This series is an abridged and revised version of a 5-part series originally published on GoodGeneration.org between Jan 15-23 , 2012.
In Part 1 of this “Impact Investing Career Checklist” series, we talked about about how to scan today’s landscape and figure out the available opportunities, as well as identifying a role for you to act within this world.
The next two items of Part 2 today deal first with understanding what type of people (or strange birds occasionally) you may encounter at your prospective future employer and how their personalities may affect you.
Second, I want to argue that we need to figure out if your impact investing organization really knows what it is talking about in terms of what type of target companies it seeks to fund and support. The answer may not always be straight forward, but what matters is the firm’s attitude towards this uncertainty.
To review the original “checklist” one more time:
Impact Investing Career Checklist
- Identify the opportunities (Part 1)
- Assess your potential role (Part 1)
- Understand who runs the show (Part 2)
- Define target organizations they fund (Part 2)
- Clarify their return expectations (Part 3)
- Know yourself (Part 3)
3) Understand who runs the show
Try to understand the “personalities” behind the impact investor
In their eagerness to find impact investing opportunities, I think a lot of wananbe do-gooders underestimate the degree to which their experience will be shaped by the type of people who founded and run the various organizations they apply for. Instead of getting hooked on the website and great stories of the social entrepreneurs funded, ask yourself some specific questions about the people behind this, the founders and leaders themselves.
- What are their backgrounds? What are their motivations? Where have they been before doing this? What is the lens through which they see the world? What view do they have on career development and compensation of employees?
- You can tell they care about social entrepreneurship. And about the poor, of course. But how much do they seem to care about you?
All such questions should be asked as they completely affect impact investor organizationsâ€™ operating principles and, ultimately, your life as an employee. Let me try to give some fair warning about potential cultural expectations to have depending on the companies you join to minimize frustration and allow you to find the right fit. Note that in the following discussion and examples, I will refer mostly to VC/PE-like funds to be able to be more specific and because I am more familiar with them.
A Personality Spectrum
Recognize that the impact investing field came together as a merger of two worlds. On the one end of the spectrum you have what I would call the â€œsoft, socially-driven people,â€ who mostly worked for nonprofits or as social entrepreneurs for most of their lives. On the opposite end of the spectrum, you have what I would call the â€œhard-nosed, profit-driven people,â€ who mostly worked for corporations, financial institutions, and consultancies for most of their lives. I will pull no punches to point out that both sides have different agendas in coming together to shape the impact investment sector, and that those agendas may not be the same as yours.
Clearly both ends of the spectrum are extreme and, by definition, exaggerated personalities. They exist nonetheless. Understanding where on the spectrum your future employer fits might help gauge their capabilities towards the following areas that matter to employees:
- Capacity for empathy (with YOU, not with the poor!)
- Demand for analytical/technical rigor and accountability of work
- Passion for the mission vs. skills as main performance evaluation criteria
- Attitude towards compensation (fair vs. low-ball offers)
- Grasp on the concept of career development
Depending on if you are dealing with people towards the soft or the hard end of this personality spectrum, you may be surprised at the variances in how they “rank” according to the above and other criteria that should be important to you as a prospective team member. More elaboration on this in the original post here.
The takeaway from this is to of course know yourself and what type of people you enjoy working with. Some of you interested in this field may tried to escape your former jobs to be around “nicer” or “more purposeful” people. Others are sick of the pure “do-good with no substance” types and seek that more rigor and disciplined approach. Whatever “does it” for you, just make sure the grass truly IS greener before you make the jump.
4) Define target organizations they fund
Let’s be honest: how many of you know exactly what type of company qualifies as a target for an impact investor? Yes, some sort of “socially good” company. Or environmental. But HOW social? Are we talking about a business that produces some socially beneficial outcome beyond employment? Are we talking about a social innovator that happens to make some revenue on the side besides asking for grants all the time? Do we include nonprofits that make no revenue at all?
These are the types of questions that many people, including impact investors, have difficulty putting into a coherent framework that explains whom to invest in and whom not to invest in.
So your litmus test for your future employer should be two things:
- Question 1: How well have they defined their target universe of firms to invest in?
- Question 2: If they haven’t quite figured it out yet, do they have the honesty and humility to tell you they don’t know for sure but are working on it as the field evolves and expectations of investors can also differ, making this a tough job overall?
Question 1 gives you a sense whether you’ll be doing mostly philanthropic grants (“venture philanthropy”) or socially responsible business (“SRI”) investing, or something in between. That affects how you do your work and also what type of funders you will have to deal with in terms of their expectations (think “soft-types” looking for impacts more than “hard-nosed” types looking for competitive financial returns.
Question 2 is even more important. It tells you how open your prospective employer is to accepting the “nature of the moving target” that is impact investing today. Anyone who has an attitude of having it all figured out, in my opinion, may just be too cock-sure for goodness’ sake.
For more elaboration, read here.
In summary, if the target organization definition is not clearly articulated, you may spend a lot of time screening deals that get turned down, usually for inconsistent reasons. If the definition is too narrow, you main run out of pipeline and do no more than 1-2 deals a year. If the definition is too broad, your fund risks allocating money in areas where you have no particular value-add or control over the investment.
Next time, in the last Part 3 of this series, we’ll consider what role return expectations play and also how well you should know yourself.