 Thank you all for joining and today we're going to have a really good discussion around a key challenge that is faced by the impact investing community. So I'm Katie Fitzgerald from CircleUp and I'll go I'll give a little bit of background on that but first to really touch on what we're talking about here today. So it's not a surprise that a lot of that funds attract more capital than direct investments, but impact funds have been slower to develop. So we're going to touch on a few questions or try to shed light on a few questions related to that. The first being how do you really evaluate an investment into an impact fund and the second being how can GPs and LPs better navigate that conversation? To do this we'll use the CircleUp grow fund as a case study and we will hear from a couple investors that considered an investment into the CircleUp growth fund. So Michael Grossman from New Island Capital and Nick Flores from the Caprock Group and you'll also hear from Rory Eakin on the evolution of the CircleUp growth fund which didn't start out as an impact fund but evolves to include an impact angle. So shortly you'll hear from both Michael and Nick on how they came to their decision and how they thought about the CircleUp growth fund and then we'll go to Rory. Before we dive in there, a brief background on CircleUp, just to provide some context. We are an online investment platform and very much a curated platform. So we accept a very small percentage of the companies that we see. We have to date helped 115 entrepreneurs raise over 130 million in aggregate on the platform and we currently have over 200 entrepreneurs that are actively raising at the moment in representing an aggregate at 250 million in curated investment opportunities for investors that is open on the platform at this time. We wanted to help even more entrepreneurs. So in late 2014 we decided to raise a fund. So the CircleUp growth fund which is the subject of the conversation today. The two investors that we have on this panel don't need a big introduction. They're well-known, well-respected, so that we can get in and we have only 20 minutes to cover a lot of ground. So maybe Michael and Nick, if as a part of your first answer you could give a brief 30-second background on yourselves, but otherwise we'll jump right in. So Michael, starting with you, can you just describe your objectives as an impact investor? Sure, thanks. New Island Capital is a institutional scale investment advisor that is captive to one family office. We invest on behalf of one family. We invest entirely for social and environmental impact and also we invest for profit. Our family that whose money we invest lives off the return that we generate. So we're not a philanthropy. We do this in order to make money and we feel that we should generate a inappropriate risk-adjusted return as well as help create impact. You know if you think about the companies on the CircleUp platform and people who invest in them, they're happy to pay a fair price to that lady who's growing, you know, organically produced, cooperatively tended quinoa in Bolivia, but they never like paying their financiers a fair price and we feel that we should be paid just like any other ethical supplier, a fair return. So that's our objective. Okay, and so New Island Capital ultimately decided to make an investment into the CircleUp growth fund. We did. Can you talk about how that fit with your objective? So it fits really well. So, I mean, we are an instance, like I said, we're an institutional scale source of capital. So for us, we try to do large transactions and for us, a large transaction is somewhere ideally between five and twenty-five million dollars. Obviously our investment CircleUp fund is smaller than that, but we we love a firm like your fund because it is the ability to invest in the kind of businesses we would like to, but we can't because of transaction costs being too high for us to do small investments. So if you look at both why we're excited about this investment, both the market opportunity, the kind of companies you curate, the kind you invest in, the ability to operate within different parts of the capital stack, and also, frankly, the team that you brought to the table with a lot of experience looking at the kind of investments that you're proposing. Great, thank you for that. And Nick, can you equally give a 30 second back on yourself and then also speak to your objectives as an investment sector? Sure. So my name is Nick Flores. The CapRoc group is a multifamily office. Unlike New Island Capital, we serve roughly 90 families and probably about 10 foundations. Many of the foundations are connected to the families that we work on behalf of. We have probably about $3 billion in AUM, one third of which has an impact mandate. And so your second question, sort of in terms of our investment objectives, we share New Island's for profit motivation. And one of the reasons why we chose to take a pass on the Circle Up growth fund, a bit of a contrarian view here. I've known Rory for quite some time. We would have loved to have found a way to make it work. But we evaluate all opportunities first and foremost through a financial lens. So we look at things like the return profile, the correlation with other assets in our clients portfolios, liquidity yield, all those sorts of various things. So I just want to make that clear that our orientation as a traditional multifamily office with impact investing expertise is that we evaluate everything first through the lens of financial. The next screen that we take is to sort of look at the impact strategy. And here we adhere to the GIN's definition of an impact investment, two core tenants of which are intentionality as well as a commitment to measure the environmental or social benefit that the investment ultimately seeks to catalyze. And I'll just try to keep my remarks brief on this point because we only have 20 minutes and I know a lot of you want to probably get to the beer hour. That is really where sort of the consideration for the Circle Up growth fund stopped for us because I think as Rory will likely admit at the beginning they didn't really have that intentionality. I think it started to grow and evolve as a result of the conversation with New Island Capital but and although there have been societal benefits, I think that result from the capital that you all provide, we felt like it wasn't interwoven into the investment strategy like we like to see from a lot of the funds in which we invest. And so I think because of that we felt like the impact that you all drive was more incidental than intentional and that was really the reason why we passed on the opportunity for impact clients. And Michael, do you have any comments on that and intentionality and measureability and how you saw that? Yeah, it's interesting. So our view is, I mean, I hate to say it, almost the exact opposite. We start with the impact lens, right? Does this achieve an impact? And you know, impact is a, as a capital provider, we are a, we're a utility, right? Other people create impact, we provide an input for them to create that impact. And so it's not for me to judge others' impacts. You know, so if I can get myself comfortable with this, this is creating a better world. And I believe that natural and organic foods is generally something that creates a better world. Then we'll start looking at the finances, right? And we will, you know, same thing, we're very rigorous and very disciplined about the financing of it. But we do seek to have, you know, the first step for us will be does it make the world a better place in line with the values of our shareholders. In terms of measurement, that's not, you know, again, lucky. We're a great, great, great, good fortune of having, of working for some one individual so we can tell stories we don't have to measure. And it makes it a lot easier. I mean, it really, really does. Sure. I would imagine for you as well as your investees. Very much so, because one of our fundamental beliefs is a concept of convergence. So as financial return increases, impact increases, and as impact increases, financial return increases. So we'll ask our investees to measure things that they're measuring already, because it's the kind of things that they're measuring to manage a business. So yeah, in the kind of like that big gears book thing, that's not, no, if that's any gears person. That's not on your desk. I get it. Can you talk about the evolution of the circle up growth fund and how it came to involve an impact angle? Yes, absolutely. So it's fascinating to hear to so thoughtful investors on the space and just thanks for having us and to have this dialogue because it was a really interesting case study for us in many ways. We started out to raise this fund, not with an impact lens. In fact, one of our philosophies was to raise and we think about scale a lot at circle up to raise as much capital for the entrepreneurs on the site as we could. We didn't want to lead with that lens and that term of impact for fear of being able to turn off potential strictly financial motivated investors. We wanted to aggregate as much capital as could move towards those entrepreneurs in the risk adjusted way for a financial return. But in talking with a number of folks including Caprock and New Island, we were being asked the question, well, what is the impact of the work? And being asked, could we codify that in some of our agreements? So with New Island, in fact, they were saying, well, here's how we think about impact. Does a majority of the capital go towards things like B Corpse or natural organic foods or local sustainable food enterprise systems? And we went back into our data from the last two years of it just on the platform naturally and we found that that was in fact where a majority of the capital was going. So we were able to make commitments to some of our LPs then in the fund without being forced in a difficult trade off of changing our strategy. So with the Circle Up Growth Fund, Nick's exactly right. We did not have that ex ante intentionality around it. But Michael's a good point when we looked at the data, we felt we could honor what New Island seeks to do with its capital in terms of helping a number of entrepreneurs we wouldn't otherwise do. And so we don't know how it will come out. Can I pick up on something that you just said? Help a lot of entrepreneurs that you otherwise would not. So how did New Island's participation change perhaps the investment strategy, if at all? I mean with the fund overall. So it didn't change. What's one of the core things towards all of our LPs is it didn't fundamentally alter the investment strategy at the fund, which is to align with the overall platform. So we had a thesis on the fund that a lot of investors on the platform are doing their own diligence and investing and we wanted to fund to mirror the platform to the extent it could. But to have a fund overall with participation from investors like New Island was able to amplify the effort. I'd like to also say there's something like we're at a point right now where you might not be aware of this, but where there's something that's happening that I think is really exciting both for us and for you and for the industry at large, which is we are talking independently of the Circle Up relationship. We're talking to one of your portfolio companies at a fairly large debt facility. Good to know. And so you took a company that couldn't get necessarily capital and you incubated it, you grew it, you spent some time and now it's a company that can actually have a conversation with somebody like us about doing a fairly large growth facility for them to grow their business. And that opportunity doesn't exist without Circle Up. Maybe it does, but I mean likely it doesn't. And so that impact is also really, for us, really exciting because this transition from early, early stage to growth and then from growth to stability as my principal business is lending and as a lender finding opportunities where there's somebody who's thoughtful, intelligent capital who's worked with the companies to get to a stage where they can actually extend their impact by extending their financing is when we like to intervene. So we're really excited about that. And Gori, you mentioned that you saw the impact of naturally playing out with the companies that Circle Up works with on the platform. Do you think Circle Up has any advantage there and what might create that advantage? Well, we only do consumer products and retail. So there is one element here that because the industries we focus on naturally, there's a momentum in that space for more impact oriented consumers are shifting their buying behavior. So what makes a good investment from a financial perspective is also writing tailwinds of the impact community including many of the consumers and investors and folks in this room now. So an example of some of the portfolio companies that we've developed through this fund now include B Corpse, include Smarty Pants Vitamin which is a gummy vitamin company which is a one-to-one match with vitamin angels providing nutrients as part of their mission throughout the world. That's gone on to raise subsequently from a private equity firm that's strictly looking to maximize value for their shareholders outside the impact lens but it's riding the same consumer tailwinds. So I liked this conversation because I think there's no easy answers and adding an impact lens makes it so much more difficult in the fund world because you've got all these vectors of financial return and risk and track record as Nick mentioned and impact and what that means to everybody but I think consumer does help in that sense because it's an active area right now. It's a little bit further along than maybe some other industries. I feel like where you all sit too is really fascinating because you mentioned you'd rather not lead with impact and we've heard from a number of fund managers too which are actually already on our platform that they have not led with impact and in fact have sort of suppressed some of their impact intentions and or goals because they feel like that will convey to the market that they may be concessionary return seeking when in fact they're not. And I think in the next in the coming years we're going to face a real challenge because I think there could be perhaps because of Silicon Valley perhaps because of that perception that somehow impact seeking funds and firms are somehow concessionary, a real blurring of the lines. And so while I hear you loud and clear that you're able to sort of ride the tailwinds of this impact space, I think other managers might actually face a headwind from that and be forced to sort of grapple with the decision. Do we want to portray ourselves as impact or would we rather again sort of suppress that message. Do you advise one way or another with with that sleeve that thirty thirty one third. Well we advise the fund managers that we work with and that we're contemplating an investment to play up the impact whether it be social or environmental benefit that they have because that absolutely is a critical component for impact clients of why we would invest. But by no means are we sitting there saying well fund manager ABC you should or should not do this. Michael and make you guys have both shared that you are looking for financial return as well as having an impact at the company that you invest in having an impact in society. How do you there are also different definitions of impact as we're hearing and so and return expectations could also vary by investor. So how do you balance those two and does having a broader definition of what impact means help there. You want to go first. How do we balance the two again. I would just say that our emphasis is on the financial first and some of the other attributes that I mentioned up front and in terms of how we balance it it largely depends on the client and I think that's where our models are vastly different. We have some clients who are very much impact agnostic. All they want to ensure is that to your point a lot sounds like a lot a lot like the family with whom you work. They just want to make sure that their money is going towards something good. We have others that are very thematically oriented toward climate change. A number of other issues and so it really depends on the client unfortunately but I will just say our first focus again is financial. And so we really try to make sure that when constructing client portfolios we keep that in mind and that we never sort of lose sight lose sight of that objective. We don't feel that there's a conflict between impact and financial return. In fact as I think as I indicated we believe that the two go together and we seek to invest or land in those areas where the two are demonstrably go together. So I don't think it's a trade off at all. You know sometimes the challenge is identifying where the impact is and keeping our feet on the ground because it's easy to get excited about things. And being honest with ourselves and understanding you know we use terminology green shades to make these distinctions of what kind of investments are. So light green medium green dark green and everyone wants to do only dark green stuff because we all want to make the world a better place. And that's why we're doing this. But there are you know managers or in portfolio companies or teammates that are doing good solid work and just have to support them with our capital. And that's what we do. And we have two minutes left here. So any words of wisdom words of wisdom for prospective fund managers looking to raise an impact fund. Talk to Caprock. Yeah yeah I would say I would say think really long and hard about how your impact intentions are interwoven into your investment strategy. Yes. Because I agree with you there does not need to be a trade off and we like to see and prefer to invest in funds and or companies where they're interwoven. We agree with you that they are mutually mutually complimentary if probably redundant. But yeah and really think not only through how you what those intentions are and how they weave into your investment strategy but more importantly how you will demonstrate to us and hopefully other LPs how you're delivering on that intention. So we're big proponents of data to tell that story but I think it's really important that entrepreneurs and fund managers alike think through sort of how they're going to demonstrate convincingly that they're doing what they set out to do. Because we'll certainly look for it. My take is ask questions and learn. I mean so much of this was figuring out the dialogue and the right framework for where the investors trying to optimize for and what they're care about. So it really was in our experience more of an opening and finding the right fit with different types of investors. But it's a moving and evolving ecosystem overall definition of impact and people's concerns are certainly shifting and growing and measurements and all sorts of different elements. So ask the questions might take away and I guess the one bit of advice I'll give us is and this is going to sound counterintuitive if you consider what we're trying to do but be patient. I mean environmental impact is easier to achieve than social impact. Social impact takes time sometimes generational time and so deploy capital intelligently rigorously and slowly and do it right so that the second time you do it you can do it larger than the first time. Everyone's in a hurry to do one great big fund and I think one of the great things about this growth fund is that it was a reasonable size to start with. It was a bite size that you guys could handle and deploy. Well thank you all again for being here and thank you to our expert panel. Thank you.