How to Make Profit for Good (And Why $715 Billion Is Just Peanuts)
The Good, the Bad, and the Cute Ugly of Impact Investing in Tech
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Welcome, Impact Nation
This newsletter is specially tailored for impact investors, leaders, and founders.
We focus on tech4good because it’s our passion, our expertise, and because tech innovators can be wonderful agents of change.
This Week We Are Diving Into:
1. A New Market for Impact Investing
2. Good Gossip
3. News & Opportunities
4. (People in Impact Series) Meet: Monique Jeanne Morrow
Let’s do it!
The Impact Lady
A New Market for Impact Investing (The Good, the Bad, and the Cute Ugly)
Paul Graham is the co-founder of YCombinator (YC), the most successful startup accelerator on the planet.
Their Alumni count over 1,800 startups – including Airbnb, Stripe, and Dropbox – for a market valuation of over $100 billion.
This year, the largest number of startups at Y Combinator stands exactly in our industry: impact in tech, with 25 companies in climate tech alone.
Not surprisingly, climate change is the most common choice within the group. It’s a massive topic, challenging, and especially popular among the younger generation.
But look closer and you’ll see the real surprise.
While this year the media focus almost exclusively on virtual reality, A.I., and finance, the next pitch day will introduce the investors to a majority of startups for impact in tech.
Impact investing is still young
The Global Impact Investing Network (GIIN) registers assets under management for $715 billion in 2020.
$715 billion may sound like a huge number, but it’s not. Actually, it’s only a small fraction compared to what’s invested in other areas.
And yet, just the year before (2019), its assets under management counted for $502 billion.
In other words, impact investing growth +42% in just a year.
This is the highest growth rate compared to every other similar market. It also means that in a 1-year span, the growth of impact investing beats everyone, including virtual reality and crypto.
In a 1-year span, impact investing beats every other market, including virtual reality and crypto.
What really matters
We have invested in 100+ startups in the last 12 years. And we have learned that, when a technology is new, size doesn’t matter too much.
It’s the traction (the growth rate) that counts.
Amazon was much smaller than Walmart … until it was not.
Size doesn't matter when your growth rate % is much faster than everyone else.
It may sound odd to talk about Amazon in an article about impact investing.
Impact investing should be managed like any other business, with profit in mind.
And not because we want you to be greedy. In fact, the opposite is true.
If we want to do good, we need to attract more investors into impact investing. If we want to attract more investors into impact investing, we need to achieve competitive profits.
Good profits for good
There is no reason why a great impact company should produce much less profit than a traditional investment.
Yes, impact investing may be more challenging. And yes, we need to support impact entrepreneurs beyond simple profits.
And yet, impact investing is not charity. It’s an investment after all.
The mantra for impact investing should be inspired by the famous quote of Judith R. Faulkner, founder of Epic Systems:
“Do good, have fun, make money”
It’s an excellent start.
(This is the first part of a 3-parts post. If you liked the Good, get ready for the Bad and the Ugly … soon in this newsletter)
Congrats to …
Anthony Chant ↪ has been appointed Investment Director at One Planet Capital, the climate change early-stage venture capital fund.
Amal-Lee Amin ↪ is the new MD and Head of Climate at CDC, the UK’s development finance institution (soon be renamed BII, British International Investment).
BlueMark ↪ raises $3.75 million in funding from an impressive line of investors, including Ford Foundation, Radicle Impact, The Rockefeller Foundation.
Donna Bartlett ↪ is the new Chief Compliance Officer (CCO) at JUSTLY Markets, the impact investment broker-dealer.
Roopa Kudva ↪ is the newest board member at Global Impact Investing Network (GIIN).
Preeti Bhattacharji ↪ and Dan Rourke have been appointed respectively as Head of Sustainable Investing for the US and Global Head of ESG Investing at JP Morgan Private Bank.
Verlume ↪ raised £2.5m in funding from Par Equity, Orchard Ventures, and Scottish Enterprise.
Qureight ↪ raises £1.5m seed funding to curate the world’s largest collection of complex disease data from Playfair Capital, Meltwind, Ascension, and Cambridge Angels.
Alnwick Agritech ↪ secured £350,000 in innovation investments led by North of Tyne Innovation Recovery Grant, and Innovate UK.
Patricia Lewis ↪ get the newly created position of Chief Sustainability Officer at UnitedHealth Group.
News & Opportunities
The growing career of a Chief ESG Officer ↪ Serious job opportunity or fickle hype? The Harvard Business Review analyzes 1,400 public companies and studies multiple surveys of stakeholders.
The top 5 impact investing firms according to Investopedia ↪ Looking for a job? For funding? Or for your competitors? J.B. Maverick released his updated list of top impact investing firms.
Acquisition spread. M&G invests $3.7 billion and sets a goal of £5B ($6.8B) ↪ M&G took a 90% stake in Swiss emerging market impact investor Responsability Investments. M&G said it would pour £5bn into sustainable private assets, overseen by a newly created global team. We see a trend for mergers and acquisitions in impact.
If you build it, they will (not) come. Firms build ESG-friendly products, but the majority of savers don’t know what ESG means ↪ This is an interesting case study from Ireland. Impact investing is growing into a major industry, so it’s building its own technical jargon. Just one problem. The investors may not speak our language. Praise to Graham Fox, head of distribution with Amundi Ireland, who’s not afraid to tell it to the media. “We really need to think about simplifying our message … so that the end customer when they see it knows what it means straight away”
Mental health apps are the Nike Hackathon winners ↪ This news was mostly ignored by the major media, but shared many times by the younger communities (our link is from Girl In Tech). Anxiety, microaggressions, bullying are on the rise among the younger population.
Many investors are not so young, they are not aware of this market, and compete to pour money into more traditional ESG goals.
Many entrepreneurs in mental-health tech are young, and without funding.
It’s a typical case of asymmetry (and thus an opportunity for good investments). Investors may help the community and their bottom-line at the same time.
US President Biden allocates $9 billion to develop clean hydrogen capacity, with a further $650 billion of clean procurement ↪ Hydrogen is viewed as one of the keys for the transition to a cleaner energy future. It's the most abundant element in the universe, however, there are no pure hydrogen deposits on Earth (it must be extracted from other materials). The administration also announced the launch of a Buy Clean Task Force, aimed at promoting clean procurement. With an annual purchasing power of $650 billion, the US federal government is the largest purchaser in the world in this area.
PEOPLE IN IMPACT
Meet: Monique Jeanne Morrow
. Top 50 women globally in technology according to Forbes;
. Holder of 15 patents;
. Author of several books;
. Member of the World Economic Forum, Data Policy Council;
. Senior Distinguished Architect at Syniverse
These are just a few titles for Monique Jeanne Morrow.
After 25 years in the tech industry, and a successful career focused on social good, Monique will share her expertise and insides at Expanse, the Global Summit for Impact Investing in Tech.
Join Expanse Summit today.
Coming soon: How Entrepreneurs Can Benefit from Impact Investing - With Matt Black, Ceo of Keystage Ventures
Video interview available from Thursday - Stay tuned
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