New report: How seed-stage impact investing works today

New report:  How seed-stage impact investing works today

We are thrilled to announce the release of the “Issue Brief on Seed-Stage Impact Investing in Canada: Insights from the Field.” The paper is a result of a collaboration between the MaRS Centre for Impact Investing and MaRS Market Insights.

Why seed-stage impact investing?

At the MaRS Centre for Impact Investing, we believe that seed-stage impact investing is vital, as it provides early ventures with capital and know-how, and develops the impact investment market overall by building the pipeline for later-stage investors. We have also observed that seed-stage investing has been attracting an increasing amount of attention from Canadian impact investors, and that new accelerator programs tailored to the needs of seed-stage impact ventures are emerging across the country.

However, for many entrepreneurs and investors, the seed-stage investment process is opaque, and there are no Canadian resources that address seed-stage impact investing in Canada.

We seek to fill that gap with this brief, which serves as a snapshot of the market in 2015. It summarizes market players’ observations about seed-stage impact investing in Canada and offers insights into how these investments happen. The paper is aimed at potential investors, entrepreneurs and capacity-builders who wish to understand how seed-stage impact investing works in Canada today.

Insights from the field

After interviewing 29 experts across Canada and internationally, we gleaned six key observations about the current state of seed-stage impact investing in Canada.

  1. Impact ventures need seed-stage investing, but the market is still maturing.
  2. Seed-stage impact ventures typically seek $50,000 to $1 million in investment.
  3. Seed ventures need the right kind of capital.
  4. Seed ventures need more than just capital.
  5. A wide range of stakeholders play important roles in seed-stage impact investing, including accelerators, angel investors, funds, foundations, governments and financial institutions.
  6. Equity crowdfunding will provide additional seed capital, but it will not replace existing investors.

How seed-stage impact investing is happening

We interviewed seed-stage investors both in Canada and internationally to understand how, in practical terms, they go about investing for impact in seed-stage ventures. The paper examines the investment process from developing an impact investing strategy and investment thesis to conducting due diligence and structuring the transaction to managing the investment.

Please download the paper here. For a discussion of these issues, please attend our panel on seed-stage impact investing at ImpactOntario on May 25. A special thank you to those entrepreneurs, investors and accelerator managers who participated in our research.

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