Maximpact special advisor Cornelius Pietzner has been engaged in the fields of philanthropy, social finance and investment in the US and Europe for the last 25 years. As Maximpact’s work gathers momentum, we asked him some questions about impact investing, Maximpact and the future he sees for the sector.
You have a long and varied career of involvement with very diverse charitable, philanthropic and financial endeavors. What brought you to impact investing?
I’ve been involved in supporting social entrepreneurs in various ways for 25 years. There was no cataclysmic event that derailed me from a more traditional career but I’ve always had the good fortune and the privilege of connecting my professional interests with my personal interests. I have always tried to develop and use various models, instrument sand methodologies that may be effective in improving the welfare of the planet.
I see impact investing as a means to an end, not an end in itself. This is one reason why I like the principles of Maximpact: It’s a big tent approach, a generous, inclusive strategy that doesn’t get hung up on narrow distinctions about whether an investment is purely an impact investment, just “impactful”, or whether it’s philanthropic. Maximpact is designed to facilitate deal-making across the continuum of different methods and types of intervention, whether it’s a purely philanthropic intervention or financially prioritized. I think all these approaches have their place, sometimes even in combination.
I was involved in the philanthropic sector for many years. I see continuing value and necessity for philanthropic intervention (and not just venture philanthropy, but also pure grants: giving). You can use different instruments, sometimes you have to use several in hybridized, creative approaches that are appropriate and relevant for a particular situation. What is important to be able to discern and discriminate what is appropriate, for whom, when. Doing this effectively requires flexibility and knowing what is appropriate. To be successful it is very helpful to be willing to engage in a dialogical process with the people you are working with or investing in. It’s not a unilateral relationship. The best; most sustainable and viable; engagements are those that incorporate, where possible, the entire stakeholder group.
How did you first become involved with Maximpact?
I first met Tom Holland when I was doing an investor presentation for my fund, Alterra. He’d already completed the framework for Maximpact and was exploring strategies for honing the site and getting the word out to the impact investment community about what it could do.We had several long discussions and found we could work together. Tom comes from a private equity background and I think he realized that I had a broad network spanning venture philanthropy foundations, social entrepreneurs and the relevant groups that support them, as well as the impact investment community. For my part, I felt that the principles and core of Maximpact corresponded to a missing piece of market place infrastructure.
Can you say more about the “missing piece” Maximpact provides?
Social entrepreneurs have been around obviously for a very long time indeed. However, social entrepreneurship has been articulated and embedded in the academic world really for only around 15 years, thanks to a few successful pioneer organizations. Today, you see social innovation centers and entrepreneur institutes springing up worldwide. The investment and capital markets, by contrast, have only been activated recently. The marketplace is still relatively in its infancy. It has the growing pains, redundancies and inefficiencies and also the lack of transparency of an early-stage marketplace. There’s also perhaps some carry over from more traditional finance; somewhat unconsciously, maybe; in terms of proprietary thinking. That attitude of “the tighter I hold on to my best ideas, the better off I’ll be” lingers. I hope we’re contributing to the creation of a new paradigm of collaboration. Ultimately there are enough planetary problems and issues for all of us!
When you’re building this marketplace, you need to have certain pieces in place that facilitate it; liquidity, exits and deal-flow are essential. There are always costs associated with these. The greater the costs, the more difficult it is for players in the sector, especially small players, to break through and establish themselves. The classic example; to bring it home to what Maximpact is trying to do; is simple deal sourcing, which can be erratic and expensive. One thing I like about Maximpact is that it’s not trying to do everything and be everything for everybody. It’s trying to facilitate deal-flow and make this element of the marketplace more affordable for more players. By doing this, it provides one important piece of the environment that helps impact investing grow. Once we achieve critical mass; and we are very close to that now; Maximpact’s service will be of enormous value to the funds and ultimately to the entrepreneurs
What developments would you like to see in impact investing in the next six months?
There are some pretty hefty forecasts in regard to what kind of money should be coming into the impact investing field and I don’t think any of us have seen that yet. As some people say, there’s still a lot of smoke and sizzle around. What I’d like to see is more capital in-flow, more capital available and larger amounts of capital coming from some key institutions; and they know who they are. This capital needs to be made available in a smart way that doesn’t overwhelm or prejudice the field. But, again, there are reasons why we’re not seeing this kind of activity yet. One of the reasons is that there are still some infrastructure pieces that are missing, for example exits. There’s still work to be done toward making this marketplace work effectively.
Cornelius Pietzner is Maximpact’s special advisor. He also acts separately as Chief Executive Officer of Alterra Impact Finance GmbH, a social impact investment firm in Zurich focussing on sustainable European companies. He is also President of the Alterra Foundation, a Swiss charitable foundation which supports transformation initiatives related to a more human-centered economy. Pietzner serves as Trustee or Advisory Board member to a number of charitable foundations in the USA and Europe. He is a Board member of Mind and Life International, Switzerland and Integrative Care Science Center, Sweden. From 2002-2011 he served as Chief Financial Officer on the Executive Board at the Goetheanum, General Anthroposophical Society, Switzerland. He was the Director of Camphill (life; sharing) Communities in North America. He received his degree in Political Science from Williams College, Mass. and was awarded a Thomas J. Watson Fellowship.
Interview by Marta Maretich