Maximizing Impact: How NMV Invests in Change
In the categories:
- For Investors
- Open Call
Since the 2016 election, there’s been a surge of early stage investors, with millions of dollars of new risk capital, entering the political arena and placing bets on political startups. With all this new funding and energy, we’re often asked what investors need to know to maximize the impact of investments in progressive politics and movement building.
The execution is hard but the answer is simple: Investing with the intent of creating maximum impact above all else requires a wide funnel with a flexible investing structure, a fair process that offers equal access to capital, and exhaustive, rigorous diligence.
The political industry is unique in many ways. The cyclical boom and bust nature of elections is a perennial challenge for both entrepreneurs projecting growth and investors expecting returns. Unlike in most commercial sectors, nonprofits and for-profits often compete for the same business. And in order to win elections, impact policy, and ultimately advance a progressive agenda that improves the country for everyone, diverse coalitions need to be engaged and represented.
Investing successfully in this industry requires precise knowledge of the sector and a keen appreciation of its nuances. But expertise alone is insufficient; it must be complemented with a system that prioritizes equal access to capital and an exhaustive and rigorous diligence process. This formula in its entirety is a process we’ve been honing at NMV over the last decade and one that has led to dozens of highly impactful and catalytic investments.
In practice, this process begins with an Open Call. Our annual Open Call is designed to maximize the width of the funnel as well as best meet the diverse communities represented in progressive politics and movement building. The goal is democratizing access to capital – making sure founders with diverse backgrounds, pedigrees, and experiences have the exact same access to our capital. Additionally and importantly, we are fiscal structure agnostic, meaning we consider equally startups that are for-profits (e.g. B-Corps, C-Corps) and nonprofits (C3s, C4s, and 527s). This enables us to truly optimize for impact without constraint.
In 2019, 525 companies doing innovative work within our key investment areas applied for funding through NMV’s Open Call. Those companies were split evenly between for-profits and nonprofits. 63% of founder applicants are people of color, and 57% identify as women, trans, and/or nonbinary.
Along with members of our diverse investment committee, NMV staff interviewed the 100 strongest applicants and dug into the details of each pitch – business model, leadership team, mission-alignment, and potential impact. Through this process, we selected 33 finalists in contention for investment or grant funding of up to $250K.
To ultimately choose the companies ripe for the greatest impact, we culled through and produced 50-200 pages of documentation for each company, interviewed 5-10 customers, vendors, or other professional references, and met with founder and technical teams on several occasions. Through this process, we thoroughly evaluate the model, the growth, and the drivers of the company's work to date. We assess if, when, or how a company's body of work reflects emerging market trends or is noise. We look to understand the founders, their ability to triage needs, respond to feedback, and collaborate with us, customers, and other funders. And ultimately we look to determine the scale, scope, and nature of the impact. We’re scouring for the right mix of vision, persistence, and execution ability.
We will soon announce the organizations that will receive funding through our 2019 Open Call process and join our 72 existing portfolio companies taking on daunting problems with bold solutions. Through our process, we are confident this new cohort of portfolio companies will be as impactful as it is diverse and talented.