By Cathy Clark and Josie Taylor Gaillard
This snapshot of the emerging DBL investor landscape reveals a colorful cadre of investors going about their work in myriad ways. Our research shows that the group of DBL funds is broader in industry scope and deeper in each social or environmental focus than either we, or our advisors, thought it would be. The capital under management in the funds is significant, and the investors are employing an impressive array of investment philosophies, structures, and strategies. It is remarkable that even in the middle of a very depressed early-stage funding market DBL fund managers remain overwhelmingly optimistic about future growth in each of their social or environmental interest areas. To date, there has been a great deal of experimentation in the segment. Not only is this landscape diverse and fragmented, but also it is still relatively young. It appears that many of today’s DBL investors have yet to exit from their investments. Perhaps the greatest barrier to the growth and success of the DBL capital market is the resulting lack of consistent and reliable financial return data. Many fund managers believe their returns will be similar to mainstream VC returns, but we were not able to collect evidence of this belief across the DBL segment. Further complicating matters is a great disparity in the willingness of fund managers to publicly emphasize their social or environmental goals. Some funds downplay their social or environmental goals, which ultimately thwarts communication and sharing of best practices among, and especially across, fund types. We believe that the best way to counter the still widespread perception that financial returns will necessarily be sacrificed to a second bottom line is for DBL funds to demonstrate attractive financial returns.
Research Initiative on Social Entrepreneurship (RISE), 2003
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