Maximizing the impact of catalytic capital when supporting emerging fund managers

As part of C3’s Seeding Impact blog series with Impact Alpha, Margot Kane from Spring Point Partners LLC offers an insightful take on how catalytic capital can fuel emerging fund managers.

“Without risk-tolerant capital that can be deployed in unconventional approaches, such as in seeding a first-time fund or warehousing early investments, these fund managers may never have an opportunity to prove out their investment thesis and grow into sustainable businesses with long-standing impacts,” she writes.

She further notes that building trust and relationships are essential to risk mitigation strategies. “You simply aren’t going to know as much going into the deal as you might in a more traditional transaction,” she said, drawing on her own experience with emerging fund managers. “Overly structuring deals for controls and downside protection does not sufficiently mitigate against the unknowns and can meanwhile have adverse impacts upon your partners by slowing deal closing, complicating decision-making, and hampering open communications.”