From Dot-Com Bust To Impact Investing Boon

Forbes 2 months ago

For Jim Sorenson, what started as a devastating setback became a vehicle for changing lives. The Utah entrepreneur has been at the forefront of innovative philanthropy for over a decade, funding microfinance as it emerged, investing in Pay for Success projects, and advocating for impact investing — allocating capital to companies producing a measurable social benefit. It all started with his company’s near failure during the dot-com crash. “Sometimes insurmountable obstacles can lead to great opportunities,” he says, “and that’s what happened with Sorenson Communications.”

Sorenson was already an experienced entrepreneur when he launched Sorenson Communications. He’d acquired Utah Biomedical Test Labs early in his career and spun out a promising division into an independent venture. The resulting company, DataChem Laboratories, became a national leader in environmental testing. So during the internet boom of the late ’90s, Sorenson turned an entrepreneurial eye towards the new industry of video conferencing technology. 

All seemed to be going well for Sorenson Communications as it prepared for an IPO. And then, Sorenson recalls, “It was the next day — the very next day — the dot-com bubble burst.” Suddenly, Sorenson Communications was losing nearly $1 million every month. Sorenson considered folding the venture entirely.

Soon after, Sorenson’s Deaf brother-in-law Jon Hodson approached him with a proposal for taking the company’s videoconferencing technology in a new direction: a product that would enable Deaf and hard of hearing users to communicate through a remote sign language interpreter over the internet. Sorenson agreed and the company quickly reoriented, investing in technology that created a better experience for Deaf and hard of hearing users, providing them with video phones free of charge, and becoming the second-largest employer of the Deaf community in the country. Looking back, Sorenson sees this experience not only as a comeback, but as a remarkable turning point in his life.

What made Sorenson Communications so revolutionary was the way it provided a social benefit while also turning a profit. Although Sorenson says he didn’t fully comprehend his company’s social impact at first, he was soon touched by the way the technology improved lives. “Seeing the impact and hearing the stories of how the technology has changed the way that this community is able to live and to communicate,” reflects Sorenson, “it was really a profound moment for me.”

In only three years, Sorenson Communications went from losing money to annual revenues of $120 million and roughly 75% market share. It was then acquired in one of the most lucrative private equity deals of the time. “That really led me to believe there were other sectors, and there really was something to this,” Sorenson says, “doing good while doing well.” 

Sorenson is bullish on solving some of the world’s most intractable issues. “I am optimistic that with this new approach, through impact investing, that we can address these problems.”

After his experience with Sorenson Communications, Sorenson became active in impact investing. He launched the Sorenson Impact Foundation to invest in innovative companies that meet the needs of underserved populations as part of their business model. For example, the Foundation invested in Liberty & Justice, a Liberian enterprise which employs women and donates one school uniform for each sale to a Liberian child in need. Lack of access to school uniforms often prevents children in the country from attending school, and Liberty & Justice funds their donations by selling a line of clothing at Nordstrom.

Sorenson has reason to be optimistic about impact investing. Growing interest has fueled rapid growth in the sector, which registers positive social returns for communities and market rate returns on the majority (66%) of investments. Global Impact Investing Network (GIIN), a nonprofit dedicated to augmenting the “the scale and effectiveness of impact investing,” reports that more than 1,340 organizations across the world currently manage $502 billion in impact investing assets, compared to $228 billion in 2018 and $114 billion in 2017.  The organizations involved include financial institutions, private foundations, family offices, and NGOs, and their investments in social enterprises have already improved millions of lives

Sorenson plans to continue his efforts to promote the industry. He says, “frankly, I’d like to leave the world a better place, but to do it in such a way that after I’m gone, it’s like the ripple in a pond that continues to touch and hopefully move future generations.”


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