Impact Investing, Soros-Style
Wednesday, October 23, 2013
What I really deal with is venture capital without the returns,” Stewart Paperin tells the audience at INSEAD’s Entrepreneurial Forum in Fontainebleau recently. Paperin is administrative vice-president of the worldwide Open Society Foundations and (since 1997) president of the Soros Economic Development Fund (SEDF) which currently manages US$200 million of investment capital covering some 28-projects in seven regions of the world.
OK. That works as a definition. But not really as an explanation of what might attract people to invest. And in what, exactly?
“People invest in this ‘high impact capital’,” he explains, “with two objectives: one is the financial return of course, but the second is the social return.” And the challenge. “You’re dealing with early-stage companies, with management that’s not as up to scratch as we would normally find in the more developed worlds; you’re investing in environments where the laws and regulations are not necessarily those you wish you had. The risk is high, return is moderate.”