Intentional Social Impact Through Impact Investing with Brian Trelstad

Every investor wants a good return on his/her money. But is social impact something that you should be concerned about when it comes to where your funds are invested? For some years now certain individual investors have been concerned about the companies included in mutual funds, etc. for the sake of ensuring that they are not financing companies they are averse to supporting. But can it be done on a wider basis? Can social impact be a driving force behind not only a company but an investment fund? That’s exactly what we have in Bridges Ventures and today I’m talking with Brian Trelstad, partner of the firm to find out what Impact Investing is and how it’s becoming one of the more sought after ways of investing these days.

What IS an impact investment?

One of the basic questions I had to ask my guest today was this: What IS impact investing? Brian Trelstad is a partner at Bridges Ventures, an investment fund that aims specifically at investing in companies that are not only socially conscious but more so, are aimed at particular social issues that they want to address through the success and profits of the company. Those are the kinds of companies that are of great interest to Brian and the Bridges Ventures team because they are not only profitable and viable investment opportunities but are also making a difference in the world on a broader scale. Learn more about Impact Investing on this episode of Capital Gains.

Intentionality and accountability make the difference in Impact Investing.

When I asked Brian Trelstad what makes one recipient of a person’s funds a charity and another an Impact Investment he was quick to point out two things that define the difference: Intention and accountability. The Bridges Ventures team seeks out investment opportunities that are specifically aimed at a societal problem that the profits of the company are intentionally aimed at addressing. But they also look at the ways the company in question is aiming to support their favored cause and how they plan to be held accountable to do it. It’s very different than charity giving. Find out more about the social impact of impact investing on this episode.

Is there a trade-off between a company having social impact and being profitable?

When you hear of a company like Tom’s Shoes that makes a huge investment in meeting the needs of people in specific areas of the world, do you ever wonder how much the profitability of the company is hurt because so much of their labor, materials, and shipping costs are spent producing products that will realize no profit at all? I asked my guest, Brian Trelstad if there is a trade-off between social impact and profitability and was pleasantly surprised at his answer. You can hear how he responded by listening to this episode.

Does an Impact Investment fund bring in the same type of returns traditional funds do?

Since this is a show about investing it seemed natural to me to get a feel for the rate of return socially conscious companies realize in comparison to companies that are not intentionally aimed at such causes. But I also wanted to know how an investment fund like Bridges Ventures – one that invests only in socially impactful companies – fares when compared to other more traditional investment funds. You’ll probably be surprised to hear the great rates of return the Bridges team sees through their investment philosophy. You may also be impressed with the extra levels of due diligence in which the Bridges team engages to ensure that every investment is as close to a guaranteed winner as it can be. Brian shares the Bridges Ventures approach to social impact and Impact Investing on this episode.

Outline of This Episode

[1:03] My introduction of Brian Trelstad, partner at Bridges Ventures.
[1:51] What does Bridges Ventures do and how does Impact investing work?
[5:24] What exactly IS Impact Investing?
[7:05] How does Impact Investing differ from charity?
[9:11] What’s the difference between an Impact Investment and an investment in a company that happens to be socially beneficial things?
[13:20] How Bridges Ventures evaluates a potential investment.
[16:32] What makes a business and its potential impactful enough to be funded?
[19:57] What Bridges Ventures brings to the table to help impactful businesses succeed.
[23:02] Is there a trade-off between philosophy and profitability?
[29:36] How do the financial returns of Bridges Ventures funds compare to others?
[35:15] What might make a real estate investment impactful?
[37:21] Concern for the people of the neighborhood when developments go in.
[39:30] Who Bridges Ventures investments are aimed at and how you can get involved.