We kick off this season with a deeper look at the meaning of our phrase “changing how the economy functions,” specifically examining what you may have heard of as “social entrepreneurship,” which is the idea that entrepreneurial ventures should measure themselves not just by revenue but also by metrics that capture their broader impact on the social and natural environment.
Impact investing takes many forms. It can be venture firms seeking out so called “double bottom line“ or even “triple bottom line” returns, meaning financial & social returns or financial & social & environmental. In fact, there is a venture firm called DBL Partners - double bottom line - one of whose portfolio companies we’ve had on the show- Zola Electric. DBL invested in another company you may have heard of - Tesla - which is probably the most high profile, but not the only proof point that impact investing is not charitable giving.
Impact investing can also refer to the idea of investors screening for or against certain types of activities. The institutional approach is the idea of ESG investing. ESG stands for environmental, social, governance. ESG investors are typically mutual funds or financial companies with specific funds that invest in companies that are promoting those aims or perhaps which are improving their own internal practices.
How big is ESG? According to Morningstar, there are about 275 ESG open-end mutual funds and ETFs available in the U.S.. And according to Deloitte, 75% of investors applied ESG principles to at least a quarter of their portfolios in 2019. Another sign of how far this idea has come is that the incoming director of the National Economic Council, Brian Deese, most recently led BlackRock’s ESG investing, in other words, one of the most prominent economist positions in the country is about to be inhabited by an ESG guy.
Some of the more well known impact VCs include DBL, and Revolution’s Rise of the Rest, whom we’ve also featured on M4Edge. There are many other examples, all with ambitious aims, including the HEED fund, The Impact Engine, SustainVC, Village Capital, Better Ventures and many more.
We’ve decided to delve into a few of these areas, with the help of three guests. First, we’re joined by Sonal Shah, the Executive Director of the Beeck Center at Georgetown. Sonal is so steeped in the world of impact that we asked her to cohost this episode. Sonal interviews Lisa Green Hall, the Impact Chair at Apollo Global Management, but has held many roles in this space, as is really one of the pioneers of the field.
But we’re technophiles here at M4Edge, so we also interview Steve Tanner, the founder and CTO of EcoRobotix, a Swiss ag-tech company whose mission is to “develop, produce and sell innovative farming machines that require low energy and that reduce the negative ecological impact of modern agriculture, while keeping costs competitive.”