These local venture funds are propelling social entrepreneurs nationally

The members of impact investor network Investors’ Circle are all encouraged to make individual angel investments in their portfolio companies.

But they also operate a for-profit fund initiative that has been used to invest in social entrepreneurs across the country since 2007.

It’s called Patient Capital Collaborative funds, a funding mechanism operated by IC members and co-managed by Radnor-based investment firm SustainVC. These funds are set up a bit differently than typical VC funds: According to SustainVC partner and IC Philly member Tom Balderston, one major distinction is that a new pool of funds is set up every few years to comply with IC Philly’s growing membership.

In other words, whenever a new batch of members joins IC Philly — which is, by the way, a nonprofit itself — a new PCC fund is set up to provide those new members with an additional investment opportunity.

“These are angel and early stage venture funds that are organized to invest in opportunities in the impact space across the sectors that Investors’ Circle focuses on,” Balderston said. Those sectors include healthcare, energy and environment and education. “The purpose of the fund effort is to serve as part catalyst to encourage investors around the IC community to invest either or both equity in the companies, but also through the funds into the companies.”

Most of the capital in the funds has come from IC members or connections to IC members, and Balderston said they’re just about to close their fifth fund. These PCC pools have invested in 24 companies in their four existing iterations, including three successful exits (none of which are Philly-based):

• Solmetric, a Sebastopol, Calif.-based company that designs and manufactures tools for solar installers.
• Boston Heart Diagnostics, a Framingham, Mass.-based heart health diagnostics company.
• Locus Energy, a Hoboken, N.J.-based solar monitoring and data analytics platform.

“What we’re doing is enabling capital to move to these worthy entrepreneurs who are trying to pursue their mission of building successful businesses and making a difference in the world,” Balderston said. “We’re trying to stimulate the growth of those businesses by helping in whatever ways we can.”