Volume 74: The First Mover Advantage — An Investment Approach for Maximizing Impact

About ImpactPHL Perspectives:

ImpactPHL Perspectives is a multi-part content series that explores the many facets of the impact economy in Greater Philadelphia from the perspectives of its doers, movers, shakers, and agents of change. Each volume is written directly by a leader in this space to discuss best practices and share lessons learned while challenging our assumptions about financial and impact returns. For more thought leadership like this, check out the full catalog of ImpactPHL Perspectives.

Noelle St.Clair Lentz, CEO and Managing Director, Allivate Impact Capital

“Water, water everywhere, and not a drop to drink.” This popular phrase often embodies the sentiment of diverse emerging impact fund managers who hear countless times, “We like your strategy and your team, but we don’t invest in first-time funds” or “Come back to us when you are on your fourth fund.” Amidst a vast sea of capital, these fund managers are often shut out of accessing the funds needed to achieve their impact goals. This is usually due to a lack of risk appetite for the perceived risk of investing with emerging managers.

How do I know? I represent an institutional Limited Partner (LP) in impact funds and serve as CEO of a diverse emerging impact investment firm, which gives me firsthand experience and a unique vantage point as both LP and GP (General Partner).

There is abundant research demonstrating that there is no statistically significant difference in performance between diverse and non-diverse owned funds across asset classes and that investing in emerging managers can be quite lucrative as they often outperform their peer groups. Despite this research and many institutions’ commitment to reducing systemic inequities, there will still be resistance due to the extra work it will take.

  • Does it take more work to get regulatory approval if you are the first bank investor in a fund? Yes.

  • Does it take more time to do diligence if you cannot rely on the “sniff test” effect of other like-minded, reputable investors already having LP positions in a fund? Yes.

  • Do diverse and emerging managers need impact investors who are bold enough to be first movers and achieve outsized impact by investing this catalytic capital? Absolutely!

“there is no statistically significant difference in performance between diverse and non-diverse owned funds across asset classes and that investing in emerging managers can be quite lucrative as they often outperform their peer groups.”

One aspect of Due Diligence 2.0, an industry commitment meant to catalyze movement of capital to more diverse management teams, is “Be willing to go first – we will consider being an anchor/seed investor or part of a first close (or in the case of a mutual fund or exchange-traded fund, at/near fund inception) rather than insisting on being in later closes. This contributes to fundraising momentum, and we agree to not require special terms such as lower fees in order to take this position.”

An example is Woodforest National Bank’s® investment in the De-Carceration Fund. Due to the tremendous convening power of ImpactPHL, our team met Chris Bentley and Lawrence Williams at the 2022 Total Impact Summit. Intrigued by the strong impact strategy of their fund focused on reducing recidivism by investing in companies that ethically disrupt the criminal justice system, we explored if this could be a fit for our Community Reinvestment Act (CRA) investment portfolio. We learned that no bank had invested in the fund to date, which did not come as a surprise since CRA tends to be very prescriptive, and unless something overtly qualifies, such as Community Development Financial Institutions (CDFIs) or Small Business Investment Companies (SBICs), it requires more work to prove new and innovative strategies can effectively benefit low- and moderate-income people and communities, as per the mandate of the CRA. Upon receiving regulatory approval, we are proud to become the first bank investor in this fund and hope Woodforest’s investment will catalyze much more CRA-motivated bank capital to flow into this and future funds managed by the De-Carceration Fund group. This is our team’s seventeenth investment as the first bank investor in a new fund.

“90% of women surveyed by Citi Investment Management have indicated they want to invest at least a portion of their wealth in a manner that aligns with their values.”

I often tell fund managers that Woodforest National Bank® will likely not be your largest investor, but I believe our niche is having an outsized impact by being a first mover and creating a path for other larger investors to follow. This first-mover focus for our CRA investment strategy ultimately led to the creation of Allivate Impact CapitalSM (AIC), the impact investing subsidiary of Woodforest Financial Group, in 2022. The genesis of AIC came from the desire to mobilize more capital toward impactful projects and companies, thus maximizing our impact beyond our own balance sheet investments. The creation of this new firm proves we do not see CRA investing as a “check-the-box” compliance obligation but a strategic business line, given the growing demand for impact investing products that can benefit both investors and communities.

“desire for social good, paired with the projected $30 Trillion intergenerational wealth transfer predicted to go to millennials over the next 30 years, could be a recipe for major growth in the impact investing arena.”

The market research on demand for impact investing products is compelling. According to research by McKinsey, by 2030, women will control about $68 trillion in financial assets as baby boomers age (and women outlive men), the greatest intergenerational wealth transfer occurs (two-thirds of which will go to women), and female wealth creation continues to grow. 90% of women surveyed by Citi Investment Management have indicated they want to invest at least a portion of their wealth in a manner that aligns with their values. 52% of millennial investors see the social responsibility of their investments as important selection criteria, compared with less than 30% of baby boomer investors and 42% of Gen X investors. This desire for social good, paired with the projected $30 Trillion intergenerational wealth transfer predicted to go to millennials over the next 30 years, could be a recipe for major growth in the impact investing arena.

As both an LP and GP in impact funds across asset classes, our Woodforest National Bank/Allivate Impact Capital team challenges other impact investors to not be afraid to take first-mover risk. Otherwise, as an industry, we will find ourselves doing the same thing and hoping for different outcomes, which is the definition of insanity. We must be bold enough to try new approaches and blaze a path less traveled for others to follow. If the market research tells us anything, it is that there will continue to be many more investors looking to follow in the years to come. Plus, by committing to investing in diverse-led and emerging funds, we can help bridge the equity divide and create new pathways to economic resilience for all!


Noelle St.Clair Lentz is CEO and Managing Director of Allivate Impact Capital, an impact investing fund manager and subsidiary of Woodforest Financial Group® . She dedicates her career to mobilizing capital to invest in underserved communities. Noelle also serves as Senior Vice President, Impact Investing and Strategic Initiatives at Woodforest National Bank® . In this role, she spearheaded the bank’s impact investment strategy across its 17-state footprint in line with Community Reinvestment Act (CRA) objectives. She also identified and executed over $70 million innovative, high-impact investments across asset classes. Through her leadership, the Woodforest CEI-Boulos Opportunity Fund was recognized as a Forbes OZ 20: Opportunity Zone Catalyst, and Woodforest was the only bank on the inaugural list. Woodforest also received a global award for societal and community impact from Bank Administration Institute (BAI) for this innovative fund model. Prior to joining Woodforest, Noelle served as Advisor and Outreach Manager for Federal Reserve Bank of Philadelphia, where she published research and hosted national events on community development finance and impact investing trends. Noelle is a prolific presenter at national convenings and has been an expert guest on Wharton’s Sirius Business Radio. She led the Federal Reserve’s exploration of impact investment options for its employee pension funds, including presenting the strategy to Federal Reserve Board of Governors and Federal Reserve Bank presidents. Noelle was formerly a licensed securities agent at Calvert Foundation, an impact investing pioneer whose Community Investment Note channels capital to organizations and social enterprises conducting community development globally.