Investment Strategy

Multifaceted Investment Strategy

We have four investment pillars in our investment strategy. With these pillars we’re aiming to grow the social finance market while increasing social equity and advancing the UN Sustainable Development Goals.

This strategy (elaborated on in the IPS) helps us realize the vision we’ve laid out in our theory of change. Our portfolio shows we’ve already begun investing in line with these pillars.

 

Four-Pillar Investment Strategy 

1. Established private impact fund managers


Example: A venture capital fund manager focused on women-led ventures launching a larger institutional-scale fund

Example: An experienced real estate fund manager launching an affordability focused strategy

2. Emerging private impact fund managers


Example: A private debt fund manager with a diverse team working to launch a first fund to finance social enterprises

Example: A venture fund manager launching a first fund focused on Black-led businesses

3. Local mission-driven community lenders


Example: A community foundation creating a lending program for nonprofits in their region

Example: A community-based nonprofit managing a microfinance program for newcomers

4. Social purpose organizations


Example: Investment in a venture focused on commercializing plant-based packaging

Example: Investment in an innovative affordable housing development project

Never Just an Investment of Money

Committed to supporting new fund managers and to growing and enhancing the social finance market, our investment is never simply about money. For example, when there is the need we are often able to offer time, expertise and advice to support fund managers, during due diligence or after investment, to:

  • Boost their investment readiness
  • Catalyze further investments and scale more impactfully
  • Build capacity and fine tune structure to reach more investors
  • Understand how to measure and report impact

As part of the wider Social Finance Fund, and separate from this investment work, we are also running an Impact Management Program. This is a program for all SFIs, not just ones we’ve invested in. Learn more on our market building page.

Pillars 1, 2 and 4

Pillars 1 and 2 contain the more traditional private investment opportunities that fund-of-funds managers like us commonly invest in, although our emphasis on new and emerging fund managers is relatively rare in Canada.

  • Pillar 1 – Established private impact fund managers. These are social finance intermediaries (SFIs) with a proven track record of managing private impact funds or seasoned traditional private fund managers that have been investing in impact-related areas and are seeking to expand their impact focus
  • Pillar 2 – Emerging private impact fund managers. These are SFIs that are first-time and aspiring fund managers that may have capable investment professionals with some impact investing experience but lack an attributable track record

Pillar 4 is likely to be our smallest pillar. Occasionally, we may invest in social purpose organizations directly that are scaling up but are facing challenges raising sufficient capital. These investments may be direct private equity or debt or a co-investment alongside SFIs.

Pillar 3: The Community Investment Pillar

Pillar 3 is not as common in the Canadian market. With Pillar 3, we are aiming to invest in initiatives that create more localized community benefit alongside financial returns. When Realize Fund I is fully committed, we expect 5-20% of our portfolio to be allocated to such investments The financial returns of these initiatives are often lower than with other private funds but we believe the impact potential can be outsized and worth that trade-off.

What We Mean by Community Investment

  • ‘Community’: community of place or community of people. In both cases, we’re focused on investing in initiatives led by, for, or with under-represented communities and meeting community-defined needs – like the Atlantic provinces, the Prairies and the North; like Black people and Indigenous peoples.
  • ‘Investment’: this is not a granting program. We are investing repayable capital with a risk-adjusted return expectation. Investment opportunities include community loans, bonds, outcomes-based contracts, micro-loan funds and community finance initiatives. We may invest in existing opportunities that have already raised outside investment or may help an organization develop a new opportunity when it’s highly aligned with our priorities.

What We Mean by Local Mission-Driven Community Lenders

Organizations with:

  • Deep roots, strong networks and extensive understanding of the social and environmental issues affecting their communities
  • Experience providing repayable financing to community organizations or businesses

Organizations such as:

  • Nonprofits managing a financing program for affordable housing
  • A charity running a local microfinance fund investing in racialized entrepreneurs
  • A cooperative running a community economic development fund
  • A community foundation creating a lending program for community organizations