A Creativity Lens for Impact Investing
The creative economy is large, and growing. But impact investing has not focused on the creative economy in a significant, targeted way.
Although creativity and culture have been part of comprehensive community development for decades, today there are few products or funds enabling investors to direct their capital to creative places and creative businesses in low income communities.
There are early examples of impact investment in ethical fashion, sustainable food, and social impact media, but still it is not easy for impact investors to source opportunities and direct their capital to social purpose businesses in the creative economy. (To learn more about opportunities for impact in these three sectors, see Upstart’s Deep Dive series released November 2019.)
The time has come to borrow from the lessons of gender lens investing and introduce a Creativity Lens to impact investing.
Three reasons for impact investors to embrace a Creativity Lens:
- More prospective investment opportunities and portfolio diversification: As impact investing goes mainstream, there need to be more quality opportunities to absorb the additional capital; including the creative economy puts new high-potential companies in scope. Adding another segment of the economy to the impact investing universe also offers investors a chance to diversify their market exposure. It offers diversification from an impact perspective as well, bringing cognitive diversity by including creatives as problem-solvers and getting more eyeballs on the issues.
- More ways to get social impact: Investors can further their current impact goals by including creative businesses in their portfolio. Businesses in creative industries are delivering impact for the environment, , health and education, among other priorities. Investors aligning with the Sustainable Development Goals will find synergy as well. And the impact that creativity and culture contribute to low income communities has already been well-documented.
- Build a sustainable creative economy now; no need to fix it later: Entrepreneurs leading companies in creative industries want to deliver impact, and need impact investors to stand with them. The presence of capital that values inclusion, equity, and sustainability can ensure companies in the creative economy are providing quality jobs, acting positively for the environment, and strengthening their communities. The creative economy is growing. Let’s help shape the creative economy now so as it grows, it grows the right way.
With a pipeline of more than $3 billion in opportunities over the next five years, impact investing through a Creativity Lens is doable. The time to do it is now.
(Learn more about our methodology and with whom we spoke throughout this study.)