Impact Investing and the Four P’s

Impact investing is an investment strategy that’s driven by values. The investor’s goal is to have multiple bottom lines which may or may not be for profit. For example, one of the investor’s desired outcomes can be to help alleviate poverty.  In most cases, impact investors offer private companies a debt or equity offering.

Business as Mission (BAM) emphasizes the importance of people, planet, profit, and purpose. Businesses with a healthy work culture and a clear purpose are significantly more profitable than businesses who don’t possess these qualities. Contrary to popular belief, impact investing does not have to be done overseas. A lot of impact investors are willing to receive lower returns because of the businesses’ positive effects on the world. They’re more hands-on and actively want to help aside from just providing capital.

Unique Investment Risks to BAM Investing

Business rules and regulations are different per country. It may be easier to conduct business in some countries but harder in others. Investors and entrepreneurs must familiarize themselves with a specific area’s laws to avoid problems down the line. Another thing to consider is the foreign country’s culture. Understanding cultural differences can help you work harmoniously with the locals. When you’re overseas, there’s also a risk of being deported. The COVID-19 pandemic has tightened borders around the world, with some entrepreneurs getting kicked out of the country and being unable to return. 

Returns from BAM Investing

Typically, BAM investors receive a 10% return on their principal. BAM businesses that provide high returns are rare. The market is relatively young, with a lot of businesses operating in different countries which have its own unique risks. Debt offerings are more common than equity offerings. Impact investors choose to invest despite the risks and lower returns because of the businesses’ contributions to society. If it’s a small business, investors can expect their principal back and a small return. In bigger businesses with proven concepts, investors can expect greater returns. 

What are Other Ways to Make an Impact?

You don’t need to be in the BAM world to make a difference. If you’re willing to travel, you can offer your services or expertise to businesses that need them the most. Or you can even reach out to your network to offer mentorship to friends and acquaintances. It may feel awkward to put yourself out there but it’s the only way to get things done. Instead of waiting for opportunities to come find you, you can be proactive in helping others. 

Learn more about BAM School via its website. Subscribe and listen to Buddy’s podcast here.