The Blue Impact Investment Thesis

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“We believe that the most valuable companies of our time will be solving our biggest problems, and our purpose is to support value-driven entrepreneurs realise their visions of a better planet for current and future generations. We believe that transformative ideas beat incremental ones and that the UN SDGs need to be at the core of each investment.”

Our Observations

Since their inception in 2015, the sustainable development goals (SDGs) have served as blueprint for shared prosperity in a sustainable world — a world where all people can live productive, vibrant and harmonious lives on a healthy planet.

The latest interim review indicates that encouraging progress has been made towards these goals. Extreme poverty has declined considerably (from 36% of the global population living under $1.90 a day to around 10% today), child mortality continues to decrease (59% decline in under-5 mortality from 1990 to 2018), and the vast majority of the world now has access to electricity (around 90% up from 70% in 1990). While these success stories are important and deserve to be acknowledged, it is vital to concede that we are far away from reaching the goals set out for 2030. A large proportion of the world population continues to live in despair, suffering and condemnation while the planet is heading towards catastrophic and irreversible damages from global warming.

Today, 820 million people worldwide suffer from hunger, claiming around 9 million lives a year and stunting the growth of over 140 million children. Preventable diseases like diarrhea and pneumonia take the lives of 2 million children, while an estimated 300,000 women around the world die due to complications of pregnancy and childbirth every year. One billion people worldwide suffer from a lack of adequate housing, no running water at home, shared toilets, little or no waste management systems, overcrowded public transport and limited access to hospitals and schools. Even in the most educated and ‘advanced’ countries of the world women and minority groups are being underpaid, marginalized and discriminated against. Contemporaneously, the natural environment is deteriorating at an alarming rate. The past four years having been the warmest on record. Sea levels are rising, ocean acidification is accelerating, and the severity and frequency of natural disasters are growing. One million plant and animal species are at risk of extinction, while coastal erosion and land degradation continue unchecked.

Our Beliefs

It is abundantly clear that the next decade needs to be one of urgent action. A deeper, faster and more ambitious response is required that is rooted in transformed mindsets, altered patterns of production & consumption and modern views on equality and solidarity. As the ensuing Covid-19 pandemic threatens to reverse progress, exacerbate hardship and deepen the divides between the ‘haves’ and ‘have nots’, it is imperative that we make the next 10 years count!

While these challenges are immense, Blue/Impact is confident that a new generation of leaders and technologies can help make meaningful advancements towards a better planet. It is our firm conviction that the next decade will witness the rise of a new wave of “impact unicorns” — companies achieving the twin goals of being both highly profitable and making serious dents towards Agenda 2030. This worldview is supported by several important structural factors shaping the workforce and competitive landscape of tomorrow:

  • Talent in search of ‘meaningful work’: Employers are commonly quoted saying “our people are our greatest assets”. Studies show that many of these people are increasingly concerned about using their skills to benefit a positive cause. 88% of millennials said they will choose employers who have CSR values that reflect their own — a notable figure considering they will make up 75% of the global workforce by 2025.
  • Institutional support: Company missions that support the SDGs will not just face fewer regulatory hurdles, but also receive active support from governments and international institutions. Amongst others, “impact” companies stand to benefit from financial incentives, R&D support and grants. The Horizon project or the LIFE programme are cases in point.
  • Conscious consumers: Modern customers demand transparency and exercise their power and voice through the products they buy. 84% of consumers globally say they seek out responsible products whenever possible. Even more importantly, recent research indicates that shoppers aren’t all talk but are actually following through with buying more sustainable goods.
  • Huge “must-have” markets: Firms addressing the SDGs are commonly operating in trillion-dollar markets, such as education, construction, transportation, clean energy and food production. The magnitude of the challenges in these categories should yield many large winners and make them less susceptible to the “winner-takes-all” dynamics of many software and consumer product markets. In short, “what the world needs” is a much bigger opportunity than “what a middle-class urban consumer wants”.

While the investor community is beginning to acknowledge that sustainability has become a defining factor in companies’ long-term prospects, the behaviour shift is still in its infancy. A renowned report on the European Tech landscape found that only 4% of completed VC deals last year went into ‘purpose-driven’ companies and only around 15% of funds assess the societal and/or environmental impact of their investments on a regular basis. These figures lead us to believe that the next Impossible Foods, Northvolt or Zipline could be critically underserved by the current investment landscape, as too many resources continue to flow into incremental innovations and futile consumer products. At Blue/Impact, we want to play a humble, yet ambitious, role in changing this status quo! We look forward to backing and supporting a new generation of tech companies looking to take the SDGS head on.

Our Response

We are excited to introduce Blue/Impact as an early-stage investor in companies who leverage technology to contribute to the SDGs. We invest in companies generating both a financial and impact returns.

We believe that the most valuable companies of our time will be solving our biggest problems, and our purpose is to support value-driven entrepreneurs realise their visions of a better planet for current and future generations. We believe that transformative ideas beat incremental ones and that the UN SDGs need to be at the core of each investment. At the same time, financial returns are a pre-requisite. They fuel the capitalist motor driving our economies, they incentivize founders and help companies attract the best talent. Profits provide firms with flexibility and autonomy, allows them to scale operations more quickly and helps garner support from large institutional investors and for-profit organizations. To build truly changemaking organizations, it is insufficient to rely on grass-root level initiatives and people’s goodwill. We invest in impact without sacrificing on returns.

Investment Strategy

  • Industry Focus: We are on the look-out for companies who are capable of making significant dents into the SDGs. Consequently, we are placing the pillars underlying the SDGs at the core of our investment strategy:
Figure 1: Blue/Impact Investment Categories

Each prospective investment is matched to at least one SDG and its impact is consequently assessed through a proprietary impact framework. We work closely with companies to understand their visions and determine how this translates into measurable impact OKRs

  • Geostrategy: We invest from our home — Berlin — in impact around the world. In most cases European markets will be used as a platform for an initial go-to-market strategy. That being said, we are dedicated to supporting businesses anywhere if they share our mission of driving positive change through scalable technology.
  • Investment Stage: We focus on pre-seed investments to help new and untested missions get off the ground. As our aim is to partner intimately with our investments and actively support them through later growth stages, we only invest in 2–4 opportunities every year. In exceptional circumstance, we participate as a co-investor in seed or series A rounds.

Existing Portfolio

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Figure 2: Blue/Impact Portfolio Overview

If you share our ambitions and are in the process of building something towards your vision of a better planet, please reach out to us at pitch@blueimpact.de

Written by

Blue Impact Ventures means impact investing. We support teams tackling the urgent challenges for society and the environment http://www.blueimpact.de

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