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Three Key Camps at the Heart of the Impact Investing Movement

Ben Powell, Founder and Managing Partner of Agora Partnerships

If you are like many people, you are new to impact investing, have a mild notion of what it is, and believe that it could be important, maybe even revolutionary. But this notion is tempered by massive confusion surrounding the term.

Understanding the different agendas of the three key camps under the impact-investing umbrella can help you navigate this complex conversation.

Impact-First Investors (also called “Social-First”)
The origins of the term impact investing begin with a handful of foundations and non-profit organizations (incidentally, nearly all of which were founded by entrepreneurs). These groups believed that investing in entrepreneurs was a better way to solve social problems around the globe rather than the project-based approach that has dominated development assistance since the 1960s. These foundations wanted to get affordable, “patient” capital to real entrepreneurs who could then turn it into measurable impact. For this group, which includes most of the founding members of ANDE, the primary purpose of impact investing is social – to serve the needs of society, as quickly and tangibly as possible

A good example of an impact-first investor is Kevin Starr at the Mulago Foundation, author of an excellent recent post on the dangers of impact investors chasing returns over impact. His definition of impact investing is:

The practice of putting money—loans or equity—into impact-focused organizations, while expecting less than a market rate of return

Return-First Investors (also called “Finance-First”)
This is a group of mostly mainstream investors interested in creating products for their clients that allow their money to generate a triple bottom line return – meaning a market rate of return and a measurable (or at least ratable) social and environmental return. Much of the attention around impact investing has been focused on these big players like JP Morgan and Prudential. The hope is that traditional finance companies will unlock billions in investment capital that also demands to know its social impact.  Return-first investors are trained in closing deals that make money. For them, the defining feature of an impact investment is that it can favorably compete with the financial returns of a traditional investment. Ignia Fund is a good example of this approach, as is the official definition of impact investing from the GIIN.

Entrepreneurs and Field Builders
The third group doesn’t consist of investors at all, but of non-profits and some foundations that are focused on entrepreneurial eco-system development and supporting the field at the entrepreneur level. This group includes many of the founding ANDE members and smaller start-ups.  As a whole, this group believes that the key drivers of development are entrepreneurs, not investors, and that now is the time to focus our efforts on entrepreneurs. For this group, impact investors are key allies, but they lament that not enough of them are yet willing to pull the trigger, especially with smaller, angel deals, where their impact can be greatest.  The basic allegiance of this group is to the entrepreneurs on the ground. An impact investor might ask, “How can I find good deals that created blended value?” The entrepreneur camp, on the other hand, asks, “How can we help entrepreneurs make better decisions that result in increased growth and increased impact?” B Lab is a great example of this camp.

A working definition of impact investing for this group is Agora’s own:

The practice of investing in impact entrepreneurs.

Working Together
While each group has its own motivations and agendas, they must all rely on one another if we are to put ourselves on the path to a more sustainable capitalism for the 21st Century. Whether these groups can coordinate their resources effectively and work together is one of the most fundamental questions facing the movement today.


  1. Tom says:

    I enjoyed your Three Key Camps piece, Ben. For the Third group couldn’t for-profit entrepreneurs be included? These could be companies interested in making a social or environmental impact, while making a living from their efforts.

    • Ben Powell says:

      Tom, you are absolutely right. In the third camp I focused only on those organizations whose agenda is to support the needs of entrepreneurs. I left out the entrepreneurs themselves because typically their agenda is much more focused on building their businesses, and in the case of impact entrepreneurs, creating measurable social value. But you are absolutely right that this group, which has the most to gain by a renewed focus on programs that help entrepreneurs – fellowships, incubators, accelerators, trade associations, marketing assistance, mentors, pro bono support, MBA consulting — the list goes on – -should be included in the third group. Which also raises another critical question for the future – how can impact entrepreneurs – by definition super busy people who need to be focused on their businesses – better work together to support this growing movement? How the industry engages impact entrepreneurs – and vice versa – is a critical question going forward. There is nothing more powerful than a group of smart entrepreneurs working together. Thanks for the comment.

      • Tom says:

        Spending some time observing the exchange of views & sharing of information in the Impact Investing & Impact Entrepreneur groups on LinkedIn, Ben, I agree that engaging the entrepreneurs is key, and a big challenge.

        A big hurdle may be that the entrepreneurs and the hoped for investors, some of them of the traditional and institutional variety, could have different motivations and sensibilities, resulting in a strained relationship.

        One thin for all to keep in mind is the very meaning of Impact Investing, and that is that it is designed to generate both social /environmental and financial positive impact. How these two traditionally unrelated or at best accidental byproducts, are managed together will be at the center of success or failure.

        I like your observation about how powerful smart entrepreneurs, working together, can be. Have you had experience as one, or working with them?

  2. Ben Powell says:

    Thanks Tom, we are really happy with how our first accelerator class turned out. We found that the entrepreneurs built a whole lot of trust and, as entrepreneurs are want to do, started doing business together. There’s more info on the class on Agora’s website and we will be sharing more about the power of community to accelerator growth in future posts.

  3. Ben Powell says:

    Thanks Tom, we are really happy with how our first accelerator class turned out. We found that the entrepreneurs built a whole lot of trust and, as entrepreneurs are want to do, started doing business together. There’s more info on the class on Agora’s website and we will be sharing more about the power of community to accelerate growth in future posts.

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