The market is emerging. New relationships between professional investors and their investors are emerging, with limited partners no longer being quite so, uh, limited. There are some encouraging models emerging that seem to have designed that deeply engaged amateur linked to a professional into the way they do business.

Coming from traditional technology investing, and engaging with limited partners already deep into the way he operates, the question is different for Maurizio Caio

Maurizio Caio of TLcom is a traditional technology venture capitalist who calls himself an accidental impact investor on his way to becoming a purposeful impact investor. He co-invested with Gray Ghost and Grass Roots Business Fund in Movirtu, a mobile technology company whose software lets 10 people share a handset, thus opening up access to people in Mozambique who could not afford to buy a phone. Caio has around $30 million left to deploy in his current fund, in which he promised investors nothing more than the highest rate of return he could produce for them. Movirtu’s positive social impact is a pleasant externality, but he invested purely on the basis of its potential return. If things go wrong in Mozambique, the technology also has developing world applications.

In his private life, Caio has been involved as a donor and volunteer in a variety of Base of the Pyramid poverty alleviation focused non-profits for years. In that work, he’s increasingly seen that the way to solve the problem is via a financially sustainable model, rather than continuous charity. So investing in Movirtu, in a sense, brought his worlds together.

Unfortunately, Caio is not investing his own money, so his transition has to be gradual, testing the market each step of the way. For one thing, the risks are different; the technology might promise to be market rate, applied in a socially beneficial but highly profitable but non-exploitive way in a particular market. Then you run into the unknown risks of going into places where many things are broken and others are fragile. He cited the example of a wide area broadband company in which he’d invested in the developing world. It has paying customers. Unfortunately, it’s got a $1 million payment from one of those customers languishing in a bank in Egypt for the last two months. When the deal was signed that produced that revenue, Egypt was a safe place to bank.

With all of that, Caio thinks that a fund focused on technology in the developing world, from mobile, to microgrid, to perhaps medical technology might make sense, if it could credibly say it could produce scalable social impact and about an eight percent financial return.

That deal would make sense to a growing number of a particular kind of investor, those who are able to mix their meaning and their money into a single blended value perspective – an approach to life and to their assets, resources, and energy.

Then you have to make the opposite equation work: are the investors who would like your deal the kind you want to engage with? Both parties are along for a long ride with each other. So the fit has to work both ways.

There is one kind of investor that makes sense as he starts his walkabout to talk to them; the new style development finance institutions who are taking impact investing seriously as an asset class into which to throw increasing amounts of their resources; the FMOs and the OPICs, the relative few that are fast and flexible enough to match a venture investing timeline.

Caio’s not so sure about the angels, though. A lot of them want a high level of engagement, which is fine, “but that can become an intrusion,” he says. Another problem is that though many become trusted advisors who use their networks well, some few are dilettantes and amateurs, who fall in love with a particular technology or approach and want it applied where it is not appropriate, thus distracting the fund manager.

That’s the perspective a traditional fund manager brings to the relationship. It is true that impact investors, in exchange for the discount to financial return, want some greater level of involvement: a combination transformative journey and engagement strategy. Others want deeper involvement in a way that it’s difficult for the traditional fund manager to apply.

Jean-Charles Lavigne Delville of PhiTrust has embraced the deeply engaged model, and has the limited partners in his Impact Fund take board seats and lead engagement. Delville takes a management fee, but does not take the traditional 20 percent carried interest in the company when it sells or goes public. That lets him get someone with the experience of Roland Vaxelaire, a high-level branding expert. Vaxelaire was trained by Danone to help a fair trade food company that is launching a local version of fair trade within France, like the French version of Alter Eco. The company is packaging and distributing vegetables from small French farmers toward a goal of preventing the small farm from going under, as many have.

Applied correctly, the deep domain expertise of a band of investors who work through a flexible fund structure makes sense. I think PhiTrust is on to something. So is Liesbet Peeters of D. Capital who led her startup to place $10 million of impact investments last year, and is on target for $14 million this year. She is compensated, partially, by the impact she produces in the investments she places. That’s a pretty serious way of putting your investment company’s mission on the line.

Whatever the model that emerges, it will be far more democratic than previous models, but the collective will have to be managed really well with low friction. A new hybrid investment vehicle: a new half-angel circle/half-fund that would mix the engagement the individual investors want, with the professionalism provided by a fund, with a portfolio of investments, and an investment thesis may emerge. That next generation fund might have some of the elements of PhiTrust – which takes a reasonable management fee on what are something like managed circles of a few, well-selected, deeply-engaged angel investors/entrepreneurs in-residence with domain expertise, and a fund manager to keep the portfolio on track

There will be several people like Caio, Delville, and Peeters at SOCAP/Europe as well as the emerging, expanding, and interconnecting angel networks of Investors’ Circle, Toniic, ClearlySo, and Brigitte Baumann’s Go Beyond group.

Professional investors are deep in a learning mode, as more new individuals want to put their money in line with their meaning. But they will not be the only people coming to SOCAP/Europe with questions that need answers. A different set of questions will be being asked and answered by the expanding global seed funding network driven by Village Capital. This is not the old style seed funding drawn from a renewable philanthropic source. This is new seed funding in a network where investors put their own money at risk for investments that will most likely fail and produce substandard financial returns, but that will have a huge social impact (they do get first look at the few stars that emerge to do follow on investments in).

The conversation will have a lot of streams at SOCAP/Europe. It won’t just be private investors or groups of angels wanting to understand this new and exciting mix of a movement and an asset class who will be figure things out at the conference. The professional and amateur investors will be asking a lot of good questions.

The market is emerging. New relationships between professional investors and their investors is emerging. There are some encouraging models emerging. As with microgrid energy sector the real innovation is not in the technology. The new way to make impact investing work is to focus on the anthropology: how people work together, the social side of the Social Capital Market is where the battle to make a margin and accomplish a mission is going to be fought. A new level of customer awareness has to pervade a field that is more often based on a love for the tool and the technology than on understanding context.

The new breed of funds will figure out the best way to harness all the good will that can come toward a portfolio company – from the network of the limited partners and co-investors in a deal to online social networks and media. Moving money in new ways, accelerating the flow of capital to good, is about moving minds. Come talk and think with us at SOCAP/Europe. We have a lot we can learn from each other.