My journey as a sustainable investor started in 2017 when my father passed away and I inherited some wealth. Prior to this, my investments had been limited to those that I’d made from a Roth Individual Retirement Account (IRA). I decided to use the wealth provided to me by my father to become an angel investor. But I wanted to be a new breed of angel investor, a “sustainable angel”.
Sustainable Angel Investor Explained
An angel investor is someone who provides capital to early stage businesses. This injection of cash helps the founder develop their product, hire more staff, and increase marketing efforts. In exchange, the angel investor often receives equity in the company or convertible debt. A sustainable angel investor is one whose motivation behind investing is both profit and impact driven.
I find investing in early stage companies is rewarding because I get to connect with founders. I also see the direct impact that I have in helping companies succeed. To help select companies that I invest in, I created a personal investment thesis.
An investment thesis is a set of investment criteria that help to guide investors to select investments. My investment thesis is:
- Invest in founders that are creating innovative solutions in the renewable energy or water efficiency space.
- Invest my capital in female, nonbinary femme, and other groups of founders that have traditionally lacked access to capital.
- Ok…maybe I have 3 lenses because I also invest in the rock climbing sector. (This is more of a passion driven thesis than a “sustainable” investment).
As a “sustainable angel”, one of my goals is to leverage my privilege and to be an ally for others that lack access to capital. Not everyone is able to get a loan from a bank. In addition, not everyone has access to friends or family willing or able to loan them money for their venture. I step in to help fill these gaps.
Sustainable Angel Investor Network
Last year I joined Pipeline Angels. Pipeline Angels is a group whose mission is to build a network of female and non-binary femme investors that fund female and non-binary femme social entrepreneurs. The network focuses heavily on populations that historically have had far less access to capital. When capital is deployed with a socially responsible focus, it can be an important catalyst to building wealth from the bottom up. It also helps create positive change in the world. By promoting a diverse network of investors with socially impactful mission driven goals, we can start building wealth across traditionally marginalized communities.
Investing in early stage companies is my favorite way to invest. However, it remains a smaller portion of my overall portfolio since the risks are much higher than other alternatives. In general, it is best practice to invest in 10-20 deals over one’s lifetime. This is because only 1 or 2 investments will produce almost all the return on investment (ROI) for the portfolio. Many of the other investments will not provide a return.
To date, my investments include:
- Pura Roca Climbing Gym, San Pedro, Costa Rica
- LoanSense, Ann Arbor, MI
- Fundeen, Avila, Spain (deal closing in process)
Real estate investing is another area where I apply the same value of balancing profit and impact. I will write more about my real estate investments in a future blog post.