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  • 2024
  • Working Paper
  • HBS Working Paper Series

What Do Impact Investors Do Differently?

By: Shawn Cole, Leslie Jeng, Josh Lerner, Natalia Rigol and Benjamin N. Roth
  • Format:Print
  • | Language:English
  • | Pages:73
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Abstract

In recent years, impact investors – private investors who seek to generate simultaneously financial and social returns – have attracted intense interest and controversy. We analyze a novel, comprehensive data set of impact and traditional investors to assess how the non-financial characteristics of impact portfolios differ from their traditional counterparts. First, we document that they are more likely to invest in disadvantaged areas and nascent industries and exhibit more risk tolerance and patience. We then examine the degree to which impact investors expand the financing frontier, versus investing in companies that could have attracted traditional private financing. Utilizing a variety of network theoretic and event study analyses, we find limited support for the assertion that impact investors expand the financing frontier, either in the deal-selection stage or the post-investment stage.

Keywords

ESG; Socially Responsible Investing; Investment Decisions; Public Goods; Impact Investment; Investment; Private Equity; Venture Capital

Citation

Cole, Shawn, Leslie Jeng, Josh Lerner, Natalia Rigol, and Benjamin N. Roth. "What Do Impact Investors Do Differently?" Harvard Business School Working Paper, No. 24-028, November 2023. (Revise and Resubmit, Review of Financial Studies.)
  • SSRN
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About The Authors

Shawn A. Cole

Finance
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Josh Lerner

Entrepreneurial Management
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Natalia Rigol

Entrepreneurial Management
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Benjamin N. Roth

Entrepreneurial Management
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More from the Authors

    • September 2025
    • Journal of Development Economics

    Using Satellites and Phones to Evaluate and Promote Agricultural Technology Adoption: Evidence from Smallholder Farms in India

    By: Shawn Cole, Tomoko Harigaya, Grady Killeen and Aparna Krishna
    • May 2025
    • Quarterly Journal of Economics

    The Diffusion of New Technologies

    By: Aakash Kalyani, Marcela Carvalho, Nicholas Bloom, Tarek Hassan, Josh Lerner and Ahmed Tahoun
    • April 2025
    • Journal of Finance

    The Allocation of Socially Responsible Capital

    By: Daniel Green and Benjamin N. Roth
More from the Authors
  • Using Satellites and Phones to Evaluate and Promote Agricultural Technology Adoption: Evidence from Smallholder Farms in India By: Shawn Cole, Tomoko Harigaya, Grady Killeen and Aparna Krishna
  • The Diffusion of New Technologies By: Aakash Kalyani, Marcela Carvalho, Nicholas Bloom, Tarek Hassan, Josh Lerner and Ahmed Tahoun
  • The Allocation of Socially Responsible Capital By: Daniel Green and Benjamin N. Roth
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