04 Nov Rise of ‘mission investing’ is trend companies should follow
The latest round of investment in Midwestern BioAg Inc. caught many eyes simply because of its size: The 33-year-old company has raised $21.3 million to continue a $40-million recapitalization that began in 2014.
It also deserved notice because of a phrase used to describe the role of two of its latest financiers: “Mission-related investments.”
Along with four other investors, the McKnight Foundation and the Franciscan Sisters of Mary also made mission-related investments in the company through Imprint Capital Advisors, a division of Goldman Sachs.
“Mission investments” are investments made by foundations and other mission-based organizations to further their philanthropic goals. Also known as impact investments, mission investments are intended to generate both a measurable social or environmental benefit as well as a financial return.
In short, they’re market-rate investments that are expected to make money while simultaneously “doing good” according to the investor’s larger goals.
“We’re seeking opportunities to align our investments more closely with the foundation’s mission. This presents opportunities for both financial and environmental returns,” said Elizabeth McGeveran, director of impact investing at The McKnight Foundation.
“The company’s expertise in nutrient efficiency helps farmers increase yields and the nutritional content of food – that hits the financial goal. It also means fewer fertilizers escape into water supplies or the atmosphere – that hits the environmental goals of a cleaner Mississippi River and fewer greenhouse gases,” she added.
The topic will take center stage during the annual Wisconsin Early Stage Symposium, to be held Nov. 16-17 at Monona Terrace Convention Center in Madison. A panel of national experts will open the second day of the conference with a discussion of investment trends that emerging companies should know – including mission investing.
Among the Nov. 17 panelists is Rick Moss, co-founder of Better Ventures, a venture capital firm in Oakland, Calif., that views mission-related investments are core to its business. Better Ventures has invested in Wisconsin through Golden Angels, a Milwaukee-based angel network that is one of the two largest angel networks in the state.
“We back smart and scrappy teams of two or more co-founders building highly scalable and capital efficient technology companies that address big global challenges,” Moss said.
Those include low-cost web and mobile technologies, platforms tied to preventative health and technologies that promote sustainability across the economy.
While it’s not mission investing in the social sense, the Wisconsin Alumni Research Foundation has supported its own mission over time by investing directly in startup companies created with UW-Madison technologies.
Long known for patenting and licensing inventions rooted in the Madison campus, WARF began investing in some of those companies more than 15 years ago and appears poised to consider doing more.
The new managing director of WARF, Erik Iverson, helped to create the internal venture capital fund at the Bill and Melinda Gates Foundation during his tenure there. The Gates Foundation uses the fund to build upon its grants and other program activities, especially in global health.
The unique corporate structure of BrightStar Wisconsin is another Wisconsin example. Led by entrepreneur Tom Shannon, it is a non-profit, early stage fund that has invested in about three-dozen companies. Its stated mission is to “serve as an efficient philanthropic conduit for keeping our best and brightest in Wisconsin by creating high-paying jobs that will help our state compete, prosper and thrive.”
A deeper commitment to mission investing was among the recommendations in the Wisconsin Technology Council’s May report on “The Value of Higher Education to Wisconsin’s Economy.” It called upon other institutions tied to higher education to band together and become a catalyst to help fill Wisconsin’s capital void.
Mission investing should become a part of Wisconsin’s strategy for spurring growth. If our own institutions don’t demonstrate their confidence in our best and brightest entrepreneurs by being among the first to invest in them, why should anyone else?
Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal.
The opinions expressed herein or statements made in the above column are solely those of the author and do not necessarily reflect the views of WTN Media.