All Investing Has Impact

I've always had a problem with the term "impact investing".  

It's as if the investments that you made that aren't part of an impact investing strategy hang from the ceiling Mission Impossible style in a temperature controlled environment making no discernable impact on stakeholder's lives.  

Leave no trace.  Leave no fingerprints.  

Only, we know that's not the case.

Marketplaces like Etsy enable hundreds of thousands of craftspeople to find sellers for their goods.  This is almost universally seen as a good thing.  

Other companies, like Airbnb have more complex impacts.  Some people make ends meet on the platform by renting out spare rooms or offering up their apartments when they know they'll be travelling for work.  Others feel like they're shut out of affordable housing because there is inventory earmarked for living that has turned into what amounts to hotels.  

Often times, VCs have rushed to fund models without thinking much about the impact their companies make.

Take "on demand" economy companies, for example.  They made a big splash in the VC fundraising scene, promising convenient services at great prices with nice margins, all "powered by tech".  When it turned out those services were more powered by people than they were powered by tech.  These were people that were struggling to take home a living wage and get the proper protections the law provided for.  When those people demanded fairer employment status, shit hit the fan, and many of those companies are having to scramble.  

Companies built around fair labor practices, on the other hand, like the investment I am proud to say I made in Homer Logistics, are scaling well and proving that you can do well by doing good.  Homer classified all of it's delivery people as W-2 from the beginning.  Yet, no one is rushing to classify an urban delivery company as an "impact investment", even though they probably should.

Sometimes, investment policies have potentially unintended impact, like in the cannabis space. Traditional drivers of "private equity good behavior"--the government pension funds representing the little guys, like cops, firemen, and teachers--they won't even touch the space.  These are the pools of money that never had prohibitions around investing in military equipment, but who have recently made a push to clean guns and fossil fuels from some of their balance sheets.  

The institutional private equity funds in the US that they invest in are barred from making investments in cannabis.  What that means is that many of the funders of this industry wind up being rich white dudes or family offices of rich white dudes, hence where the dollars are flowing for new business opportunities.  Not surprisingly, most of the investments being made are in white, male entrepreneurs, even though, according to the NY Times, "...blacks and whites use marijuana at comparable rates."

"Yet in all states but Hawaii, blacks are more likely than whites to be arrested for marijuana offenses." it mentioned.  Minorities have been hardest hit by the enforcement of drug laws, but they're benefiting from legalization the least. 

So, on one hand, the move towards decriminalization is great for minority communities, the economic opportunities created are unevenly distributed.  

It's important to consider the footprint your dollars are going to be leaving behind, because every dollar makes an impact somewhere.