Chapter 4.
Recommendations

4.1. Feasibility

The feasibility of an impact investment fund focusing on the cultural and creative sector is the central question of this study. Is there a match between impact investors (and fund managers) and the cultural and creative sectors?

From both the demand and supply sides, it is clear that a match is possible. The sector requires strengthened equity, the acquisition of properties and pre-financing for cultural productions. Impact investors could play a key role in addressing these needs.

“We could innovate and scale faster with more financial resources, but investors often demand returns, which disrupts the focus of a holistic business. We need mission-driven clients because clients who think purely in numbers consider innovation too risky due to the lack of data. The word ‘innovation’ comes from the Latin ‘innovatus’, meaning ‘renewed’. True innovation will thrive only when we embrace renewed ways of investing as well.”

Ermi van Oers, Nova Innova

Deal Flow

Can sufficient deal flow be generated for an impact investment fund in the Netherlands? Deal flow refers to the number of investable proposals presented to an investment company. A cultural impact investment fund would only be feasible if substantial deal flow can be created.

Above all, the investability depends on the investor’s objectives, conditions, sector focus and goals. Not every investor fits the sector, and not every business benefits from or suits financial products other than grants, such as loans and venture capital.

The examples provided in this study indicate that it should be possible to generate sufficient deal flow within the Netherlands. However, we believe it would be wise for the fund to also focus on other European countries. Generally, the more specific a fund’s focus, the broader its geographical reach should be.

Challenges

The greatest challenge is that impact investors are still relatively unfamiliar with and disconnected from the cultural and creative sectors. They are often not well-acquainted with the various asset classes within the sector, struggle to assess value, perceive the sector as too risky and have limited knowledge of successful examples of impact investment in the sector.

Additionally, there is limited awareness within the cultural and creative sector itself regarding impact investment and the various financial instruments available. It is also uncommon in this sector to allow investors to participate directly in a company. During the interviews conducted, it became evident that some within the sector were unaware of the difference between impact investors and conventional investors. Furthermore, many entrepreneurial creators do not speak “the language” of impact funders and feel they must explain themselves extensively, while fearing that external investors might gain influence without fully understanding the nature of the sector and its working methods.

We also foresee that it will take time to engage entrepreneurs with bicultural backgrounds properly. The impact investment community currently lacks diversity, making it essential to involve key figures from the sector and provide them with decision-making power. This could be achieved through roles in the investment committee, appointing ambassadors and talent scouting. Diversity and inclusion must be an integral part of the fund, not an afterthought. A fund can only succeed if it has credibility within the sector. This can only be achieved through proactive scouting and close collaboration with the sector.

Investing in the cultural and creative sector also requires patience (patient capital). Patient capital refers to funds where the provider understands that the money will be committed for an extended period. Therefore, there is a need for investors who are willing to look beyond short-term returns (both financial and impact-related) and embrace the values, language and working methods of the sector. Furthermore, securing investment often requires intensive guidance for the entrepreneurs involved.

“We see that the organisations we work with in our incubator, particularly the more cultural startups that bring genuinely new ideas, often struggle to find financing in the Netherlands.”

Jon Heemsbergen, Art-up

The Fund Manager

One of the greatest challenges is finding a suitable fund manager with the experience and willingness to manage a fund for the cultural and creative sector.

Fund managers act as intermediaries responsible for overseeing the fund, such as investment houses and venture capital firms. Finding a qualified fund manager with both knowledge of and affinity for the sector, as well as the ability to work with diverse asset classes and a mix of financing instruments (e.g. equity, loans, grants), will be challenging.

A possible solution could be appointing a fund manager unfamiliar with the sector but willing to build a new team of experts or adopt a hybrid setup. In such a hybrid structure, a front-end team of sector specialists would handle investments and relationships, while a back-end team would manage accountability, administration and investor relations.

A final possibility is to establish a new fund management entity from scratch. While this approach could be costly and time-consuming, it would allow the fund to be structured according to its own vision and to assemble a dedicated, appropriately skilled team.

Conditions

Based on the sector analysis and the challenges outlined above, we have identified several conditions for the success of an impact investment fund for the cultural and creative sector:

A fund manager with affinity and knowledge of the sector. It is also possible to work with a fund manager less familiar with the sector but willing to operate with a hybrid setup. This would involve a newly formed front-end team with sector expertise and a back-end team of experienced fund managers responsible for administration, governance and investor relations.
Sector involvement and shared decision-making from the outset. Key figures from the sector could be included in the investment committee or even made co-shareholders in the fund. Alternatively, a cooperative structure could be chosen, emphasising horizontal decision-making. Diversity and inclusion should be core principles of the investment fund, not secondary considerations.
Proactive scouting is important to find investable opportunities. The fund manager must take an active role in identifying suitable ventures rather than passively waiting for proposals. Building a strong investment pipeline should be an initial priority. This can be achieved through collaboration with external scouts and sector ambassadors.
A willingness to work with a blend of financial instruments. The fund manager should be open to a combination of philanthropy, loans and equity investments.
Patient capital is crucial. A fund within the cultural and creative sector will require a long-term investment horizon.

4.2. Potential Fund Structures

There are several potential variations of fund structures possible. These are briefly outlined schematically below.

Structure: Equity investments (venture capital) in creative ventures within a specific neighbourhood, city or multiple cities, or on the fringes of Europe with similar cultural characteristics.

Focus areas: Urban culture, popular culture, music, nightlife, fashion brands, street culture, festivals, independent radio and urban fringe areas – working towards shaping the city of tomorrow.

Link to DOEN’s Strategic Compass: Supporting the transition to a society that embraces radical imagination and inclusivity by investing in creative businesses connected to the multicultural realities of young people, shaping the urban culture of the future.

Place-Based Fund for Urban Culture

Structure: Blend van filantropie voor R&D, venture capital en non-financial support voor materiaal-ontwerpers en ambachten in Europa + Venture studio

Focus areas: Designers, artists, and cultural entrepreneurs who work with new materials such as mycelium, algae, and fungi, operating at the intersection of new techniques, production processes, and traditional crafts, such as "digital knitting" or 3D printing with wool using robots.

Link to DOEN’s Strategic Compass: Accelerating the transition from a linear to a circular economy by investing in the groundbreaking work of designers and revitalizing traditional crafts, thereby replacing materials with sustainable, natural alternatives.

Venture Studio for New Material and Crafts

Structure: Venture capital for circular fashion start-ups and scale-ups in the Netherlands/Europe.

Focus areas: Ethical fashion brands, circular start-ups, and scale-ups in the fashion industry working with smart textiles featuring solar cells, sneaker upcycling, and expression interwoven with identities, lifestyles, stories, and deeply rooted in communities.

Link to DOEN’s Strategic Compass: Accelerating the transition to a circular fashion and textile industry by investing in ethical fashion start-ups and scale-ups, and by promoting behavioral change in the cultural lifestyles of diverse communities.

Venture Capital Fund for Circular Fashion

Structure: Loans for the acquisition of cultural properties, bringing them into (collective) ownership within the Netherlands.

Focus areas: Cultural spaces, cultural properties, free spaces, creative hubs, workshops, performance venues, rehearsal spaces, open-air cinemas, sculpture gardens and incubators.

Link to DOEN’s Strategic Compass: Contributing to a society where radical imagination flourishes by investing in free cultural spaces that prioritise horizontal, equitable and inclusive collaboration models while adopting alternative ownership structures.

Real Estate Fund for Free Cultural Spaces

Structure: Pre-financing and revenue-based finance for large cultural productions such as theatre performances, exhibitions, films and games that offer new perspectives on societal issues.

Focus areas: Cultural productions, including theatre, dance, music, festivals, exhibitions and films.

Link to DOEN’s Strategic Compass: Contributing to a society where radical imagination flourishes by investing in cultural productions that use creativity to show that a different world is possible while questioning dominant societal narratives.

Production Fund for Radical Imagination

4.3. Risk Mitigation and Impact Maximisation

To mitigate risks and maximise impact, the following strategies could be considered:

Mixed Model: A combination of two or more of the fund structures and asset classes mentioned above could be implemented. For example, real estate investments could support investments in creative ventures. A venture-building model could also be combined with a venture capital component, funding both cultural ventures and productions (such as film or theatre projects). This diversified approach helps spread risk. However, it may deter potential investors focused on specific asset classes.
Evergreen Structure: An evergreen fund would have a long-term investment horizon with an open-ended structure, allowing investors to join or exit at any time. There would be no pressure to sell a business within a fixed period. Such a fund could adopt alternative cost and reward structures, with some profits potentially reinvested into the sector. A steward-ownership model could also be considered, where investors never have control over ownership or decision-making power. Investors would hold shares but without governance rights. However, this structure may deter some potential limited partners (LPs).
Impact-Linked Models: In these models, the success of investments would be measured not only by financial returns but also by achieved impact. Profits could be redistributed among a broader group of stakeholders by separating ownership, decision-making and financial returns, as seen in a steward-owned model. However, this structure is still relatively unfamiliar and could discourage some investors.

4.4. Recommended Fund Model

The final structure of the fund will, of course, be determined in consultation with DOEN. Below, we provide a preliminary outline based on the findings of this study.

As highlighted throughout this report, there is significant diversity in themes and financial instruments available. In the previous chapter, we suggested five focus areas: (1) new materials and craftsmanship, (2) ethical fashion, (3) cultural spaces, (4) creative productions and expression, and (5) the culture. In addition, we proposed various investment formats suitable for the needs of these target groups, such as equity investments in creative ventures, investments in cultural properties and pre-financing or revenue-based finance for impactful cultural productions.

We recommend establishing an impact fund that provides venture capital to creative venturesm but also suggest combining this with investments in cultural real estate. The real estate component could be integrated into the equity investment portfolio, for example as part of the fund’s asset base. One option would be to allocate a maximum of 20% of the fund’s assets to cultural properties to preserve them as communal and accessible spaces under community ownership.

We propose the thematic focus of the fund to be a Place-Based Fund for Urban Culture, combined with investments in cultural properties and major impact-driven cultural productions such as films, performances and exhibitions. The Urban Culture theme would focus on cultural entrepreneurs working towards the city of tomorrow, including fashion brands, street and nightlife culture, festivals, diasporic urban culture, music festivals and record labels, as well as free spaces and venues in the city’s fringe areas. A place-based fund would work on shaping the city of the future through imagination, community, translocality and impact.

Geographical focus: We recommend focusing on Europe, with an emphasis on urban areas that share a similar multicultural dynamic, such as Amsterdam, Hamburg, Milan and Marseille. Additionally, we suggest focusing on diasporic urban culture and creative ventures operating translocally (deeply rooted in local contexts while connected to global cultural expressions). The fund could begin by targeting Dutch cities before expanding to other European cities, starting with Belgium, Germany, Italy, Spain, Denmark and France to strengthen deal flow.

Fund structure: We recommend moving away from a traditional closed-end, and instead establishing a patient capital fund with a longer-term horizon. This approach would allow for collaborative planning with entrepreneurs to determine the most sustainable growth path. We also suggest a blended approach, combining equity, loans and grants to best meet the sector’s needs.

Operational structure: We recommend a hybrid setup, where a front-end team composed of sector experts collaborates with a back-end team managed by an established, experienced fund manager responsible for accountability, administration and investor relations. For this hybrid structure, we advise partnering with the creative team within DOEN, given its in-depth sector knowledge. It is crucial for the fund to work alongside an established cultural organisation with strong cultural sector expertise within Europe.

We also recommend exploring and testing a steward-ownership model, where investors receive shares in a business or property, but (at least part of) the decision-making power remains with the community. In addition, it is essential to involve key figures from the target groups in the fund’s development from the outset and ensure they have a say in its operations. Diversity and inclusion should be a core principle of the fund. Furthermore, we advise establishing a robust non-financial support facility alongside the financial investments.

Finally, we recommend ensuring the fund is clearly complementary to the existing cultural and creative funding landscape described in this report. The fund should target a niche where Culture, Impact and Profit intersect – focusing on cultural entrepreneurs with revenue models who seek to strengthen and grow their initiatives. By doing so, we believe the fund can mobilise additional capital towards the sector.

Chapter 4. Recommendations