Mindy Knebel

Venture Capital Showcase Highlights Socially Conscious Investments

By Kara Voght

A man who turns methane into diamonds, a woman who brings patients to doctors’ appointments, and two Ph.D. students who deliver renewable energy to sub-Saharan Africa all walk into one of Chicago’s most iconic buildings and ask strangers for thousands of dollars.

No, this isn’t the start of a joke. This group of assorted entrepreneurs, unified by their common aim to solve society’s pressing problems, came together with their venture capital firms to pitch their ideas at the Impact Engine Community Showcase, held at tech hub 1871, in Merchandise Mart, on Tuesday night.

The evening, sponsored by Chicago-based venture fund Impact Engine, highlighted Chicago’s “impact investors,” which are venture funds that invest in businesses promising both social and economic return. Impact Engine invited five other funds to share their socially conscious missions and portfolio companies, alongside its own, with a standing-room-only, 250-person audience of potential investors and fellow entrepreneurs.

As Impact Engine CEO Jessica Droste Yagan introduced the evening of presentations and pitches, she drew attention to the important role impact investing plays in building a better world.

“Today, more than ever, we have to use every tool at our disposal to create the world we want to live in,” Yagan said. “Capitalism is one of those tools I believe is underused for this purpose. Whether you know it or not, or whether you like it or not, you do create impact with your dollars.”

Over a period of an hour and a half, six fund representatives and founders of the businesses they sponsor spoke successively to the gathered crowd. Some funds have industry-specific missions, like Ekistic Ventures, which invests in urban-centric companies like Kaizen Health, a business that connects patients with transportation to their doctors’ appointments. Others, like Impact Engine, broadly fund technology businesses with a social mission like Edovo, a company that reduces recidivism by bringing tech-based educational tools to jails.

Tuesday’s event marked Impact Engine’s fifth annual showcase. In the past, the evening was focused solely on companies that were supported by the host. This year, for the first time, Yagan said Impact Engine invited other impact investing funds to share the stage.

“There’s a lot more happening in impact investing in Chicago than there was in 2012 when we started,” Yagan said to the crowd. “In 2012, it would have been hard to find a whole lineup of impact funds and entrepreneurs to present that weren’t ours.”

The companies that presented on Tuesday night have supported over 80 local organizations with at least $130 million. Yagan attributes this growth to an increasing awareness of governments’ failures to provide social innovation and a shift in mindset, in which social and financial returns are no longer seen as mutually exclusive.

“People are increasingly realizing that they don’t have to compromise,” Yagan said. “I think it used to be like, ‘Oh, if I want to save the world I have to go work for a nonprofit,’ or ‘I want to make money, so therefore I don’t want to work for this.’ Now, more and more people are saying, ‘No, I don’t want to give up either of those.’”

A growing community doesn’t translate into increased competition among the funds, however. Erik Birkerts, CEO of the venture fund Clean Energy Trusts, said he enjoyed learning about other funds at Tuesday’s event. To him, this type of investing and business development fosters a supportive community that is quick to collaborate.

“It’s a social mission thing for sure,” Birkerts said. “This sector is relatively nascent to Chicago that it’s not as if we’re fighting over opportunities.”

Collaboration is what Yagan said the showcase should be about, building and sustaining a mission-driven investment movement across Chicago.

“If we get more and more people engaged in impact investing, however they enter the door, it benefits our own fund and movement eventually, as well,” Yagan said.

Audience
A captive audience of over 250 watches presentations from funds and startups. (KARA VOGHT/MEDILL)

For the featured growing businesses, the audience gathered to witness their pitches offered a chance to connect with the right investors. John Yerger, president and CEO of Advanced Diamond Technology, said a community of people with an interest in social-driven business is a fertile place to find willing investors.

“You need passion in an early-stage business, and I think this is a room full of people with a lot of passion,” Yerger said.

His investor, Jason Blumberg of Energy Foundry, said he liked how this event educates potential investors about investment opportunities in social spaces. Finding that room full of passionate people makes his work and that of his portfolio companies that much easier.

“The people here are solving hard problems,” Blumberg said. “Most of the excitement [in investing] isn’t around solving hard problems, it’s around code.”

Impact investing can be a successful venture for all involved, but Yagan still encouraged the audience to not neglect other means of social engagement. Her comments, reflecting on the country’s state of transition, were met with laughter from those gathered.

“It’s not a replacement for charity or being active to affect the government,” Yagan said. “Please, please continue your work in those areas. Very important!”

Entrepreneur Mindi Knebel, founder of Kaizen Health, pitches her business to the crowd gathered at the Impact Engine Community Showcase at 1871’s auditorium. (KARA VOGHT/MEDILL)