Nov 11, 2015 • 22M

#324: A New Investment Model For A New Capitalism

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Some of the world's great changemakers join host Devin Thorpe to share leadership lessons you can use to increase your impact.
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November 5, 2015 - Read the full Your Mark on the World article and watch the interview here: Subscribe to this podcast on iTunes by clicking here: or on Stitcher by clicking here: Over the last 30 years or so, a growing movement that expects capitalism to drive social benefit rather than tolerate its own harm has led to a burgeoning demand for capital with a conscience. Michael Sauvante of Commonwealth Capital has developed a model for financing social ventures that could rapidly increase available capital for social ventures. Michael explains, “Small business with 20 or fewer employees provide more U.S. jobs than all the jobs in big business, government, non-profits and all the other sources of jobs combined. Yet small businesses are struggling to survive and are desperate for capital and credit, both exceedingly difficult to obtain.” “One of the biggest problems with raising money for such small businesses is that, unlike investing in the stock market where investors can buy and sell anytime they want, when they invest in small private businesses, investors cannot easily get their money out of them once they put it in. What is needed is a way for investors to support small businesses, but still be able to get their money out anytime they need or want to,” he continues. His innovation has been around for decades, but Michael wants to breath new life into it for the sake of social enterprises. He notes, “BDCs (Business Development Companies) overcome this problem by serving as an intermediary between investors and small companies. BDCs are a special type of venture capital company that is a public company listed on the stock market. That means anybody can own a piece of them, not just wealthy people like they do in regular venture capital funds. It also means their investors get freely tradable stock that they can buy and sell anytime they want.” He adds, “BDCs take the money they get from investors and invest it in and/or lend it to small companies. That way small businesses get the money they need, but their investor backers don’t have their money tied up if they need or want to get it out. Commonwealth Capital is taking the basic BDC concept further by forming lots of smaller BDCs under it to help spread this concept much wider than would normally be possible.” Read the full Your Mark on the World article and watch the interview here: Please consider whether a friend or colleague might benefit from this piece and, if so, share it.