How Crowdfunding & Impact Investing Are Changing the World

 

 

The concept of investing is not new or unknown. That being said, it is often seen as an action reserved for the older and more financially settled generations in society. With the creation of the JOBS Act and the rise of social impact investing, however, this could change.

The JOBS Act of 2012 recognized the importance of social impact investing and crowdfunding and relaxed the rules on who could invest in early age startups. This means that modern startups have a much wider pool of potential investors and need to know how to reach them.

Look at the millennials: This generation is known for being very socially conscious and, as they become more of a presence in the market, social impact investing will have an increasing level of importance. Relatively new in the investing world, impact investing means people can feel they are really making a difference by supporting a certain cause (while also potentially gaining a financial return).

Startups can and should use this new investment wave to gain the necessary funds to help grow their companies. However, the important thing to remember is this: In terms of millennial investors, your success will likely depend on your ability to show how the startup has a positive social impact.

The good news is there is an easy way to present yourself to these noble investors. Wefunder (the “kickstarter for investing” and one of the companies that fought to get the JOBS Act passed) allows startups to create profiles and put themselves in front of close to 80, 000 potential investors. These profiles provide companies with the opportunity to show how they plan to change the world.

One example of the type of company on Wefunder is Kharity Marketplace, which calls itself a charitable ecommerce marketplace. Kharity Marketplace aims to link buyers to sellers while also donating 10% of every sale to charity (one that is chosen by the seller). Buyers will in fact be able to shop based on which cause they want to support, changing the notion of shopping for the better.

The impact investing market is incredibly popular right now and there are fantastic financial companies working in this area. Many of these impact investors and startups were present at The Social Finance Forum held at MaRS Discovery District on October 27 and 28, 2016.

One of the standouts: Impak Finance.  Impak, the first impact investing bank to make an impact in the Canadian market, proudly proclaims its desire to change the world through the creation of a “transparent and collaborative financial ecosystem” and offers loans to Canadian companies that are making a positive social and/or environmental impact in the world. The company recently raised more than $1 million in two weeks, a great example of how important impact investing is right now. As it grows, Impak says it will offer the services provided by conventional banks while staying true to its mission as an impact investing bank.

The millennials have been called the most socially conscious generation and have grown up with technology. When it comes to investing, they will want to know their money is making a positive influence and they will want the ability to use technology to manage their portfolios. It is easy to see how important platforms like Impak and Wefunder will become and how much potential there is for socially conscious FinTech startups to find their backers and fund their businesses.

Yes, FinTech and social impact investing really will change the world.