Patient Capital

Investors provide capital into an early stage business with measurable social or environmental benefits and a path to growth or fiscal sustainability. 

Patient Capital funds include what is called blended finance or a range of capital types from loans to equity – and as such may include many of the capital types described in this library

Patient capital is sometimes described as impact capital or social impact capital. 

What Patient Capital is Not

Patient Capital as practiced is not designed for unprofitable organizations that intend to depend on perpetual funding to stay afloat.  Instead, patient capital investors expect that it will take a bit longer for an organization to find and validate a sustainable solution that will address a social or environmental need. The time horizon is longer than venture capital, and Patient Capitalists believe the needs of the shareholders do not have primacy over the needs of end customers. In fact Patient Capital funds may deliver investments or debt to for profits and non profits or a hybrid structure that links the two types of organization. But ultimately Patient Capital is designed to get an organization up and running in time to find a market-based sustainable or even exponential growth solution. 

What can be confusing about Patient Capital or Impact Capital is the range of return expected by investors. 

Some Patient Capital funds emphasize addressing social or environment needs and are ok with smaller, community-based solutions that become profitable and consider a range of debt and equity as financing alternatives. Other Patient Capital funds have longer time horizons vs. standard funds, but they do expect to invest equity in exchange for ownership as the founders to search for highly scalable exponential growth solutions (for example in climate tech or biotech). For the purpose of this capital library we are focused on early stage investing rather than later stage or public markets investing.

Venture Capital vs. Patient Capital vs. Philanthropic Grants

Patient Capital was created as an alternative “third way” to both Venture Capital and Philanthropic Grants, popularized by the Rockefeller Foundation and the Acumen Fund.

Venture Capitalists (VCs) expect fast returns to fit the timing and structure of their funds. A typical Venture Capital firm raises different versions of funds, and each fund has a life of approximately 10 years. A successful firm will open new funds every 3-5 years. This puts pressure on VCs to seek returns quickly, and to look for opportunities that deliver returns quickly. Therefore, an organization that may take longer to work on a complex issue and address a social or environmental challenge may be overlooked by VC, particularly companies focused on climate adaptation and transition, poverty alleviation, and social justice. 

The creators of Patient Capital funds positioned these investments in contrast to development grants and development finance that dominated efforts of foundations like Rockefeller and NGOs like the UNDP in low income countries whose organizations became dependent on perpetual grants. 

Patient Capital funders see financing options on a spectrum including many of the capital types covered in this library – making the world even more confusing. 

Finding one’s place along the spectrum is a key consideration for any impact investor. At the far left, one motivated primarily by social impact might make a low interest loan or recoverable grant to a non profit organization. At the other end, a financially driven approach might lead to an equity investment in a big public company based on its integration of corporate social responsibility. 

Example Organizations

Acument Fund | Omidyar Network | Rockefeller Foundation

Is Patient Capital finance the right capital for your business at this stage?




Key Performance Indicators




Key Performance Indicators

When it Works Well

Values and Impact Aligned

For organizations seeking patient capital, when there. is a clear match in values in intended impact with a funding organization, the capital can be foundational and catalytic for starting or expanding. 

Compounded Impact Returns

For foundations, capital from the endowment can be deployed to acheive the foundation’s aims (vs. the 5% typically allocated each year for grants). Investment returns can be reused over and over again to compound the impact.



Space for Capital Innovation

Patient capital structures give investors and founders greater freedom and flexibility to innovate and test new ways to acheive a combination of financial returns as they seek impact.

Since the pandemic and rising awareness of climate and social challenges, funders explored patient capital in order to question and redirect giving strategies and incorporate their approach to positive social and environmental change. 


Achieves Impact 

The organization actually sets and accomplishes its intent to address core issues, like Divine Chocolate sourcing fair trade cacao in Sierra Leone and investing proceeds in local climate justice initiatives.

Space to Breathe and Grow

Patient Capital investors understand that it takes longer time horizons to address deep-rooted social and environmental challenges, and give organizations more time to explore, validate, and test what solutions actually alleviate root cause problems. 


Challenges to Patient Capital Finance

Impact Capital that is not Patient

It has become fashionable to position early stage funding as impact funding, and many new funds were created to address social justice in climate issues.

However, it is worth asking these fund managers about their time horizons. Many are new to learn about and address these systemic issues, and are no different than venture capital with the same short time horizons and expectations that companies center shareholder interests as a primary stakeholder in growth, even at the expense of social or climate goals or worker wage benefits. 


Murky Goals can Thwart Missions

Impact investors can influence organizations to veer from their missions.  When funders are not clear about the key stakeholders and expected outcome they might influence board-level discussions and strategies to address a higher paying customer base, for example, and to not address the needs of lower income customers.  

Impact in this case ends up scattered and limited, and if the mission becomes secondary to profit, the organization may not be able to move the needle on the original intended mission. 


Draws Money from Philanthropy

Impact investors are often accused of applying a belief that markets can solve the world’s toughest problems, and that  business models can address systemic issues. 

But the consequence of this belief is that funders may avoid giving direct grants in spaces, countries, and systems that require more structural investments, or need non market-based approaches.

Trends in Patient Capital

Focused Impact Thesis

Funders with a well-defined investment thesis can become a learning network of like-minded organizations.

For example, the  BlueRidge Fund, connected to the Robin Hood Fund, is focused on tech-enabled organizations that alleviate poverty in NYC. The fund has attracted both for and nonprofit organizations that have gone on to scale and raise additional capital, and further achieve their aims. 


Rush to Address Impact

COVID19 has accelerated a trend already underway: the rise in capital targeted to address issues of climate and social justice and to deliver funding directly to underserved groups typically ignored by standard venture capital. 

As mentioned above, if you are seeking impact capital and require the capital to be patient or have friendlier terms – begin your discussions with investors to set expectations at the start. 



Addressing Critique

Many funders self-examined their motivations, structures and intentions during the year of the pandemic and have started to address the critique that “doing well by doing good” may lead to more status quo, rather than deep rooted change. 

Ask potential funders how they may have changed their approach to address the social justice or climate aims they espouse in their fund or foundation marketing, and what they are doing differently as a result of self-examination.




Before You Consider Patient Capital Finance

  • Do you have a well thought through logic for how your actions, activities, and organization might contribute to a defined outcome and impact (defined as a theory of change)?
  • Do you have an understanding of the systemic root causes of the problem you are looking to address? 
  • Do you have a sense of how long it would take to get your organization to a state of self-sufficiency? 

Exploring Patient Capital Finance

  • Start identifying the capital expectations, investment themes, and theories of change for funders that may be in alignment with your organization’s mission 
  • Assume it will be more difficult to secure values-aligned funders and that if a well-run fundraising effort may involve reaching out to 100 investors in order to get one favorable term sheet, it may require even more outreach to secure values-aligned funders to find the right match
  • If you have received an inquiry from an investor but you were not in the market for funds, make sure to do due diligence on the investor, and be clear on how patient their patient capital claims to be

Discover Alternative Capital

Patient Capital Finance is one way to grow your organization, and you can choose other capital types as an alternative or pair and combine at different stages of your business. Consider these alternative capital sources or explore our Capital Library