Investing with dual objectives : the investment decision of impact investors and their preferences for the business model of social ventures : a qualitative exploration
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- Master Thesis 
Impact investors aim to achieve social and environmental impact, alongside financial return on their investments. Thus, they are increasingly considered a potential source of funding for ventures that aim to address pressing social challenges. Despite growing interest from practitioners and policymakers, the academic literature on impact investing is limited. Several fundamental aspects have not been addressed; such as the investment decision of impact investors and the conceptual confusion. We address the conceptual confusion by conducting a critical review of the literature and background interviews in Uganda, Kenya and Norway, leading us to propose a working definition. Furthermore, as the pursuit of social impact and financial return are historically deemed incompatible, the question arises of how impact investors approach their dual objectives in an investment decision. We address this question by conducting semi-structured interviews with Norwegian impact investors and potential investees; social ventures. By applying a business model perspective to the investment decision of impact investors, we provide novel insight on their preferences for characteristics of social ventures. We find that Norwegian impact investors aim to incorporate their dual objectives in the investment decision, however an informal and limited assessment of the potential social impact, lead to an emphasis on the financial objective. By identifying preferences regarding the business model, we find that impact investors approach their dual objectives by investing in ventures where the generation of profit and social impact are aligned. Thus, we find that the business model of the social venture should be given high importance in the investment decision, as certain characteristics lead to less conflicts between the dual objectives of impact investors. This thesis contributes to the limited academic literature on impact investing, and to the best of our knowledge, it is the first study on the Norwegian impact investing scene. Our findings provide clarity on the concept of impact investing and the investment decision, with theoretical and practical implications. Furthermore, based on our findings we provide concrete recommendations that can be utilised by social ventures seeking funding from impact investors.