Lessons Learned from Canada's Top Impact Investing Platform

SVX, the impact investing platform for ventures, is the entry point for those interested in social and financial returns. What have we learned thus far about impact investing? We ask SVX founder Adam Spence

Why It Matters

Impact investing and social finance aren't sustainable with government funding or philanthropic capital alone. There is a continued amount of work that the social change community across Canada needs to do to convene and convince mainstream private sector players of its value.

What was the moment that struck you and made you think, ‘Ok, this platform is going to be really important for social change?’

It wasn’t a single moment, but a constellation of efforts. One was the momentum of funds and ventures seeking capital. In addition, the impact investor community was starting to grow and flower. There was also growing interest from the U.S. and Mexico. The signals were strong from investors, entrepreneurs, and those looking in from outside.

 

In a nutshell, what makes this platform work well?

It’s the continuum of services that we support. SVX is an online platform where you go and you make money or investments. We provide support from education all the way to managing funds. If you’re an organization looking to build or raise capital, we can build your capacity to understand social finance, help you develop a strategy, and raise capital. We’re a nonprofit and a registered financial services firm. We have a wide mandate across all sectors and asset classes.

 

A number of Future of Good readers know about impact investing. Tell them something they wouldn’t have heard or seen before. If it challenges our assumptions, the better.

What is emerging as being atypical or net new is how local impact investing can apply. Impact investing used to carry this moniker of big scalable projects. There have been examples where people have been interested in intermediaries that are being created to help bring capital in from local communities and deploy it to invest in local housing projects, local non-profit organizations. You can increasingly invest now in your own backyard, which has been a fundamental disconnect in the financial industry for a long time. Rhiza Capital in Sunshine Coast, Verge Breakthrough fund in Southwestern Ontario, EntrepreNorth in Northern Canada, these are locally oriented impact investment funds offering more to do in your own backyard. That’s pretty cool.

 

What are your top insights about the trajectory of impact investing in Canada? Where is it headed?

There’s tremendous momentum and potential and now action in impact investing across the country, but that momentum needs to be sustained and carried over into the mainstream institutions. The Social Finance Fund has the potential to be a real game changer, but we have to match government initiatives with private capital to truly carry it forward.

 

Are we ready for that? Is this an uphill battle or is the ground sufficiently fertile?

There is a continued amount of work that social finance sector community across the country needs to do to convince and convene mainstream private sector players. It seems like we’re at a precipice, there’s a fundamental culture change that’s taken place. Whether you are Starbucks or Out of the World cafe, there’s an understanding and recognition that there’s a better way to do business when you think about your economic, social, and environmental bottom line. Inertia in the financial services industry is there, policies and procedures are built on hundreds of years of financial policies, which aren’t necessarily aligned with how we want to learn with our money.

Also, government plays a role in terms of having the right kinds of incentives and regulations around impact investing. When we’re dealing with the tides of populism, progressivism, and anxieties people are facing, that is challenging for people to overcome. At the same time, thinking about social finance and social enterprise as being a straight path through that can help to address some of the economic anxieties people face through these approaches that are bringing in multiple bottom lines and deal with climate change, job security, inequality—it represents a piece of the thread.

 

In the last decade of your work in impact investing and in building SVX, what didn’t you see coming?

The market itself, who knew it would be approaching $5 billion in capital? Coming as quickly as it did was interesting. Additionally, it was about all the building blocks that need to be in place to create the right kind of movement in Canada. So governments, foundations, strategic institutions, investors, the time it takes to move between interest and action—I didn’t think we anticipated how long that would take. Now, we need to move private sector players.

 

What are the questions you’re asking yourself now?

For us, we ask a number of key questions around the operation of the organization. Ultimately, it’s about what is the impact we want to achieve. Do we have the resources to do it and are we going to bring in the right kind of revenues to create this. What are the next steps and milestones we need to achieve to realize our mission, and assures the sustainability of what we’re trying to do and fits within an ecosystem in Canada. We’re one part of the puzzle. How do we make sure we fit well within that, so we can have a greater impact.

 

The federal election is this fall. How would you like to see impact investing presented in the campaigns and platforms?

My sense is we want to see a continued commitment to the role of government in public policy, regulation, and funding support to address issues of climate change, inequality, crime, disease. As a necessary condition for success, we need to engage private enterprise and private capital to achieve progress on the challenges we face. We have 11 years until we get to 2030—the year the UN’s Sustainable Development Goals sunset. We’re going to need to make sure we have the right kind of private capital and nonprofit organizations in place that are all heading in the same direction, so we can reorient capital toward that purpose.

 

SVX was incubated by MaRS since 2010. What have you learned about what it takes to get something like SVX to a critical mass?

The concept began as a social stock market. In order to be able to survive, thrive, and achieving interesting milestones to scale capital, there were a number of ingredients for success. For one, an idea or innovation isn’t driven by one hero entrepreneur, but a collection of people to ensure the success from finance, IT, events, and comms, and great financial, social, and government partners. It’s also about adaptability and the role we played around being supported by and supporting the development of an ecosystem. SVX has benefited from and worked with a broad group of actors on a broad group of initiatives.