Investing for Impact in Ontario
A look at the new venture in Canada linking socially-minded investors and social enterprises in need of capital.
September 24 , 2013
Two of the biggest trends in the investing world are impact investing— supporting enterprises with a social mission—and local investing, where money is put to work locally. The Social Venture Connection, a new investing platform in Toronto, combines both into what may be the first of its kind marketplace in North America.
The platform officially launched on September 19 at the opening of the Toronto Stock Exchange, whose parent company, TMX Group, is a backer of the initiative. The goal is to catalyze investments in organizations working to reduce poverty, create opportunity, and advance environmental sustainability in Ontario.
The Social Venture Connection, or SVX, brings together socially-minded investors and social enterprises in Ontario need of capital. "It's like e-harmony for impact investing," says Adam Spence, SVX founder and associate director for Toronto's MaRs Centre for Impact Investing. Impact investing represents a $5.3 billion market today in Canada, and is expected to grow to $30 billion in 10 years, he said.
Technically, SVX is not an exchange—transactions take place offline for now, because of securities regulations, so it acts more as a matchmaking service. Social enterprises can upload information and video about their business and funding needs, which can be searched and viewed by investors looking to make a positive impact with their investments.
The site is open to accredited investors within Ontario, including high net worth individuals, foundations and financial institutions. Organizations listed on SVX must be Ontario-based impact ventures and funds—including non-profits, charities, cooperatives and for-profit businesses with a social or environmental mission looking to raise up to $10 million on the network.
One such enterprise is SolarShare Co-operative , a nonprofit that develops solar projects throughout Ontario and was one of twelve initial social enterprises to launch on SVX. The cooperative finances the projects through a mix of funding from private investors—who put up the initial risk capital for construction projects—as well as public bonds and long term loans. Solar power is capital intensive. The cooperative is gearing up to build more than a dozen new solar installations over the next twelve months, which will require more than $20 million to construct.
"The challenge has been to find people who are not just it in for the money and not necessarily what's best for the co-op," says Mike Brigham, SolarShare's president. With SVX, "you already have the types of investors that are leaning this way."
Other enterprises listed on the site include The Fair Trade Jewelry Company, which designs, makes and sells ethically produced jewelry, including fair trade gold, Homestead Organics, which sells organic feed to farmers and REficcient, an online marketplace for used and surplus equipment.
Spence, who has been working on the SVX idea since 2007, hopes it will further impact investing in Ontario and beyond. "We're hopeful that other folks engage in this kind of thing around the world, and we will share and scale our model." SVX is North America's first impact-first, local investment platform, he said, although similar markets exist in Asia.
In addition to TMX and MaRs, SVX is supported by the Government of Ontario, Torys LLP, KPMG, The J.W. McConnell Family Foundation, Royal Bank of Canada and Hamilton Community Foundation.
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