Why Do Investors Like Benefit Corporations?
Benefit corporations are already raising venture capital from mainstream investors like Andreessen Horowitz, Benchmark, Founders Fund and First Round Capital. At the same time, institutional investors are increasingly paying attention to companies that have a social or environmental impact.
There are five broad trends that point capital in the direction of sustainable enterprises that create long-term durable value:
Sustainability Improves Performance.
A survey of 200 academic studies found that "88% of reviewed sources find that companies with robust sustainability practices demonstrate better operational performance, which ultimately translates into cash flows," and "80% of the reviewed studies demonstrate that prudent sustainability practices have a positive influence on investment performance." - From the Stockholder to the Stakeholder
Public Market Investors are Focused on ESG Factors
“Strong governance, along with effective management of environmental and human capital factors, increases the likelihood that companies will perform over the long-term and manage risk effectively.” - CalPERS 2013 Investment Beliefs
Entrepreneurs Want to Lock in Mission
“Becoming a Benefit Corporation helps codify and support our mission. In AltSchool's case, delivering a broad social impact goes hand-in-hand with creating a large and thriving business.” – Max Ventilla, Founder of Altschool
Talend Demands Purposeful Ecosystems
"Millennials will grow to 75% of the workforce by 2025, 77% say their “company’s purpose was part of the reason they chose to work there.” -Deloitte Millennial Survey
Non-Financial Information is Now Pivotal
"64% of investors say businesses do not adequately disclose non-financial risks and nearly half of investors would rule out investment based on certain non-financial disclosures” - Ernst and Young, Global Survey of Institutional Investors 2015