The Solution Finance Accelerator, whose first cohort ran from 2020-2021, contributes to a vision of a vibrant social finance marketplace with efficient and effective investment capital flowing to social and environmental development at scale. The SFA aims to expand the Canadian social finance marketplace by supporting a group of impact investing intermediaries to develop and launch their funds. These organizations are disrupting the traditional means of structuring their business models, be it by leveraging technologies or applying new financial mechanisms to advance the United Nations Sustainable Development Goals. This series profiles the nine participants supported through the Accelerator.
Scale Collaborative works with nonprofits, charities and social enterprises to create a thriving, connected, and financially resilient social change sector on Vancouver Island and beyond. Scale provides consulting, coaching and ecosystem building initiatives to help build a thriving impact sector and social economy. They recently launched the Thrive Impact Fund.
“In developing Thrive Impact Fund, we had to continually grapple with traditional venture investment fund culture and structures that tilt towards high risk, high reward outcomes. We see opportunities for strategically placed capital that helps steady growth and impact-focused enterprises be able to access patient capital and generate impact-rewards first, followed by a steady return for investors. We had to to think differently and create a fund structure and processes that places people, community and impact at the centre”
—Kristi Fairholm Mader, Director, Innovation And Initiatives
Thrive Impact Fund
All types of organizations can generate positive environmental and social impacts. The impact investment landscape, however, has primarily targeted high-growth, for-profit enterprises. Scale has identified an opportunity to capitalize highly impactful enterprises and projects generated by non-profits, co-ops and for-profit social enterprises.
Scale’s Thrive Impact Fund (TIF) offers patient, flexible equity-like debt and royalty financing to projects that help achieve UN Sustainable Development Goals and provide local benefit. TIF fills a financing gap by providing financing for impact organizations that cannot access equity investments because of their structure, and who also struggle to access traditional financing because they lack collateral resources. To bridge this gap, TIF uses an innovative corporate and legal structure to provide non-collateralized investments to local organizations, combined with wrap-around support to help them succeed. For investors, TIF provides an opportunity to invest their money locally for impact, with a steady return of 3%.
How does the Fund work?
- TIF is set up as an evergreen fund, which means that at the end of the first redemption period, investors can leave their money in the fund or start a redemption payout of principle.
- TIF targets high-net-worth individuals, accredited investors and institutional investors like foundations, with missions aligned with the fund’s objectives. TIF provides a compacting impact return on their dollars as the fund is repaid, meaning investor dollars have a multiplier effect for impact in the region.
Solutions Finance Accelerator highlights
- Working with mentor Christian Novak and the other cohort members, Scale developed and tested the theory and vision of the fund.
- Scale used the Accelator’s technical support to build out the Fund’s legal, governance and due diligence frameworks that will be used to operate the fund.
- The result: TIF launched in June, initiating their capital raise. They are currently in the process of making their first investments.
- Thrive Impact Fund is also exploring with Rhiza Capital, Yukonstruct and others how to leverage their combined resources and networks and support economic development and inclusive impact in regions that are traditionally overlooked by venture capital.