By Neil Cotiaux | Photo by Jim Baron
Being a capitalist doesn’t mean you can’t possess a higher consciousness.
So says Lynn Carpenter, co-founder and partner at Epoch Pi, a middle-market investment banking firm that helps growing businesses generate social as well as financial returns.
Founded in February 2015, the firm helps for-profit business owners locate capital partners willing to invest in their companies as they strive to produce healthy earnings while creating a variety of value opportunities for employees, customers, suppliers, and communities. Sometimes called “impact investing” or “conscious capitalism,” this newer form of business mission is catching on nationwide.
Consistent with the objectives of its clients, Epoch Pi’s mission, Carpenter says, is to help them “create great companies … beyond making a profit.”
While raising equity and debt capital for growth or recapitalization and helping business owners with exit strategies, the nearly two-year-old firm also scours the investment community to find prospective partners with the kinds of values and goals pursued by Epoch Pi’s clients.
“Most investment bankers feel their job is done at the time of the transaction,” says Carpenter, who was an associate at Morgenthaler, the pioneering venture capital and private equity firm, before co-founding Epoch Pi. Most mergers, acquisitions, and partnerships fail, she says, “not because of the numbers but because of a misalignment of cultures.”
Carpenter and her co-founder/partner, William Vogelgesang, first considered forming an investment bank centered on impact investing after reading an article by one of the movement’s leaders, John Mackey, Whole Foods Market’s co-CEO. “It resonated, and it was something that we very much wanted to embody and incorporate in our business,” Carpenter says.
Pablo Guevara, a former Eaton Corp. and Walmart executive, joined the firm as its third partner earlier this year.
To formalize its commitment to conscious capitalism, Epoch Pi has placed language in its operating agreement that reflects its multiple missions, providing a legal framework for balancing financial goals with social goals. The firm has also applied for certification as a B Corporation – a company with a mission and formal plan to serve stakeholders – from B Lab, a Berwyn, Pa.-based organization that certifies socially conscious businesses. In a one- to three-hour assessment, applicants are rated on attributes such as transparency, compensation structure, supplier recruitment, and environmental responsibility.
Epoch Pi has booked clients in the sustainable agriculture, clean-water technology, manufacturing, and business-to-consumer segments and is moving into a new office in Ohio City.
The investment bank is currently seeking a capital partner for SplashLink, an online platform for engineering firms, equipment providers, new technology companies, and utilities that engage in community-based clean water solutions.
“I was not terribly familiar with the investment banker model,” Ebie Holst, the firm’s founder and CEO, says. Surprisingly, she adds, “Their first questions were not about SplashLink’s financial returns … I think they have spent a lot more time listening to our vision.”
A self-described “diehard capitalist,” Holst believes that the impact investing nurtured by Epoch Pi helps businesses engage in longer-term strategic development.
“One of the things we’ve seen over the last 20 years is an increasing focus on this quarter’s earnings,” she points out, a practice that Carpenter believes contributed to the unauthorized, quota-driven accounts at Wells Fargo, triggering customer outrage, massive dismissals and executive clawbacks.
Carpenter and Holst believe that changing demographics are accelerating interest in companies whose business models include both financial and non-financial bottom lines.
With the demise of lifetime jobs and the redefinition of benefits, “other things started to matter” for millennials, Holst says. The focus now is on “people and purpose and less on profits,” Carpenter adds.
As for business owners in their 40s and 50s, “their values start shifting, and they’re looking for more meaning and more legacy,” Carpenter says.
“Companies are going to have to shift their thinking,” Epoch Pi’s co-founder says. “It’s just good business.”
For more info: epochpi.com
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