“Patient capital is money invested in entrepreneurs who are building companies and organizations that solve tough problems like healthcare, water, housing, alternative energy.”1 It is traditional investment which could be equity, debt, or other instruments and the investor is willing to forgo high financial returns in exchange for social impact with a focus on the end customer as much as that of the shareholders. Generally, there is a greater tolerance for risk than with traditional capital and a longer time horizon.
Patient capital in the Business as Mission (BAM) world often focuses on social problems such as high unemployment, human trafficking, transportation, water purification, the environment, and food production – all of which define current IBEC projects.
Here is an example of a friend who was very much a part of a BAM business in Azerbaijan before she married, and together they set out to build another business. She and her husband, both passionate about entrepreneurship, job creation, social enterprise, and making disciples of Jesus, continued to be committed to solving social problems – this time in east Africa with its poverty and unemployment. Take two minutes to watch this video.
The investors in this project consider their funding to be patient capital. They know it will take time; they know the returns will not be as high as those of venture capitalists, but they know that the end customers will benefit with improved living conditions, education for their children, better health care, and an understanding of how the gospel came to change their lives.
1 Novogratz, Jacqueline (June 2009), A third way to think about aid, TED, retrieved December 18, 2017
Larry Sharp, Director of Training, IBEC Ventures