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Patient capital

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Title: Patient capital  
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Patient capital

Patient capital is another name for long term capital. With patient capital, the investor is willing to make a financial investment in a business with no expectation of turning a quick profit. Instead, the investor is willing to forgo an immediate return in anticipation of more substantial returns down the road.

Although patient capital can be considered a traditional investment instrument, it has gained new life with the rise in environmentally and socially responsible enterprises. In this case, it may take the form of equity, debt, loan guarantees or other financial instruments, and is characterized by a:

  • Willingness to forgo maximum financial returns for social impact, and an unwillingness to sacrifice the interests of the end customer for the sake of shareholders
  • Greater tolerance for risk than traditional investment capital
  • Longer time horizons for return of capital
  • Intensive support of management as they grow their enterprise
PatientCapital
The source of capital may be philanthropy, investment capital, or some combination of the two. Patient capital is not a grant, it is an investment intended to return its principal plus (below market-rate) interest. It does not seek to maximize financial returns to investors; it seeks to maximize social impact and to catalyze the creation of markets to combat poverty. On the spectrum of capital available to both non-profits and for-profits, patient capital sits between traditional venture capital and traditional philanthropy, between development aid and foreign direct investment.

[2]

Notes

  1. ^ Friedman, Thomas L. (2007-04-20). "Patient Capital for an Africa That Can't Wait". The New York Times. Retrieved 2007-04-20. 
  2. ^ "Talks Jacqueline Novogratz: A third way to think about aid". TED:Ideas Worth Sprending. Retrieved September 2009. 

Other references

Media References

  • More 'Patient Capital' for Social Ventures; Business Week
  • Entrepreneurship: Resources for 'Patient' Capital; Business Week
  • The Patient Capitalist; The Economist

Organizations/Businesses using patient capital investment methods:

  • AAvishkaar
  • Acumen
  • AgDevCo
  • Agora Partnerships
  • E+Co
  • Grassroots Business Fund
  • IGNIA
  • Good Capital
  • Root Capital

Examples of enterprises that have benefited from patient capital:

  • A to Z Textile Mills
  • d.Light design
  • Dial 1298 for Ambulance
  • Dial 108 for Ambulance
  • Lifespring
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