows, a manufacturer of interior inserts that can be pressed onto an existing window's frame to improve insulation. The second is DR2 Solutions, a Williamstown-MA-based demand response software company that helps companies generate savings from reduced energy consumption. That brings to 17 the number of companies the PCC has invested in since its first 2007 fund. The PCC is currently doing due diligence on companies that presented at the Washington DC IC gathering in October and at the New York conference in early December. Tom further reports that “while there are a number of active institutional funds in the impact sector, on the ground it doesn’t look like major amounts of money is moving into early stage impact investing yet. Generally speaking institutional investors want to see proven stories and track records and growing companies and clear exits. So most of the capital we see in our portfolio companies comes from fellow angel investors. PCC has built a solid portfolio, but we have not had any exits yet.” "It seems unlikely," he goes on to say,"that we, in the early stage segment of the impact investing arena, are likely to attract a following from institutional capital until we can demonstrate both financial returns as well as impact results. That’s because there is a commonly held perception among institutional investors that it is necessary to trade off financial returns for impact. We can believe that this trade-off isn’t always necessary, but until we can demonstrate it, I don’t think we’ll see major institutional capital flows into the arena." PCC has invested using a number of structures, most frequently along side other investors in various forms of preferred stock. “We like to find companies that have an opportunity to be commercially viable but also will make a difference. We would like them to keep going even if the business side of things gets tough – and we are continually impressed with the determination of the entrepreneurs in this space. “ |
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