September 6, 2024
Impact investments are made to produce a beneficial, measurable social and environmental impact in addition to financial return. Impact investments may be done in both developed and emerging economies, with returns ranging from below market to market rate, depending on the strategic aims of the investors.
The growing impact investing industry provides capital to address the world's most pressing issues in areas such as sustainable agriculture, renewable energy, conservation and accessible basic services such as housing, healthcare and education.
Globally, impact investment activity has grown steadily over the past decade, with particular progress being made in impact measurement and management.
The global market for ESG-focused funds (including impact investments) set a record in 2020 of $542 billion and continued to grow exponentially in 2021 up to $649 billion. ESG funds now account for 10% of worldwide fund assets and are expected to increase in the coming years.
Traditionally, investments are understood as purely focused on financial return, with no consideration of impact. Some investors, and those looking for investments, make the common mistake of assuming investing in impact as philanthropy.
This could not be further from the truth. ‘Impact’ businesses do not seek to achieve an environmental/social purpose at the expense of profit, but rather, profit-creation is intertwined with achieving their purpose.
We’ve gathered a list of 10 impact investing groups that we think you should consider when looking at driving investments that will help you grow your business and impact.
1) Big Society Capital
Summary profile/Approach:
Big Society Capital is an independent financial institution with a social mission authorised and regulated by the Financial Conduct Authority (FCA).
They work to improve the lives of people in the UK through investment with a sustainable return. Leading social impact-led investors, restless for change.
To ensure they remain true to their social mission, there is a comprehensive governance structure in place.
Sector/Investment Focus:
Big Society Capital focuses on investments in charities and social businesses, as well as social impact investing in startup tech companies with a focus on impact.
The UK population confront social obstacles daily in housing, access to affordable financial goods and services, health and wellness, and community resilience.
Social impact investing makes a significant difference by assisting enterprises in addressing these difficulties at scale to improve people's lives.
Startups making a difference in the areas of health, education, training, and financial inclusion are a focus here.
Most Impact is in:
Outlined in their 2025 Strategy, social and affordable housing, Impact venture, social lending, social outcomes is where impact is driven the most.
191 mission-driven technology startups have been supported, 10x as many impact venture funds seeking investment in 2020 vs 2018, with 17m people reached.
Portfolio/Impact stories:
In 2020, including their Covid-19 response, 16 investments were made totalling £115 million.
Over £2.2 billion has been made available to more than 1,500 social enterprises and charities all over the UK aiding to tackle some of the toughest social challenges and improve people’s lives.
Impact stories include Urban Jungle, a tech-enabled insurance provider on a mission to transform the UK home insurance market. The use of behavioural data to assess individuals’ risk on factors that they can control rather than demographics allows them to sell insurance products that are more transparent and effective to their customers.
This model supports communities and people that are the most underserved, as they only pay for the insurance they need which makes it more accessible. Urban Jungle now has 20,000 customers and over 1,000 five-star Trustpilot reviews.
What do they look for?
For Big Society Capital, there isn’t a typical process to create new investments, but the aim is to understand people’s needs first and place that at the heart of this process. They start by getting to the root of the social issues and focus on the ones that affect people who are underserved or vulnerable.
Ideally, they are looking for enterprises that can and do contribute to tackling the social issues and where they can be bolstered, replicated, or scaled up. From there, financing or other support can be provided to help these enterprises deliver better outcomes for people.
Open applications:
To find out what opportunities are available to you, contact the Big Society Capital team directly. Alternatively, access and browse their list of social investors and advisers to find out more about the finance available.
2) KKR
Summary Profile/ Approach:
KKR strives to produce more robust, long-term competitive performance by investing in businesses that have an impact through their goods or services and actively addressing environmental, social, and governance (ESG) risks.
They have created an efficient method for incorporating ESG concerns into the investing process by detecting possible risks and opportunities and resolving critical challenges. They consider competently governing a business is an important aspect of generating good investment results.
Sector/Investment Focus:
KKR invests in scalable, commercial solutions to solve critical global challenges. They look for opportunities where financial success and societal impact are inextricably linked.
To offer significant answers to the UN Sustainable Development Goals (SDGs), the Global Impact Fund invests in four primary investment themes: climate action, lifelong learning, sustainable living, and inclusive growth.
Most Impact in:
Over the last decade, $7.5 billion has been invested in firms with core business models that promote solutions to global, environmental, educational, and workforce development difficulties, responsible consumption and production, worker safety, and social concerns.
Here are some highlights of Global Impact’s contribution to the SDGs, drawn from their Impact Report:
Portfolio/Impact Stories:
KKR included some notable impact stories in their impact report. An enterprise called Citation, providing Health and Safety, Human Resources, and Compliance support for SMEs caught our attention.
Citation offers a cost-effective solution that makes even smaller employers compliant with best practices. They provide small businesses with a solution that has a measurable impact and results in improving workplace safety. Citations key contribution is directed to SDG 8 for decent work and economic growth (8.8).
What do they look for?
The investment selection criteria include four main considerations:
- Can it achieve attractive risk-adjusted returns?
- Do the core products or services contribute locally relevant solutions to the SGDs?
- Does it generate measurable impacts, using metrics sourced from third-party frameworks wherever possible?
- Does it seek to measurably improve its ESG performance during KKR ownership?
3) Balderton Capital
Summary profile/Approach:
Balderton is Europe's leading early-stage venture capital investor, focused on European-founded technology firms. They invest in startups that have the potential to disrupt large sectors as well as the desire to expand internationally.
With over two decades of investing expertise, they offer a network of unrivalled professional and personal networks to bear in assisting businesses from start-up through exit.
Businesses in the Balderton portfolio benefit from a worldwide network of CEOs with real-world experience creating and developing digital companies from startup to IPO; Balderton's CEO Collective; and the firm's platform of legal, talent, and marketing services.
Sector/Investment focus:
Balderton believes the next European giant will be a technology company, so they look for startups with the potential to scale to become large companies with global impact.
Most Impact in:
Open finance, Data-driven health, Software for modern business, efficient mobility, a more secure internet, retail redefined, thoughtful food, creative entertainment.
Portfolio/Impact stories:
Their portfolio is large and impressive with many known brands; including Depop, Nutmeg, and CityMapper.
What do they look for?
Build with Balderton includes a selection of insights, resources and networks to help guide founders on the journey to becoming impactful businesses.
Open Applications:
Founders and entrepreneurs seeking investment should reach out directly to a member of the Balderton investment team.
4) Bridges Fund Management
Summary profile/Approach:
Bridges were set up in 2002 by Sir Ronald Cohen, Michele Giddens, and Philip Newborough, who shared the belief that business and investment should play a critical role in addressing some of the world's most serious social and environmental concerns.
They have spent the last 17 years creating investment ideas that can assist to make our economy more equitable and sustainable – and thereby unleash permanent economic value through rigorous investigation of the trends driving our future.
This, in turn, will draw more private finance into initiatives that benefit people and the environment over time.
Sector/Investment focus:
Across all strategies, the focus is on four specific themes to help source and select compelling investment opportunities.
Closely aligned with the Sustainable Development Goals, these themes reflect social and environmental mega-trends that are reshaping our world.
Four themes:
- Healthier lives - Investing in solutions that improve physical and mental health and well-being.
- Future Skills - that boost skills and productivity, and strengthen pathways to employment.
- Sustainable planet - in the transition to a lower-carbon economy.
- Stronger communities - in solutions that increase access to opportunities and services.
Most Impact in:
Healthier lives - 40k individuals provided with high-quality health & social care, 1.3m hours of care delivered, 60k first time-gym users.
Portfolio/Impact stories:
Impact Stories: The Bridges Impact Foundation launched in 2007 to provide catalytic support for innovative solutions that drive better outcomes for underserved people and the planet.
The Foundation is funded primarily by the Bridges team, who donate 10% of all their profits from the firm’s investment funds.
What do they look for?
The Bridges Sustainable Growth Funds invest in growth companies that are helping to create a more inclusive and sustainable future. Grounded in the belief that businesses like these will be the big winners of the next decade.
By helping them to achieve their potential, they can deliver attractive financial returns alongside measurable societal impact. They look for companies that are value-aligned and share their vision to solve our biggest challenges.
Open Applications:
Contact the team directly by sending a quick email to info@bridgesfundmanagement.com to find out more about any relevant opportunities for you.
5) Oneplanet Capital
Summary profile/Approach:
One Planet Capital is an EIS fund that focuses on the expanding green economy. It is broad in scope, focusing on investments that will reduce CO2 emissions as well as businesses that have a good environmental impact.
The founders' shared concern for our world was the motivating cause for the founding of One Planet Capital. They think that capitalism has a crucial role to play in addressing today's environmental difficulties and that by investing in the next generation of firms that will address these issues, we can have a positive global influence.
‘OnePlanetCapital is more than an investment house, it’s part of a movement. Radical venture capital focused on unlocking the positive impact of early stage companies as they grow. Our team is spearheading the green industrial revolution and disrupting the status quo to create a positive global impact.’
Sector/Investment focus:
One Planet Capital is targeting a minimum raise of 2m GBP for its inaugural fund which will be deployed across 12-15 early-stage companies that have potential for global reach and impact and sit within the green/sustainable/circular economy space.
Most Impact in:
Environmental/Sustainability.
Portfolio/Impact stories:
Most recent investment into a zero-emissions delivery service called Zedify. Zedify’s business creates high levels of positive environmental impact.
‘Each one of its deliveries on an ebike is displacing a diesel van sat in traffic with a near 100% reduction in emissions achieved by each e bike delivery vs a diesel delivery van. Zedify is currently removing 600,000 van journeys annually which has been a fundamental contributor to the business generating 400 tonnes in CO2 savings per year thus far. Given the future growth expected this positive impact will increase in tandem.’
What do they look for?
Companies that aim to change the environmental prospects of the UK and the wider planet.
Open Applications:
One Planet Capital sustainability EIS fund, which aims to invest in high growth companies that are combating climate change
6) Ascension
Summary profile/Approach:
Ascension is an early-stage venture capital firm founded by successful entrepreneurs to support the next generation of tech and impact entrepreneurs. Their mission is to work with startups to help them speed their progress to Series A and beyond.
Ascension is one of the UK's most active Seed investors. Through (S)EIS & Institutional Funds, they have financed 125+ innovative and impact businesses since 2015.
Sector/Investment focus:
They manage (S)EIS and Institutional Seed funds that invest in UK technology and impact businesses across these key focus areas: Next Gen Media, New Work, Digital Health & Life Sciences, Sustainability, FinTech, Commerce, DeepTech.
Portfolio/Impact stories:
Their portfolio includes: Wagestream, Lick, HeyGo, WeGift, zeroheight, Organise, Moteefe.
What do they look for?
Key criteria of assessment include:
- Strong, dedicated Founder(s) with a deep understanding of the problem their product is trying to solve.
- Robustness of IP / tech development.
- A clear route to market and a compelling business model capable of rolling out globally.
- Strong leveraged marketing/distribution strategies built into the proposition.
- At least 12-18 months runway from current anticipated raise, assuming no revenue growth.
- An opportunity for Ascension to add value in supporting your access to revenue and funding.
Open Applications:
You can apply for Ascensions UK seed fund directly on their website.
7) Nesta
Summary profile/Approach:
Nesta is an intriguing non-profit that promotes itself as an "innovation foundation." Nesta Impact Investments provides financial, expertise, and network capital to innovative technology enterprises that are positively impacting the world.
They seek to support firms that are strongly connected with Nesta's Mission impact goals, such as enhancing school readiness at the age of five and secondary school achievement, combating obesity, lowering household carbon emissions, and increasing productivity.
Their investment strategy has evolved to now focus purely on impact investments.
Sector/Investment focus:
Edtech, foodtech, healthtech, climate tech, the future of work and productivity. Tech startups that tackle some of the UK’s most pressing social challenges.
Most Impact in:
Invest between £500k and £1m in Seed-to-Series-A tech start-ups that are developing innovations that align with Nesta’s three mission areas.
Portfolio/Impact stories:
Nesta has partnered with Founders Factory, a world-leading venture studio and accelerator that builds technology startups focused on solving global challenges.
They have an impressive portfolio of successful tech startups, including Acre, the first fintech end to end mortgage manager in the UK. Acre has a simplified user platform that makes getting a mortgage easier and cheaper.
What do they look for?
They’re looking to attract, nurture, and invest in diverse founders from all backgrounds, particularly those who may have previously lacked the opportunity to found their own business.
Open Applications:
Mission Studios application, focusing specifically on the issues of reducing household carbon emissions and improving health and narrowing health inequalities.
8) Mustard Seed
Summary Profile/Approach:
Mustard Seed is a leading early-stage investor in world-class companies that deliver compelling financial and societal returns. They do so in collaboration with their worldwide network of business luminaries, an FCA-approved startup fund, and events at many of the world's top institutions.
They argue that tackling the most serious societal concerns leads to long-term business success.
Mustard Seed Impact has created its impact investment technique, branded "Lock Step Venturing."
Sector/Investment focus:
They invest in founders driven to make a difference and share the idea that business can and should be a force for good.
Most Impact in:
Economic inclusion, education, environmental sustainability, health, and family & community.
Portfolio/Impact Stories:
Mustard Seed has publicly announced 19 investments since its inception in 2015.
Investments reveal a strategy designed to tackle food waste, with investments such as Winnow and OLIO. Other interesting ventures include Mush, a social platform for mums which could tackle maternal loneliness, and Beulah, a jewellery brand that employs vulnerable and trafficked women to make its products.
What do they look for?
Mustard Seeds forward approach outlines:
- We back innate resilience matched by the humility and rigour of relentless self-improvement.
- We back visionary team builders, and those who see opportunity in their own failure.
- We invest in fast-growing European ventures, with global lock- step potential.
- We are in this for the long haul. We avoid the words ‘exit’ and ‘deal’, and anything that might lead us to myopic, transactional behaviour.
- Every stage of our investment process is driven by our ethos and guiding principles – humility, integrity, empathy, paying it forward and resilience.
- We back the dare-doers, led by the heartfelt desire to make the world better.
A ‘lock-step’ business model: Your business’s product or service should inherently be a benefit to society. No matter who the future stakeholders are, positive impact is at the core of your business and can never be stripped away.
Measurable, outsized positive impact in at least one of Mustard Seeds 5 action areas: education, economic inclusion, environmental sustainability, health, or family & community
High growth potential: As your business grows, so does the impact it has.
9) Bethnal Green Ventures
Summary Profile/Approach:
Bethnal Green Ventures is Europe’s leading early-stage tech for good VC. They support ambitious founders on a mission to use technology to tackle big social and environmental problems that aim to radically improve millions of lives.
They base their approach on the belief that technology developed with positive intention can provide solutions to some of our biggest social and environmental challenges. They also believe in leading by example, and using their principles to guide the way they work - this has led them to be strong advocates of diversity and inclusion, and have been a B Corp since 2015.
Their unrivalled experience and track record investing in and scaling tech for good businesses has generated top-tier returns for investors, as well as significant and measurable impact.
Sector/Investment focus:
Invest in ambitious founders using technology to tackle big social and environmental problems that aim to radically improve millions of lives.
Investment thesis:
BGV believe that:
- Social and environmental challenges need better solutions.
- Technology is the best way to deliver a positive impact at scale.
- There’s a growing demand for businesses to be a force for good.
- Diverse teams deliver better impact and returns.
Portfolio/Impact Stories:
Impact includes:
- 141 tech for good ventures backed.
- £98m of follow on investment raised by portfolio.
- 16.9m users of BGV portfolio companies’ products and services
- 563 people employed by portfolio companies (43% of which are women – well over double tech sector average).
- 34% of portfolio companies believe that without BGV their product or service would not have existed today.
- Tech for good in response to Covid-19.
What do they look for?
Invest in tech for good companies that drive a significant positive impact for people and the planet. Their investment thesis is centred around the idea that the companies invested in contributing to a sustainable planet produce a better society and healthy lives.
- Sustainable planets: They want to see innovative, yet affordable systems and solutions in the following areas: Resource efficiency and circular economy, responsible consumption and production, sustainable agriculture, transportation and infrastructure.
- A better society: Education and life-long learning, employability and fair work, poverty reduction, integrated and inclusive communities, civic participation and social justice.
- Healthy lives: Health and social care, preventative care, mental and emotional wellbeing, healthy lifestyles and ageing population.
Open Applications:
The Tech for Good Programme provides ambitious early-stage founders with the investment, support, expertise and networks to launch and build a successful tech for good venture.
Applications for the Autumn 2022 programme will open in May 2022.
Conclusion
Most, if not all, impact investors on our list prefer to invest in businesses that prioritise measurably improving their ESG performance to generate impacts. This is where Profit Impact can help.
We will guide you through the process of measuring your impacts and ESG metrics so we can outline what improvements are needed to attract more investment.
Let us know if there are any others we should have on our radar and we will work on updating this list with the most relevant and useful impact investing groups!
#ConsciousBusinessPerformance - Book a call with Sarah today to discuss your current business position with ESG.
