CSE

Center for Social Entrepreneurship

at Middlebury

Investing for Profits and a Better World

CSE Friday Speaker Series, October 3, 2014

Alexandra Peterson Cart, Co-founder and Director of Strategic Development at Madeira Global

by Otto Nagengast ‘17

Alexandra Cart '08 When Alexandra graduated from Middlebury College in 2008, she wanted to go make the world a better place like, as she says, “any liberal arts student.” She found a job with a non-profit, but after several years she became disenchanted with the non-profit world. She felt like she spent her time navigating bureaucracies instead of making an impact. “The amount of red tape was slightly obnoxious,” she says.

Alexandra jumped into the financial world, where she thrived. She enjoyed the fast-paced and results-driven work. But after getting settled in her new career, she missed working to make the world a better place. Combining her desire to do good for the world and her talents in finance, she co-founded Madeira Global, an impact investing firm, in 2012.

What is impact investing? Explaining impact investing to potential clients and dispelling their many misconceptions is, in fact, one Alexandra’s biggest challenges. Impact investing is using an aggressive outlook to find investments “where impact is in the DNA of the company.” This means that “the success of the company depends on the impact,” says Alexandra. Sectors like alternative energy and biotechnology are some of the primary targets of impact investors.

Alexandra believes that impact investing is one the key ways that young generations will use to address the world’s problems. To solve problems, she explains, we need to move capital. Until recently, this almost always meant philanthropy. But Alexandra believes that “we need to deliver solutions through for-profit structures.” Whereas philanthropy depends on people’s generosity to move capital, impact investing depends on people’s profit motives. And profit motives can move a lot more capital than generosity can.

The field of impact investing is filled with firms who have superb marketing but little substance. Alexandra and Madeira Global are trying to make impact investing a reputable business in the world of finance. This has forced Madeira to make some sacrifices, like less publicity, until they feel that they have proven themselves. The firm even turned down a cover story opportunity from Fast Company because they believed that they had not yet accomplished enough to deserve it.

Madeira concentrates on investing in middle-market companies in the United States by offering loans to the firms. Madeira aims to offer investors a shorter time horizon for their investments than the seven to ten year lock-up periods, the amount of time that investors must wait for returns, that are common in impact investing now. In order to raise impact investing up to the same level as other sectors in finance, Alexandra believes that impact investors need to translate impact into data, the language of finance. Madeira has crafted their own system of metrics that enables them to compare the impact of their investments across sectors. With this system, Madeira can compare the impact of investing in a charter school in Texas to the impact of investing in a farm in Africa.

“I’m really excited to see what’s going to happen…in the next five, ten years. I think [impact investing] is going to legitimize.” Ultimately, she says, “I think impact investing is here to stay.”

 

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