De-risking impact investing critical for more capital

Among the key challenges for fund managers seeking to make impact investments is figuring out the level of risk involved — if even just a part of that uncertainty was removed, it could pave the way for more money to flow.

“One of the bottlenecks that we’re finding as investors in this space is the number of companies that we can invest in that have been de-risked somewhat so there is a better predictability in terms of their outcomes,” according to Maya Chorengel, co-founder and managing director of Elevar Equity, focused on creating returns by investing in companies that provide essential services to underserved communities.

In a video interview with Devex Impact, Chorengel said that the U.S. government can play a critical role in reducing the risk of investments by providing guarantees and other financial instruments.

The managing director of Elevar Equity is a member of the U.S. National Advisory Board on impact investing, which recently released a report “Private Capital Public Good: How smart federal policy can galvanize impact investing — and why it’s urgent” featuring suggestions on how to address this challenge.

Click on the above clip to find out more about what can be done and how impact investing can follow the path of venture capital to appeal to a broader group of potential investors.

This story is part of a series on impact investing. For more, check out our Storify page on “Impact Investing 2.0: The evolving social finance landscape” and tweet @DevexImpact using #impinv.

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