Citizen Mint: Bridging the Gap Between Private Market Capital and Impact Investments

Citizen Mint is a startup company dedicated to making impact investments accessible to everyone. By leveraging technology and an extensive network of contacts, Citizen Mint seeks to bridge the gap between private market investors and those that are interested in making an impact with their investments.

In Episode 163 of the Disruptors for Good podcast, we speak with Josh Hile, Founder and CEO of Citizen Mint, on connecting investors with private market opportunities that have the potential to make real positive impact on society and our planet.

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The team is made up of experienced professionals from different areas such as finance, technology, and sustainability. Each team member has extensive experience in the industry, allowing them to thoroughly research each potential investment for both its financial return and positive social or environmental impact.

At the heart of Citizen Mint’s mission statement is the goal of closing the gap between traditional banking institutions and those financially excluded due to lack of access.

Realizing that most retail investors have limited access to high-return private market investments, Citizen Mint works hard to make these opportunities available at a fraction of the cost compared to traditional banking institutions.

This allows more people to participate in private market investment opportunities while ensuring they get the best possible financial return without sacrificing on social or environmental impact.

How Does Citizen Mint Work?

From renewable energy sources to low-cost housing, development loans in underserved areas or sustainability solutions – making private capital more accessible empowers us to start tackling global challenges head-on.

• Create your account – Take just a few minutes to sign up and access the growing catalog of impact investments.
• Select investments​ – Review investment opportunities and select the ones that align with you.
• Stay updated -​ Keep an eye on the impact and growth of your investment through comprehensive reporting data.
• DISCLOSURE: Currently investments are only for accredited investors.

Citizen Mint Investment Categories

• Renewable, clean & affordable energy and energy efficiency
• Carbon sequestration and capture
• Clean water and sanitation management & infrastructure
• Sustainable forestry, agriculture & food systems
• Waste management, recycling, and circular economy
• Environmental Solutions Technologies
• Affordable, safe, and quality living conditions
• K-12 & workforce training
• Equitable & affordable access to water, sanitation, energy, waste, and broadband internet
• Microfinance & access to credit

How does Citizen Mint select Investment opportunities?

Every year the team reviews hundreds of investments, sourcing and selecting only those that provide highly competitive risk-adjusted returns and positive social or environmental impact.

The Citizen platform is guided by three pillars:

• Due Diligence – The team utilizes a rigorous five-step process to evaluate all opportunities.
• Expertise – Citizen Mint has decades of experience evaluating impact opportunities in the private markets.
• Objectivity – Citizen Mint is never compensated for recommended investments.

The Citizen Mint Due Diligence Process

• Drawing from the teams extensive network of industry contacts and resources, Citizen Mint creates a list of viable private market investments, eliminating all managers with operational or regulatory issues.
• Citizen Mints then conducts in-depth reviews of the thesis or business plan of each investment opportunity, including an analysis of market trends, financial returns, and the proposed positive impact of the opportunity.
• They then evaluate all teams on key factors related to performance, including experience and reputation in the industry, operational history, investment skills, resource adequacy, personal motivation, and team structure and dynamics.
• The a rigorous background checks are done, reference calls are made, assessing the team’s financial and accounting capabilities are taken in, and talking with key vendors (valuation, fund administration, banking, accountants, etc.) to gain conviction that this management team can perform as expected over a long period of time.
• Citizen Mint’s investment committee reviews re-review the risks involved, risk mitigation, and downside protection for investors. If they feel the impact and risk versus return are sufficient, the investment is added to the platform.

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How Citizen Mint Measures Impact

To ensure successful outcomes, the team evaluates potential investments through a thorough quantitative assessment of their projected impact. The due diligence process begins by establishing key performance indicators with the sponsor or fund manager to accurately measure and track progress throughout the life-cycle of the project.

In particular the Affordable & Workforce Housing portfolio boasts metrics such as housing units financed/built, individuals housed within those buildings, average area median income (AMI) for tenants plus job creation derived from its construction – measures that will be expanded upon in future as increasing amounts of data are made available by partners.

They further look to expand metrics in this category to include the impact of the building to the community and individuals’ livelihoods (i.e. decrease in time commuting, increased satisfaction with living arrangement, etc.).

Citizen Mint for Financial Advisors and Wealth Managers

Citizen Mint believes the platform will help Financial Advisors and Wealth Managers gain an advantage in the marketplace by offering vetted and innovative impact investments to reach and retain clients.

Some of the top benefits advisors experience with Citizen Mint include:

• Powerful technology to track investments on both financial and impact metrics
• Differentiate from traditional financial advisors & wealth managers
• Diversify investment offerings and reduce the volatility of client returns
• Attract Millennial clients who both want access to alternatives and impact opportunities
• Positioned as a leader in sustainability and impact investment advising

How Does Citizen Mint Make Money?

Citizen Mint charges an assets under management fee which can range from 0.5% to 2% based on the complexity of the opportunity. The company tries to keep fees low and look to negotiate with sponsors and managers to reduce the ultimate fee charged to the Citizen Mint community.

Citizen Mint’s Commitment to Responsibility

Citizen Mint is a signatory of the internationally recognized Principles for Responsible Investment which publicly demonstrates are commitment to investing responsibly.

The company is committed to aligning and reporting on each investment as it relates to the UN SDG’s which is a global commitment to solving our planet’s biggest challenges.

Citizen Mint has committed to giving 1% of profits to non-profits that seek to address societal and environmental issues.

Interview Transcript

00:10

Host: Well, thank you so much, Josh, for joining me today. I’m excited to talk about an industry I’m passionate about, which is the merging of finance and impact investing.

Impact investing can mean a lot of different things to different people, so I’m excited to dive in and get your thoughts on the sector as it continues to mature. But before we get started talking about Citizen Mint and the startup you just founded, talk a little about your career path before Citizen Mint.

00:41

Josh: I started my career in accounting, working at Deloitte in California, doing auditing for big investment firms like Pacific Life. Then, I moved on to Russell Investments, a large institutional asset manager, and worked in their manager research department for about six years, helping with pension fund assets and our large mutual fund business.

After that, I was recruited to a large wealth manager in Seattle, where I was the director of investment strategy and research for Laird Norton Wealth Management, a $16 billion wealth manager.

01:32

Host: You’ve seen a lot of capital move in different ways. How often did impact investing come up in your previous roles? Was it a recent topic or something that’s been around for a while?

01:58

Josh: It’s been an evolution. At Russell, we saw European clients driving interest in ESG, which stands for environmental, social, and governance standards, focusing on reducing negative externalities of businesses. In the wealth management space, many clients were passionate about specific issues like climate change, housing affordability, or education.

We saw a significant shift within the industry, with large asset managers and new investment talent focusing on impact within specific areas. It continued to grow within our client base, with more people wanting to align their capital with their values while also providing financial security for themselves and their heirs.

03:26

Host: Do you think the industry is moving in a positive direction? Early on, ESG felt like a sloppy way to introduce impact investing. Do you see the industry getting better at defining and doing due diligence in this space?

04:17

Josh: We differentiate ESG from impact investing and socially responsible investing (SRI). SRI focuses on divesting from things you don’t want to invest in, like alcohol, tobacco, or weapons manufacturers. ESG is about reducing negative externalities, like Amazon reducing oil use in its trucks to become more sustainable.

Impact investing, as we see it, addresses massive issues like housing affordability, climate sustainability, education, and healthcare. We believe private capital, not just the government, can solve these issues.

These are multi-trillion dollar opportunities that can provide strong returns while having a positive impact. Investors are increasingly recognizing this and allocating significant capital to the space.

06:03

Host: Let’s talk about the journey of starting Citizen Mint. What was the decision-making process like, and what is the mission and vision of Citizen Mint?

06:17

Josh: Working within the space, I saw younger generations wanting to align their capital with their values. I noticed a significant increase in talent and asset managers focusing on impact. I realized impact investing could have a positive impact and strong returns.

Seeing where the industry was moving and the demand from future generations, I decided to start Citizen Mint. The mission is to democratize access to impact investments, making it available not just to institutional investors and the ultra-high net worth, but to more people.

08:18

Host: What are some of the opportunities in impact investing? How do you choose the offerings and ensure they’re right for the Citizen Mint platform?

08:44

Josh: We have broad categories like environment, community health and wellness, and empowerment. Specific examples include affordable and workforce housing, solar and wind development, and access to top-tier private equity impact, VC impact, or debt funds.

We ensure these investments address significant issues while providing strong returns. The opportunity set is broad, and we’ve seen hundreds of new funds in recent months.

10:08

Host: The democratization part is interesting. While offerings still require accredited investors, financial advisors can provide access to more people. What are your conversations with financial advisors like, and how are they viewing the impact investing sector?

10:50

Josh: Financial advisors see it as a differentiator, allowing them to engage clients in new ways. It’s a way to align clients’ capital with their values and provide something unique in their portfolio. It’s also helpful in tough market environments, where advisors can highlight positive impact investments.

I recently attended the Financial Planners Association Conference, where the co-founder of Ellevest highlighted the importance of engaging with women and the growing demand for impact investing. Advisors need to be ready to discuss these trends and provide options for clients who care about these issues.

13:52

Host: Can you talk about the process of discovering and choosing impact investment opportunities for Citizen Mint? How do you ensure they’re the right fit?

15:05

Josh: It takes a lot of time to build a universe of managers and identify the best ones. We do extensive due diligence, meeting with investment teams, reviewing performance track records, and conducting reference and background checks. We also do operational due diligence to ensure the managers can handle the capital responsibly.

These investments are often longer-term with limited liquidity, so we need to be confident in the managers’ abilities. Building these relationships and understanding the players in each universe is crucial.

17:41

Host: You’ve had a long career in the industry, but starting a new venture comes with unique challenges. What have you learned in the last 12 months of launching Citizen Mint?

18:15

Josh: It’s been about 100 times harder than I imagined, stretching me in many ways. It’s important to set daily tasks and build momentum. The startup journey is fun and creative, but also filled with challenges.

You need to be prepared for ups and downs and stay upbeat. The mental game is critical, and talking to other entrepreneurs who’ve faced similar challenges can be helpful. You have to accept that you’ll make mistakes and learn from them.

20:39

Host: Are there any podcasts, books, or websites you’ve turned to for learning and inspiration?

20:49

Josh: The Gimlet Media StartUp podcast was helpful, as it resonated with the challenges I was facing. Listening to other entrepreneurs’ journeys and struggles can be encouraging. I also found value in a startup book by a major Silicon Valley VC, which talked about the delusional nature of startup founders. It takes tenacity and confidence to take an idea and turn it into something real.

22:07

Host: You mentioned Sri focuses on divesting, which can be a powerful mechanism. What are your thoughts on divesting as a strategy for impact investing?

22:54

Josh: Divestment can be effective, as it increases a company’s cost of capital. However, engagement can also drive change. For example, Engine No. 1’s successful campaign to add board seats at ExxonMobil led to significant change. Engaging with companies and showing them the potential benefits of adopting sustainable practices can lead to real business cases for change.

24:56

Host: Let’s talk about 401(k)s. Impact investing in 401(k)s seems challenging due to regulations. Do you see progress in making 401(k)s more impactful?

26:28

Josh: There’s definitely progress. While regulations have made it challenging, there are efforts to open up the market for private market investments within 401(k)s. Interval funds, which allow non-accredited investors to invest with better liquidity capabilities, could lend themselves well to 401(k) structures. It’s coming, but it will take time and industry adoption.

28:27

Host: Looking three to five years down the line, what does success look like for Citizen Mint?

28:48

Josh: Success for us means providing a broad marketplace where people can easily access impact investments, align their capital with their values, and secure their financial future. We want to be synonymous with impact investing, known for providing the best investment opportunities. We aim to be well-known within the industry and requested by clients of financial advisors.

30:12

Host: Thank you so much for taking the time, Josh. Congrats on the early wins and best of luck to you and the team over the next decade. It’s an important sector that we should all be educating ourselves about.

31:05

Josh: Thank you so much, Grant.