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The Long Road to Impact (and a Bit of Déjà Vu All Over Again)

By: Cabot Brown 13 Jun 2018

Editor’s Note: The below post is part of our Alumni for Impact series, which features alumni who are making a difference in the social sector, specifically in K-12 education, impact investing, nonprofit supportive services and social entrepreneurship. Cabot Brown (MBA 1987), Founder and Chief Executive Officer of Carabiner LLC, describes in the below post how his career intersected with creating social impact and propelled him to found Carabiner.

In 1987, I completed my studies at HBS and headed west for San Francisco, inspired by every class I took on the topic of entrepreneurship and seeking to make my own mark creating and advancing companies, which has been my career’s work, both as a principal and advisor.  

As oft noted, it is not for the faint of heart, this world of startups, but, when a company one helps build does prosper, there is very little in business more gratifying, particularly when one believes firmly in the mission and purpose of the enterprise.

The companies and enterprises with which I have associated over the years have operated in many industries, but I have spent most of my time in the areas of medical sciences, education, and more recently, in sustainability. Without putting a name like “social impact” on these sorts of organizations, core to what they do, by definition, is making a difference in people’s lives.

It is the overlay of this social purpose and the new and evolving sources of social impact capital have led me, over the past year, to build to scale Carabiner LLC, an advisory firm—the third I have helped create—that serves the needs of entrepreneurs making a difference while creating economic success for their owners and backers.

We believe the opportunity to build a significant firm with our focus is driven by a variety of contextual factors, including: innovation on an unmatched scale in our areas of focus; the arrival of “impact investing” as a mainstream aspect of asset management, but with still evolving standards and metrics for assessing “good” and “return;” and the emergence of the B Corporation and other “non-traditional” corporate and philanthropic structures that require careful navigation and assessment.

The need is now. KKR recently followed its peers, TPG and Bain, in raising a major social impact fund, and we expect other leading private equity firms to follow down this path, pioneered by DBL and others years ago. In fact, Pitchbook estimates there are 20 social impact funds in the market targeting more than $100 million. BlackRock, Merrill Lynch, UBS, Goldman Sachs, and other major investment banks all have platforms allowing their clients to assess and select investments based on social impact measures. It is estimated that, on a global basis, “responsible investing” now represents 25% of all public equity investments globally. And a Bank of America study showed that 85% of millennials consider their investment decisions as a way to express their social, political, and environmental values.

In the 1980s, when I started on this entrepreneurial journey, the major Wall Street investment banks did not understand the potential for innovative companies funded by emerging—but, by their standards, insignificant—venture capital funds, allowing an entire ecosystems of investment banks and other advisors to form to support these companies and their backers (most of which were acquired by these very firms in the subsequent 20 years). We believe we are on the cusp of a similar opportunity, in which impact investing and enterprise-building moves from the periphery to become a core part of economic activity in the US and abroad, requiring expertise, networks, and experience not yet in place and which are in the early stages of definition and development.