A ground-breaking new marketplace for social investing

The world of social investing is a highly fragmented place with thousands  of double and triple-bottom-line companies and potential investors (angels, foundations, pension funds and so on), but no central venue for them to interact.

That problem may be fixed this summer, when Mission Markets launches.  The Riverside, Ct., venture–it moves to New York City next month–aims to become the dominant private marketplace for social entrepreneurs and investors. If  successful, it could transform the face of social investing in the U.S.

According to CEO and founder Michael Van Patten, the enterprise , which  will be regulated by the SEC and FINRA,  will allow only accredited and institutional investors with a demonstrated interest in social investing to  have access to the electronic platform. Only companies with an existing revenue stream can list.  Plus, the platform will list projects–say, an effort aimed at preserving wetlands in California– to attract investors seeking to back conservation ventures.

But there’s another unusual feature that could open social investing up to more investors. One of the big stumbling blocks to investment in these ventures is the lack of liquidity. The catch phrase in the industry is “patient capital”. But, what if, say, a pension fund invests $2 million in microfinance debt with a 10-year maturity and ends up needing the money three years down the road?

Mission Markets will allow for an alternative: listing the debt on the platform. No guarantee anyone will  find a buyer. But, at least there will be an organized marketplace for these secondary sales. (This type of transaction will be open to microfinance and community investment debt).

Van Patten readily acknowledges he’d prefer not to be launching the enterprise in this economy.  And, it’s likely that the recession will put a damper on the number of transactions when Mission Markets launches. Van Patten hopes to have 400 to 500 accredited investors as members at that point.  Let’s hope there’s enough activity to allow the platform the breathing room to survive the downturn.