ImpactUs launched last spring with a splash. Hatched out of the CDFI world and funded by heavyweights including the Ford and MacArthur foundations, the impact investment marketplace promised to bring new ease to connecting investors with vetted funds as well as direct investments in social enterprises. Its goal: $1 billion in transactions over five years.
But less than a year later, ImpactUs has shut down.
“The ImpactUs Marketplace was formed with the goal of simplifying the impact investing process; providing impact investors, advisors, and institutions with solutions to accelerate the flow of capital to funds, companies, and projects that deliver community, societal, and environmental benefits. Unfortunately, we have had to make the difficult decision to cease operations,” reads a message on its web site.
ImpactUs representatives were unable to comment. But people familiar with the situation say ImpactUs quietly closed late last year, and is working on a sale or transfer of assets to a third party.
The development surprised many in the impact world, especially given the startup’s pedigree and the growing demand for the kind of socially beneficial investments it offered.
ImpactUs was launched in April 2017 with backing from the MacArthur Foundation, Ford Foundation, Kellogg Foundation, Open Road Alliance, Enterprise Community Partners and City First Enterprises. The Washington DC-based company expected to host 25 to 30 investment products on its platform in the near term, growing to several hundred over the next decade. By the end of 2017, it had listed less than a dozen investment offerings.
An Unmet Need
Marketplaces such as ImpactUs can help reduce the barriers that slow the flow of capital to social enterprises. But to date, such marketplaces have struggled to gain traction. Mission Markets, another prominent impact investing marketplace, struggled for years to get established before closing its doors for good last year.
ImpactUs, a FINRA member broker-dealer, was a full service platform that vetted deals for institutions, financial advisors and (mainly accredited) individuals. Investors could search based upon interests such as renewable energy or affordable housing, as well as by product type, such as debt, equity or estimated yield. Initial offerings on the platform included Iroquois Valley Farms, a fund that supports organic farming, and CommonBond Communities, a nonprofit provider of affordable housing. Last fall, it added its first direct investment opportunity in an early stage venture: Meow Wolf, a Santa Fe-based arts & entertainment collective.
For issuers, it provided a compliant platform that could help attract and onboard new investors.
People familiar with the company said costs were higher than expected and that it burned through its initial funding.
Others suggested that the impact marketplace business model has yet to be nailed. “Many aspirational marketplaces with grand ambitions have closed,” said Kevin Jones, the founder of the impact investing conference SOCAP and, more recently, Neighborhood Economics, who was surprised to hear the news. “These platforms and marketplaces can make sense of impact investing, reach a broader audience and remove the friction,” he said. “But they’ve been plagued with burdensome theories of change migrating from philanthropy.”
Marketplaces, like railways and other infrastructure, require the coordination of many signals, added Jones. “No one has yet solved coordination for the impact market,” he said. “It’s a systems architecture problem.”