The Aspen Institute, October 11, 2018: The world’s most untapped start-up economy: investing in creative businesses
Creative industries – including art, crafts, design, film, and music – employ millions of people across the globe. These businesses not only drive job creation and economic growth, but also play a critical role in community revitalization and cultural preservation.
Still, creative businesses are not included in traditional investment portfolios. The arts receive only 5 percent of philanthropic giving in the US. In impact investing, the creative economy is virtually invisible.
The Clinton Foundation and the Aspen Institute Artisan Alliance are building a cross-sector coalition of partners committed to changing this narrative. In September 2018, the two organizations hosted their second roundtable discussion around innovative financing in the creative economy.
Takeaways from the conversation included:
Impact investing needs a creativity lens.
Laura Callanan, founding partner of Upstart Co-Lab, opened the roundtable discussion by presenting top line findings from the organization’s upcoming report identifying 100 existing funds and 125 new opportunities for impact investing in the creative economy. Few impact funds were entirely focused on the creative economy in the past, but three such funds are launching this year: the Nesta Arts Impact Fund II and the Cultural Land Trust in the UK; and the LISC NYC Inclusive Creative Economy Fund in the US. Upstart believes impact investors should follow the lead of gender lens investors and adopt a “creativity lens” to bring into focus opportunities to drive returns and impact through food, fashion, media, and other creative industries.
Close the knowledge gap between funders and creative entrepreneurs.
Banks and impact investors do not understand the needs of creative entrepreneurs. At the same time, artists, filmmakers, and artisan business owners are not trained in traditional business skills and do not know where to look for funding. Knowledge gaps are even wider in remote and indigenous communities. How can we break down current systems that exclude creative businesses to drive new resources to the creative economy in a sustainable and inclusive way?
Creative businesses need working capital.
Many creative businesses, particularly artisan businesses, work on a purchase-order payment scheme. Large retailers will not pay a supplier’s invoice until up to 60 days after the order is fulfilled. To complete an order, small-scale business owners need working capital upfront to buy raw materials and increase production.
Storytelling of people and place matters.
We can begin to break down barriers facing funders and impact investors through storytelling. Sam Marks, Executive Director of LISC NYC, discussed the NYC Inclusive Creative Economy Fund. The fund targets affordable spaces for New York artists, artisans and small manufacturers, and is engaging impact investors through the stories of economic revitalization in their own communities.
Moving these ideas to action, the group realized, will require a committed group of first movers. These conversations are just getting started, and the group is eager to explore other opportunities to support this untapped start-up economy.
