Impact investing is set for a “revolution” as investors increasingly look to small and medium-sized enterprises (SMEs) driving social change, according to Beckon Capital CIO Chris Selth.
“The world needs to empower the local. The centre has failed,” Chris Selth told InvestorDaily.
“Beckon is about getting capital and resources to places it’s difficult to get to – the smaller or localised part of the economy – in order to help build those businesses and communities.”
Mr Selth is a financial services veteran and ethical investing pioneer who – along with former colleagues from his time at Bankers Trust – started Beckon to invest in small and medium-sized enterprises (SMEs) to deliver both attractive returns alongside social and environmental change.
“We’re delivering investors returns they can’t otherwise get. There’s a lot of money swishing around chasing a small number of big companies, but the places where there’s need and opportunity are not configured to get capital, and capital is not configured to get to those places,” he said.
Small and medium enterprises have historically relied on debt capital – a “mortgage on their life” that gives the business limited capability to expand. Beckon instead takes a minority equity stake in established businesses that “are already paying their bills” and partners with them to improve productivity and reduce risk, including through a tech platform that collects data allowing Beckon to better assess and manage investees.
“The reason small businesses frequently fail is they fail when they attempt to grow. They are good at their product specialisation, but they’re weak at their adjacencies – marketing, technology, HR. When they’re a small team, they function. The moment they try and move beyond that they crack,” Mr Selth said.
One company that Beckon’s proof-of-concept fund invested in designs living will technology – an initiative increasingly “in the box seat” in the face of the royal commission and Australia’s ageing population. Mr Selth sees impact investing as evolving from “Impact 1.0” – little more than philanthropy – into a bona fide profit-generating investment strategy, and Beckon has recently launched a $150 million fund to meet a tidal wave of demand.
“The queue of people at our doorstep is insane right now. This is a revolution…Impact is not just a nice to do. It’s the future of business. In the past, greed was good. Now, meeting needs beats greed,” Mr Selth said.
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