Joel Solomon On A Clean Money Revolution; Reinventing Power, Purpose & Capitalism

Joel Solomon is Co-Author of The Clean Money Revolution: Reinventing Power, Purpose, and Capitalism. As Co-Founder of Renewal Funds, a $98 million mission venture capital firm, he has invested in over 100 early growth-stage companies in North America, delivering above market returns while catalyzing positive social and environmental change.

Joel is a founding member of Social Venture Network, Businesses for Social Responsibility, Chair of Hollyhock, Co-Producer of RSF's “Integrated Capital Institute”, and serves on the University of British Columbia Board of Governors.

Joel shares his experience as a trailblazer in the mission venture capital space, discussing impact investing, opportunities for social entrepreneurs and the long term wellbeing of humanity and ecology.

Highlights from the interview (listen to the podcast for full details)

[Tom Allen] - You’ve been a trailblazer in the mission venture capital and social innovation space. Can you please tell us a bit about how you got started working in this space?

[Joel Solomon] - I have to credit my family roots, a combination of parents who cared about the world, and cared about society. They were very good models about that. I'm in my 60s now and I grew up in the '60s, and I was highly influenced by the questioning and challenges that were coming forward in that era. We were learning a lot more about how the world worked, and it became clear to me that there had to be a middle ground of the possibility that capitalism could be a powerful force for good, and that what was important is that we dedicate ourselves to our values, do what we truly believe in, and think it right, but that we can also work in the marketplace and support great products, services, and people to do well, and that was really important to do.

That led me to look at the financial success that my family had and the emerging financial success of society that was happening for those who were the most privileged, and that it was a responsibility for those of us that could have that access to do the best we could and really think about all of our choices, the influence that they have, and particularly around money, and what money is doing to be in places on behalf of ourselves in our name, and to take responsibility for that.

Fantastic. It's obviously been a very rewarding journey for you. In 2008, you co-founded Renewal Funds, which has become Canada's largest mission venture capital firm, and as some of our listeners may recognise, it's also a certified B corp. So could please tell us a bit more about the specific work you're doing there Joel, the type of companies you invest in, and the purpose of Renewal Funds?

Well, Renewal Funds grew from first my personal investing in early stage companies, and then I went to work with an extraordinary woman named Carol Newell. She had inherited a large amount of money and wanted the majority of it deployed for things that she felt would be good for the world long-term. I was invited to strategise and implement that work.

That was a 14 year process where we invested in dozens and dozens of green companies to just keep simple the description. After that work which we felt was very successful in helping prove our point, with my primary partner Paul Richardson, (who is the managing partner of Renewal Funds), with Carol's support and numbers of others we decided to see if we could attract other people to invest with us, and so we set out about 10 years ago. We launched a fund that we named Renewal 2, following the work of Carol, honouring that work that had preceded it.

We invited outside parties to invest with us. We went across Canada and the US primarily. We attracted 80 partners. Several from Europe and Asia, they included individuals, families, charitable foundations, and boutique wealth managers. That mix meant a lot to us, because we felt that our real goal with the fund after proving that we could make money for our investors aligning with their values was to help build this field.

Even 10 years ago, the idea of impact investing was still looked at with high skepticism, and there were not very many products available for people, particularly in private equity, so we wanted to carry on our work and prove that it could be done, and inspire others to do it.

So from Renewal 2 became Renewal 3. The first one was 35 million dollars, the second was 63 million, and we're now underway raising the Renewal 4 fund.

What an inspiring journey, Joel. These are all interesting experiences that you've gained over the years in managing these funds, and many of these insights were turned into your book called The Clean Money Revolution, and it has been called 'a treasure map to a better world', so can you please tell our readers a little bit about what inspired you, the keys points that led you to writing this book, as well as how the book's laid out, and the sort of questions that you tackle?

You can tell from what I've said already that I'm a bit of a missionary.

I feel like my job is really for the long-term future, the best that I can do, and the book is an outgrowth of decades of experience in learning about these fields, learning about entrepreneurs, learning about how businesses can create better products and services, and then how to support them properly. So with all of that experience, which is part of what I do, I also consider myself a good and active citizen and I'm involved in the not-for-profit sector, and pretty much whatever I can do that moves along positive issues.

So as I turned 60, it seemed to me that I had a lot of privileged experiences and opportunities, and that I was at the time in life where it was important to share about those experiences the way others had been able to help and influence me that way, whether it was directly, or through reading their books. It was a very satisfying process to go through, and really think back over the years, and what was useful to me as a young entrepreneur, and what might be useful to share from those experiences, along with a partial mapping, kinda a personal mapping, of the taxonomy of how this whole field emerged from an American and Canadian perspective.

I was involved in many networks and organisations that are considered seminal to the evolution that takes us to where we stand now, but also I feel that there is a time of need for moral and ethical call to action, particularly for those of us that have affluence, and that have more than enough.

So writing a book about how this is pragmatically possible first, that it's actually a great money making opportunity, to soothe the nerves of managers and responsible investors, but that actually it's much bigger than that.

There's a need for a spiritual evolution that runs alongside what the technology and industrial revolution has done and brought us to.

Those of us alive today have more capacity to do unconscious or even conscious damage than any previous people of the planet, and that's because of the tools and technologies that we've moved to.

It becomes clear that though there is massive money in the world, we have problems that keep accelerating, and I would say most people listening to this show share some kind of understanding of the massive challenges and crises we face ecologically, and socially, and politically, across the planet.

If we're conscious about the use of money, and we really think about it, and we take responsibility for it, we can cause a massive transformation, and I believe that comes from effectively what I'm calling a spiritual route, which is our belief system, about what our job is with this precious thing called life, and how we support future generations.

So the book is both pragmatic and also hopefully an inspirational call to action.

We've heard a lot of buzz around the term 'impact investing' in recent years with what seems like very strong momentum gathering in the space, so what do you believe are the key reasons for this? Do you believe it comes back to the sort of changes we're seeing in the world that you just mentioned before?

I do. I think that more information can both numb us but also awaken us, and anyone with a curious mind today, pretty much anyone, almost anyone, can get to the internet and learn about all kinds of things, wonders of life, science, technology, so with increased awareness comes increased privilege, comes increased responsibility.

Those of us that are fortunate have a responsibility to the future, and to each other, and to that which happens around us. So this movement called impact investing is really just the tangible front end, a very practical way to demonstrate the rise of those who care, and we care about things beyond only ourselves.

The impact investment movement is in its early stage.

We will gradually have the ability to track every dollar, where it came from, where it goes after we choose where to give it, spend it, invest it, and this will become more and more normal over time.

I like to think about if there were a blockchain type tracking of where every dollar that comes through me came from, what it did, who it affected, what places it affected, and then what happens in the future with where I move my dollars, I think this would revolutionise how we look at the world.

It certainly seems like there's a strong capability, and the technology, in order to do that effectively now right? So in many ways you're talking about the measurement of impact, Joel, so how do you currently do this, or what advice would you give to others in the space who are looking to more effectively measure their impact?

Well first thing I would say is it's a struggle, and it's a struggle because there's quantitative impact and there's qualitative impact, and quantitative impact is a complicated strategy to figure out exactly. Counting numbers of jobs, and everything that you can count can change, and when you count you can leave out really important factors. So in the metrics of today we need to find both ways to show tangible results, but we also need to be able to talk about why it matters to be part of a mindset change, and a consciousness shift, because I believe that with enough proof of concept there will be a dramatic shift in how the entire framework of capital works.

We will, at risk of our own peril, find better ways to deploy the resources that are held by ourselves, by governments, by corporations, for the long-term wellbeing of humanity and ecology. Without that, we face an unthinkable horror show. I believe that people will rise to the occasion.

It's great to hear that positive outlook that you have and it's certainly with the sort of action that you're taking that others can be inspired to create that change. You mentioned before about having worked a lot with a range of different entrepreneurs, so where do you see social entrepreneurs typically falling short when they're seeking investment?

I'm not sure that I see them falling short any differently than any other kind of investing. If we work hard and we study our issue well, and we really learn how whatever system we're attempting to intervene in works, then intelligent human behaviour will lead us to talk about it better, to map it better, and to implement it better.

And so, as we move from the earliest stage of having to be just patted on the head for saying that we could do a business that actually matters to the world, and make money, as this gets proven to become more and more normal then it's really about am I a good entrepreneur? Or am I an entrepreneur that still has more things to learn that investors are ready to get behind? And that's a hard thing for us because there's another factor that happens which is the privilege of access.

Some of us, myself included, I was born to a family of rising entrepreneurial success. Well, that leads to being able to go to better schools, to be involved in things where I'd meet kinds of people and things like that, so those of us that have inherent advantages have an inherent advantage in raising money, and raising capital.

That's why we have to think very carefully about who we are supporting with our investing, and what their values are, and whether we believe that they can truly succeed is always a part of it.

I think as this field grows, and the premise grows, more and more people will start to look at their company from top to bottom and how does each action in that company affect people and places.

Hopefully, government regulation will align with that, marketplaces will align with it, and our beliefs about the future will align with it. I know that I want my family to have healthy food that's not damaging them.

At that very simple level. That's now a premise upon which lots of money can be made as well. So you go through society and look at every issue and I believe that is the case.

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Some very interesting thoughts there, Joel, so are there any particular projects or initiatives that you've worked with or simply come across recently that you believe are creating some really excellent positive social change?

Well, I have overabundant access to seeing those kinds of opportunities, so because I've chosen to steer my life towards that, and gotten to know the networks, people, entrepreneurs, funders, of this world, for decades now, that means that I have an embarrassment of riches in seeing companies, and nonprofits, and social initiatives that are dedicated to improving things.

When you seek out that which is aligned with your values and your deepest beliefs, it can be very challenging in the beginning, but as you find your way into the circles and networks that feed that passion in you, you discover that there're vast universes that you never knew about.

So I think that now we're some decades into this. There's infrastructure established. Young entrepreneurs, investors, people that are interested in careers in these things can now find many, many, opportunities.

Fantastic. Finally, Joel, as an author yourself, I'm very curious to hear your thoughts on this, but are there any particular books, beyond your own book, which you would recommend to our listeners?

I think that Paul Hawkings 'Draw Down' has been a very important book. Morgan Simon, 'Real Impact'. Ross Baird's book, Jed Emerson... there are numbers of people in this field that have started to put out books, because the field is maturing, and there's a readership that's interested.

One thing, when you go online and you buy a book, and you get recommended other books, I find looking at my own online sales, I discover all kinds of great books. It's the internet era.