Impact Evaluation in Early-Stage Impact Investing Cognitive Patterns and Heuristics of Impact Investors

Impact assessment is a high priority for most impact investors. However, little is known about how impact investors assess the potential of early-stage ventures before investing. This paper sheds light on the cognitive pattern used to form ex-ante assessments of social impact potential. Working with 41 verbal protocols of assessments provided by fourteen experienced impact investors, we identify 23 distinct cognitive patterns used to assess impact that were not previously described in research on heuristics of for-profit investors. Findings underscore the distinctiveness of impact investing as a practice and highlight the crucial role of individual cognition in the selection process.