Think venture capital is all about generating short-term profits for investors? Well, think again. There's a new type of venture capital out there, and it's focused on helping to solve long-term social and environmental problems, the Telegraph reports.
Called impact finance, it's "grounded in problem-solving and embraces a wider understanding of sustainable value creation that provides significant strategic worth," writes Matt Meyer, chief executive of Taylor Vinters, a UK-based company that focuses on sustainable wine.
"The fact that giant American private equity investors, such as Apollo, KKR, Bain, and TPG, have moved into the impact ecosystem is evidence of impact finance becoming part of the mainstream of investment," writes Meyer.
There are a few things to keep in mind when considering impact finance: It's still in its infancy, and there's a lot of work to be done to make it easier for investors and business founders to measure the results of such ventures.
"The speed of travel in this direction is undoubtedly increasing, and with it, the creation of new impact ventures will become economic drivers," writes Meyer.
"Traditional corporate investment is based on familiar modelling that does not apply to impact investing, which is predicated on a wider and less precise landscape."
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Pedagogy of the Oppressed, a 1970s book by author Paulo Freire, envisions a world not as a given reality, but as “a problem to be worked on and solved.” That mentality is often applied to the greatest social entrepreneurs.