“First Grow Capital” Principle

The principle of growing capital first is how Sovereign Trusteeship Inc is able to maximize both return on investment and impact development outcomes.

Here is the way that works.   When investor’s seed capital comes in the door, either through the purchase of ownership interest or via one of our small cap programs (lending), that money is utilized in our bank derivatives trading department.   The enhanced value which comes out of that activity is considerably more than the original seed capital.

Two Investment Streams

Sovereign Trusteeship has the lowest capital acquisition costs in the industry. When all of that new money comes out of our trading department, it is split into two streams.

Investor ROI

(1)   The first stream is utilized to provide a financial return on investment for those who contributed the seed capital.   This practice frees the investor from waiting for returns on the projects which are designed for community impact.

This is especially important when doing development in nascent economies. &nbsp That is important because when building state of the art infrastructure or businesses, the per capita income of the region has to rise over time before the citizenry have the financial capacity and willingness to pay for premium services or products.   So there is a significant time delay in profitability in developing countries, where we do all of our impact projects.

Our system is unique in this way.

What’s Wrong with Legacy Impact Investing

Every other impact fund invests in companies with better ESG ratings and then hopes to get a ROI from an increase in the fiat value of that companies stock, or hopes to get dividends from that companies income stream.

We can explain why that is a bad practice:

• When seed capital is immediately used as CAPEX, there is less money to work with, than if the seed capital was enhanced first.
• Doing development with debt and without growth first, limits the amount of social impact which can take place.
• This practice also limits the amount of available profits to be shared with the investor.
• This often forces a trade-off.   In other words, choices are made in limiting features which could benefit social good and environmental responsibility.   And in stead, some of that money will be spent providing an investment return.

By Sovereign Trusteeship Inc first growing capital we do not need to make those trade-offs.

SROI – Social Return On Investment – Enhanced

(2)   The second stream of the enhanced capital is then employed as CAPEX for the development project.

 

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How We Fixed the Problem

While we will certainly hire companies to do the work (EPC firms, project managers, etc.), the focus of the spending of this stream is not to fund a company or to invest in a company.   It is instead focused to complete a project in our target community, which is where we want to see the Social Return on Investment (SROI), and where we wish to see environmental improvements and perhaps even reversal of prior environmental damage.

With the extra capital available from our “first grow capital” principle, we are not only able to pay a higher return on investment for our contributors but also to do much more work with the additional capital available.

Below is a diagram illustrating the flow of capital in our impact development process:

Capital Flow Diagram

This system of financial handling also necessitates a different ownership structure than other Impact Funds have.

Other impact funds own directly the businesses they are investing into, and those businesses own the projects.   So their long term investment strategy is such that the investors capital is tied up for years while the development goes on.   Some time in the future, after the company invested in has an operative business, and is profitable, then the investor can realize some return on his investment.   This destroys the investors liquidity, effectively eliminating other investment opportunities.   You can clearly see why this legacy investment model is faulty.

With Sovereign Trusteeship’s leadership in this Impact Development industry, your investment is going to go a lot further in accomplishing your goals.   Below is a list of the benefits this “First Grow Capital” Principle drives:

• Greater ROI
• Quicker negotiable exit
• Possible Monthly Revenue
• Greater social return on investment (SROI)
• More environmental activism and outcomes

This is the Triple Bottom Line every impact investor is seeking.
1) financial return on investment
2) social improvements in the community
3) environmentally responsible development
 

Thank you for taking the time to indulge in our writing.   Perhaps we’ll here from you in the future.