In 2025, supporting state-level policy will continue to be a strategic focus for Blue Haven, where integrating policy and advocacy alongside our investment decisions is a priority. Our Megan McCarthy connected with Dave Horwich, Founding Partner of LAVA Strategies, to discuss how impact investors can support legislative, regulatory, and political efforts aligned with their goals.

 

Megan: Dave, why should impact investors engage in policy?

 

Dave: Impact investors are missing a real opportunity to shape systems for the better if they don’t use their voice, experience, and capital in the policy arena. No check is big enough to solve the social and environmental problems that matter most to impact investors. Engaging in legislative campaigns can help shape and advance policy that has scalable impact.

 

Megan: A common refrain we hear from partners is “I’m an investor, not a policy person.” But impact investors don’t usually shy away from diving headfirst into complex systems. So why are many sitting on the sidelines when there are such significant, even historic opportunities for impact with policy engagement?

 

Dave: Politics is often messy, and getting legislation across the finish line can be challenging. Even the most climate-conscious investors might hesitate before wading into a debate over subsidies that legacy energy companies spend tens of millions of dollars to protect. We want to help others act and demystify how they can get started. From LAVA’s time overseeing legislative campaigns on issues like mental health, cannabis legalization, and clean energy, we’ve seen how players have effectively deployed political and philanthropic capital to build power and achieve outcomes. We need to level the playing field by enabling impact investors to use their voice and seat at the table to shape policy and advocate for the passage of legislation.

 

Megan: Makes sense. At Blue Haven, we’re starting at the state level with policy areas where we deploy market-rate capital: climate and financial access. We are testing examples and prioritizing small wins. What other ways can investors get started?

 

Dave: Investors can leverage their existing networks and partner with organizations that are already doing great policy work. There’s no reason to duplicate efforts or reinvent the wheel.

 

You mentioned climate. If an investor wants to get started, they should look at Energy Action Fund, a major hub for state and local climate politics. Its team has done a lot of heavy lifting, supporting 31 issue campaigns across 23 states, many of which it won last year. We’ve partnered with EAF to develop a 2025 campaign investment menu with impact investors in mind that we’re happy to share.

 

Megan: Great! On our end, we’ve found conversations with our fund managers helpful too. Our longtime GP, Community Investment Management (CIM), identified a pain point they are addressing with a legislative campaign. The team realized that the lending protections available to consumers don’t exist for small businesses. And as you know, a thriving ecosystem of small businesses really matters to the health of our economy. In the US, small businesses employ over 60M workers and drive diverse ownership and innovation. Through a conversation, we learned the CIM team set up the Responsible Business Lending Coalition (RBLC), which developed the Small Business Borrowers’ Bill of Rights to address the rise of irresponsible non-bank commercial lending practices. The team has actively worked on passing bills in California and New York to get portions of this framework into law. And Blue Haven is helping fund an effort to continue to move legislation at the state level.

 

Dave: That’s a great example. The Small Business Borrowers' Bill of Rights is a fantastic framework with commitments from nearly 60 lenders, brokers, and lead generators. But, as they work to get aspects of the Bill of Rights enacted into law, they’ve realized they are up against entrenched interests. So, combining these policy concepts with smart in-state government-relations experts and coalition partners will help policies move from concept to law.

 

Megan: Right. And it all started with a conversation! Lastly, are there any other approaches impact investors should consider?

 

Dave: There is no substitute for in-person conversations and old-fashioned relationship-building. Many impact investors have access to networks that can facilitate direct engagement with policymakers, from state attorneys general to mayors. Setting up meetings in casual settings where investors voice their interests and concerns, share their experiences and constituent-level data from investments, and discuss important legislation is great. This education process and relationship-building can be effective and can help policymakers attach faces, companies, and real-world examples to policy concepts in a more tangible way.

 

Megan: To learn more about our policy-enhanced impact investing approach, watch a webinar we hosted with the Sorenson Impact Institute or read this summary article. You can also find a case study we wrote about how CIM built a coalition, defined industry standards, and passed legislation to protect the rights of small business owners here. If you want to join our learning community on this topic, email the Blue Haven and Lava teams at partner@policyenhanced.com.

Policy Engagement: Our Approach

Blue Haven deploys a range of tools to educate policymakers, measure public sentiment, and advocate for specific policy solutions. Public education efforts include 501(c)3 and 501(c)4 investments which, when combined with philanthropic grants and campaign donations, can amplify the work of our fund managers.

It’s an exciting moment: An investor sources a startup, the Investment Committee approves a deal, and an early-stage company lands a new funder. Capital is poised to move—and then there’s a snag.

 

On average, it takes eight months for a company to receive committed capital, says Caroline Bressan of Open Road Alliance (ORA). An entrepreneur might think, “I’ve raised $2 million! My problems are solved.” But frequently there are legal negotiations or issues the investment committee wants addressed. At that point, capital often gets stuck, she says.

 

That’s when the ORA team steps in, providing timely short-term bridge loans to companies and nonprofits. Since launching the Open Road Impact Fund in 2019, the team has dispersed over $54 million in loans to mission-driven companies in the U.S. and overseas, which has kept an incredible $548 million of follow-on financing on track. About 80% of loans are “keeping-the-lights-on money” to cover operating expenses. “It’s important to allow projects and companies to keep growing while the administrative plumbing is figured out,” Caroline says.

 

And they do grow: Some 86% of the time companies experience business growth or the successful launch of a product during their loan. Among the companies in our portfolio that have benefited from these loans: Flare, Tibu Health, and Field Intelligence.

 

Blue Haven first invested in ORA in 2020 when the urgent need for bridge funding arose in emerging markets during the pandemic. Nearly five years later, the team continues to address unforeseen crises, like the Silicon Valley Bank crash, as well as the unpredictable fundraising timelines startup teams always face. To satisfy the demand for its bridge loans, Open Road is raising its second private credit offering to accelerate impact for companies working to combat climate change and reduce inequality. Its target first close is in April.

 

But a question remains: How can impact investors do a better job at keeping money moving? Caroline and Megan share a few ideas:

• Consider hybrid financing models. Providing catalytic capital in addition to investment capital works, says Caroline. Short-term debt financing is a helpful option too.

• Cut checks quickly. When entrepreneurs face an urgent need for capital. “Investors need to understand that their timelines have real consequences,” Caroline points out.

• Outline operational and legal diligence steps clearly and expeditiously.. Once an investment is approved, “speed and focus on your timeline can keep teams employed and stress levels under control,” Megan says.

• Extend flexibility to founders. Many family offices have this option, Megan notes, and should use it.

   

We’re interested to hear other ways investors speed up this process!