Impact investing in Canada, the role of debt

Wow… Impact investing comes to Canada in a big way with RBC launching its own $10M impact fund.

While this is chump change to RBC overall (just the PR and community goodwill makes the $10M worth it), it is a great moment for the impact investing market as a whole with such a big player coming in.

It wasn’t clear if this money will be for equity or debt, but my guess is that it is probably for equity.

Equity is sexier but for a whole lot of reasons debt can be more useful, not the least of which because it helps social organizations build financial discipline and a credit history, which is key to helping them become sustainable over the long term.

Also, debt removes the need to be looking for an exit and therefore gives the organization a bit more breathing space to grow and carry out their mission without the preoccupation of trying to return capital to investors.

RBC creates impact fund