Announcing our oversubscribed $200M Fund II
We are excited to announce that we have raised Material Impact Fund II, a $200 million oversubscribed fund that enables us to continue to build world-changing companies around products enabled by materials innovations.
How did we raise a $200 million fund in the middle of a global pandemic?
We like to think it has to do with a tried and tested investment thesis that stands up to tumultuous times. A belief system we set out to build a fund around four years ago:
- That material innovations have world-changing impact.
- That focusing on large-scale, real-world, enduring problems, not fads, will return tremendous value both financially and to humanity.
- That taking an active, hands-on approach to company building is critical for entrepreneurs as they mitigate new threats and capitalize on new opportunities.
- And that experts — not generalists — are the ones best positioned to help entrepreneurs navigate through complicated times.
We have shown an unwavering commitment to these three tenets of our investment thesis, and it’s paying off. Our fund and our portfolio has proved resilient even in the most uncertain of times. Whether it’s Soft Robotics’ hand-like robotic grippers that eliminate the need for human contact during food handling, NextGen Jane’s remote diagnostic solution that enables patients to gather high-quality health data from the comfort of home, or Zero Mass Water’s infrastructure-independent technology that decentralizes access to clean drinking water, or Nohbo’s water-dissolving packaged single-use soap slips for the COVID landscape, our companies are building products that are resilient to disasters and crises like this one.
We have lived through market volatility in the past both as VCs and as entrepreneurs, and our portfolio companies are relying on that experience. Our hands-on approach to company building is more important in today’s world than ever before. There is no firm better positioned to manage through this health crisis than our Material Impact. Our thesis. Our business model. Our partners. We are built for this.
Since our founding, the Material Impact portfolio has grown to include eleven startups. These companies share our vision of a world where technology makes a measurable and sustained difference to human lives. These are entrepreneurial businesses that are responding to the COVID-19 crisis by adapting their existing operations to meet immediate consumer, business and community needs.
Fund II is in many ways a continuation of the work we started four years ago. And we’ve learned some important lessons along the way that will help inform the evolution and expansion of our firm:
A non-impact fund making a big impact
We are not a social impact fund, but at Material Impact we aim to have companies that generate high shareholder returns while also making a big difference. We know that the world is headed in this direction, and that the emphasis on measurable social and environmental good alongside financial returns is increasingly becoming the new norm. So in 2019 we chose to embrace measuring ourselves and our portfolio companies to show where we stand, pound for pound, when it comes to ESG measures. We partnered with B Corporation and participated in the B Impact Assessment process. It turns out, our score and the scores of our portfolio companies puts us above most impact funds. This is in large part due to the incredible diversity of our team and our founders, and the fact that impact is so intimately woven into what we and our companies do everyday.
The rise of “Deep Tech”
When we raised Fund I, “tough tech,” “hard tech” and “deep tech” weren’t making VC headlines. Raising a fund to invest in manufactured products enabled by material science was relatively novel. But thanks to an incredible group of strategic LPs, Fund I launched with more than $110M under management. Over the last two-three years, hard tech has become en vogue, with some of the most respected VCs and talented entrepreneurs moving into the space. Companies like Impossible Foods making a synthetic burger out of materials have illustrated the power of material innovations, setting new standards for their respective industries. We’ve had the incredible opportunity to be a driver of this new wave of innovation, and we’ve seen the result of this in the quality of our deal flow and of our syndicates. Despite being a first time fund and a brand new firm, we continue to be recognized as the top material science investor in the country, perhaps in the world.
Coast to coast and everywhere in between
It turns out, not all important innovations take place in San Francisco. In fact, we’ve tapped into some of the most exciting material science disruptions at academic institutions in Boston and in the Midwest. From Harvard we’ve spun out Soft Robotics and Datacule, from MIT 6K, Infinite Cooling and Bloomer Tech. In Fund I our network expanded beyond Boston and the Bay Area to include the heartland of the country. We mined for true diamonds in the rough like Orbion from Michigan Technological University, Fusion Coolant Systems from University of Michigan, Zero Mass Water from Arizona State and Folio Photonics from Case Western. The network that we’ve built from coast to coast has enabled us access to the very best deal flow in our space.
Introducing Fund II
In Fund II we will expand on the foundation we built in Fund I. At $200M we can take even stronger ownership stakes in our companies while maintaining a hands-on, inception stage approach to company building. We will stick to our knitting as operators and company builders because that is what we are all about. And the value we’ve added to our companies has been transformative.
We will continue to prioritize an inclusive culture and diversity of race, gender, thought and experience in our team and in our founders. At the end of March we added Corinna Chen and Sidney McLaurin, two original members of the Material Impact Entrepreneur Advisory Committee, to the team as Partners. We have known and worked with Corinna and Sidney for several years. Their deep industry and operational expertise combined with their unique stories and career paths are a perfect blend with our team. They have already hit the ground running, diving in to support our company building efforts, and developing investment theses and deal flow centered around their areas of expertise.
We are proud to add even more world-class LPs to the Material Impact family. From some of the largest university endowments in the world, to several of the most influential family offices, to reputable fund-of-funds, to widely-respected foundations, we could not be more proud of the partners we have assembled to take this journey with us.
In this new age of COVID-19, we are embracing uncertainty and building the next generation of category creators and disruptors. It’s been a wild ride, but now more than ever we know our work is just getting started. We can’t wait for the next chapter.
Carmichael Roberts & Adam Sharkawy
Managing Partners of Material Impact