Project reflections from Upstart Co-Lab: Impact capital for an inclusive creative economy

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Upstart Co-Lab connects capital with creative people who make a profit and make a difference. A field-builder, thought leader and catalyst since launching in 2016, Upstart has defined a ‘creativity lens’ to frame the creative economy as an impact investing priority; demonstrated through original research the role of creative places and businesses in comprehensive community development and the opportunity the creative economy offers BIPOC and women entrepreneurs; developed a pipeline of 300 impact investment opportunities in the creative economy; and directly mobilised nearly US$23 million of impact investing capital for the creative economy of the United States.

Upstart Co-Lab identified 145 industries that states and regions across the US use to define their local creative economy, and grouped these industries into categories to describe the inclusive creative economy for the benefit of impact investors: ethical fashion; sustainable food; social impact media (with a focus on film & TV and video games); and other creative businesses, such as those in the visual art market, immersive live experiences, and the quickly growing creator economy – the ecosystem of direct-to-audience platforms and digital tools helping creatives to develop, monetise, scale, and maintain control over their work.

Over the past three years, Upstart has advised donor-advised funds, private foundations and endowed cultural institutions with US$4 billion in aggregate investment capacity. Upstart has helped newcomers explore how investment can align with their values and commitment to art, design, culture, heritage and creativity. Upstart has helped those who are already impact investors deploy nearly US$12.5 million into funds and companies in the creative economy driving deep people-focused impact and delivering financial return. To learn more, read Upstart’s 2021 Impact Report: Investing for an Inclusive Creative Economy and Cultural Capital: The state of museums and their investing.

Creativity and culture are globally recognised as empowering people – especially disadvantaged groups, women and youth – to take ownership of their own development as the basis for innovation that can drive inclusive, equitable and sustainable growth. While there are already examples in Europe, Latin America and Africa of impact investments funds fully dedicated to the creative economy – such as Nesta’s Arts & Culture Finance Fund in the UK, the HEVA Fund in Kenya, France’s Mirabaud Patrimoine Vivant and Brazil’s Trê – the US currently lacks such a vehicle.

Now, Upstart Co-Lab is launching the Inclusive Creative Economy Strategy, the first national creative economy impact investment strategy in the US. The Inclusive Creative Economy Strategy will invest in a portfolio of emerging impact funds with creative industry exposure and seed/early-stage companies in the creative industries. Upstart’s approach targets market-rate returns.

The Strategy seeks to achieve deep, people-focused impact across five dimensions:

  • Access to capital for BIPOC and women entrepreneurs: Funds and companies that are led by diverse managers and founders, respectively, as well as investments in funds that are backing diverse founders.
  • Quality jobs: Jobs that provide a living wage, basic benefits, career-building opportunities, wealth- building opportunities, and a fair and engaging workplace.
  • Vibrant communities: Activities that strengthen economic development, encourage civic engagement, build resiliency and contribute to quality of life.
  • Sustainable creative lives: Ownership models, earnings opportunities, and pathways to wealth building that support a ‘creative middle class’.
  • An inclusive creative economy: Economic activity anchored in Openness and Experimentation, Diversity and Inclusion, and Tradition and Innovation that benefits artists, designers and all members of the community. (Learn more: ‘Values And Metrics for the Inclusive Creative Economy.’)

In tandem with managing this investment strategy, Upstart will conduct a complementary influence strategy, intended to both unlock the creative sector as a new source of impact capital and to move impact capital to the creative economy at scale. In an effort to engage more investors, advisers and fund managers in impact investing in the creative economy, Upstart will be radically generous in sharing the learnings so that others can replicate our approach. The Inclusive Creative Economy Strategy is intended to demonstrate to the impact investing field the potential of the creative economy to deliver both market- rate financial returns and deep people-focused impact.

Upstart Co-Lab’s goal is to make the creative economy a priority within impact investing. When this happens, artists, designers and other creatives will gain access to values-aligned capital to scale their businesses and their impact. Cultural institutions, art lovers and artists will become the next cohort of impact investors. The creative economy will be more inclusive, equitable and sustainable because it is shaped by impact investment capital that shares these values.

Upstart is grateful to our partners at Nesta’s Arts & Culture Finance and Fundación Compromiso, and to all of the contributors to this collection for our shared work towards these ambitious long-term goals. We move forward energised by this collaboration and by this global community. Thank you.

Project reflections from Nesta: Impact investment and the creative economy - taking each other to the next stage