BC Business
With its impact model, the Vancouver Social Value Fund aims to occupy the middle ground between philanthropy and traditional investing.
East Van Roasters has a new lease on life after student organization the Vancouver Social Value Fund raised a $200,000 investment to keep it open
Student impact investors from the Vancouver Social Value Fund (VSVF) have helped raise $200,000 to finance a struggling coffee shop in Vancouver’s Downtown Eastside.
East Van Roasters, located at 319 Carrall Street, risked permanent closure after its parent company restructured. That’s when VSVF stepped in, leading a group of seven investors who offered a loan to the newly formed Community Contribution Co., which will keep the shop open.
East Van Roasters—which provides employment opportunities to vulnerable and marginalized women in the Downtown Eastside—calls itself a social enterprise, a business that measures success by community impact rather than profit.
That commitment to uplifting the community made the coffee shop a perfect match for student-led VSVF, whose mandate is to invest in local organizations that have a positive impact on society.
Alex Doonanco, a fourth-year UBC student and a fund manager at VSVF, calls impact investing the “middle ground” between philanthropy and traditional investing.
“It revolves around the notion of mobilizing capital in ways that does measurable good and creates change,” Doonanco explains. He’s also quick to point out how different impact investing is from ESG, or socially responsible, investing, which is only trying to “minimize harm,” he says.
“You’re trying to promote and take ideas into reality, that create measurable change, either socially, environmentally or in some form of economic justice.”
Measuring such impact is tricky, however. To that end, VSVF creates “impact metrics” for each of the businesses in its portfolio, Doonanco says. For East Van Roasters, some of those metrics include tracking the number of people it hires and how many hours they work.
VSVF currently has seven ventures in its portfolio, all based in British Columbia. The others include an early investment in Save Da Sea Foods, which makes plant-based smoked salmon; and an equity investment in ChopValue, a furniture company that crafts its products from recycled wooden chopsticks.
Doonanco says VSVF’s organizational structure is “flat,” with associates keeping track of metrics and helping companies if required, fund managers like Doonanco helping raise capital and an investment committee that provides leadership, insights and guidance on possible ventures.
A big feather in VSVF’s cap is its investment in—and subsequent exit from—The Very Good Butchers, a Victoria-headquartered maker of plant-based vegan meats. Its parent company, The Very Good Food Co. saw an 800-percent increase in value after listing on the Canadian Securities Exchange in November 2020. For VSVF, that turned into a 15-fold return on its original investment just 14 months earlier. Very Good Food (VERY) now trades on the TSX Venture Exchange.
Doonanco acknowledges that East Van Roasters is unlikely to be a similar growth story. Calling the $200,000 investment a “patient loan,” he expects that the fund will “eventually get their money back.”
The idea is to enable one investment to pay for another, but VSVF also sources capital from investment committee members and community partners, like it did from the Vancity Community Foundation for East Van Roasters. It looks like 2021 will be a year of change, though.
“We’re going to be pitching to other investors for the first time,” Doonanco says. “And we’re looking to raise a million dollars this year from local impact investors.”
Those are ambitious goals for a 10-member group run by students from UBC and SFU. But their brand of impact investing is growing across Canada, in Montreal, Calgary and London, under umbrella organization the National Social Venture Fund.
The fund aims to capitalize on a worldwide appetite for impact investing. The Global Impact Investing Network estimated the market at US$500 billion in 2019, with 58 percent of participating organizations based in Canada and the U.S. Given that one in four dollars of professionally managed assets is now considering so-called sustainability principles, there’s only room to grow.
VSVF is looking to invest in local, undercapitalized companies trying to create change by making an impact. To find out more, you can reach the fund via email or the usual social media channels.
Doonanco says VSVF is flexible on the ventures it invests in, as long as the company is based has a clear, measurable ability to track impact.
“Of course, we want to invest in great businesses,” he adds. “But we need to invest in great businesses that have a very firm grasp—as firm as their business model—on how their activities impact the world.”