At the SvF we believe that social enterprises not only provide alternatives to the traditional form of philanthropy, but will also drive our future triple bottom line economy in which positive and negative externalities, like clean water and CO2 emissions, are priced into the market. Recognizing the immediate social and environmental needs and how traditional financial mechanisms can help meet those needs, the SvF is proactively accounting for these externalities when making our investment decisions. We employ the Social Return on Investment (SROI) methodology in conjunction with the Impact Reporting and Investment Standards (IRIS) to determine the level of social and environmental impact of our potential investments.
Recognizing the risk of any start-up enterprise, the SvF has a target blended Internal Rate of Return (IRR) similar to that of traditional Venture Capital Funds (VC) . However, unlike a VC we calculate our blended IRR by combining our financial, social and environmental returns to deliver an overall value to our funders that is commensurate with their risk. Our target financial IRR for the fund is pegged to the 10 Year Treasury Bond, and thus due to new venture risk target companies must be able to achieve a financial IRR that is twice (2x) that rate. The SvF is an evergreen fund, investing all returns into existing portfolio companies or new enterprises.
Our Investment Criteria
Social Enterprise: The Social Venture Fund focuses exclusively on for-profit social enterprises, existing independently or within the legal structure of a pre-existing organization (LC3, 501c3, LLC, etc.)
Change Agent Entrepreneurs: We invest in inspiring leaders, both students and non-students, capable of assembling a world-class management team that shares their passion and commitment to the enterprise’s sustained social impact.
Alignment with Investment Areas: We invest in enterprise generating a profit and responding to critical challenges within Education, Food Systems & Environmental, Health, and Urban Revitalization.
Investment Amounts and Stage: We invest $50,000 – $250,000 in pre-revenue and post-revenue companies.
Location: We focus on businesses based in the US. The Urban Revitalization circle is particularly interested in plans for the Southeast Michigan/Detroit area.
Returns: We focus on companies that can help us achieve a portfolio wide financial return equal to the 10 Year Treasury Bond and a blended social & financial return equal to that for traditional early stage investments.