Entrepreneurs, and the new ventures they lead, have been recognized as major engines for the creation of sustainable products and processes that can be used to solve many difficult social and environmental problems. Since venture capitalists focus on nurturing entrepreneurship and new ventures, they have an important role in the development, growth and maturation of these sustainable businesses. Venture capital is well suited to the inherent riskiness and longer evolution cycles of sustainable startups: they specialize in identifying and investing in riskier businesses, companies that banks and traditional private equity firms are reluctant to support until they are further along in the development of their technologies and products, and working with them to grow faster, create more value and generate more employment and innovation over an extended period of time. This book focuses on an emerging subset of venture capital firms that practice impact investing (i.e., investing made with the intention to generate positive, measurable social and environmental impact alongside a financial return). These sustainable, or impact, venture capital funds make investments in technologies, processes or products with positive environmental, social and economic outcome and direct their investment activities and support on small-scale, young firms with excellent development capabilities that can deliver triple bottom line results. The book begins with an overview of impact investment and then dives into the practical "nuts and bolts" of practicing impact venture capital and launching and managing an impact venture capital fund. The book also discusses the process of "doing the deal" with investees and incorporating impact investment principles into contracts and post-investment relationships. The critical role of impact measurement, management and reporting is also discussed. The work is intended to demonstrate how the impact venture capital sector can fulfill its promise as important contributor to developing and implementing innovative and financially viable solutions to achieve society's aspirations for sustainable development and progress.
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