Impact investing, which aims to generate financial returns while creating positive social or environmental change, has faced skepticism from traditional investors who wondered if focusing on a smaller pool of opportunities to meet impact goals could hurt financial performance. However, with the right expertise and strategy, impact investing can deliver both strong returns and meaningful results.

A recent article in from the Chicago Booth Review highlighted Harry Markowitz’s Modern Portfolio Theory, which highlights the importance of diversification. While impact investing narrows its focus to specific sectors such as healthcare, education, or technology, deep expertise in these areas can offset the risks. For example, firms that specialize in a specific sector can use their team’s knowledge and network to identify strong companies that drive both financial success and measurable impact.

Returns in impact investing are influenced by two main factors: beta, which measures how investments move with the market, and alpha, which reflects an investor’s skill in selecting the right opportunities. Impact investors may have portfolios that look different from the broader market, as they focus on sectors rich in impactful companies. Great success in the field of impact investing is achievable and depends heavily on the investor’s ability to evaluate both financial potential and how a company’s mission can help its profitability.

At Seed Healthcare, our $100 million impact fund exemplifies this approach, targeting transformative healthcare technologies with a focus on early disease detection. Our investments aim to improve patient outcomes by addressing critical challenges like preventative care. By aligning with the UN Sustainable Development Goals and healthcare standards, we emphasize proactive care that enhances health, reduces costs, and fosters long-term societal benefits. We believe that innovation in healthcare can drive measurable, sustainable, and transparent improvements, benefiting both patients and investors. For more information on our fund, please contact Todd Perman, our President & CEO.