Sep 27, 2022
Impact Unicorns Prepare To Run Their Four-Minute Mile
This article is part of a series by Ananda Impact Ventures Co-Founder Johannes Weber called “Make it matter”
Equine metaphors
It’s early evening in vibrant and entrepreneurial Prenzlauer Berg, and I’m sitting here with my Berlin team. We’re sipping pineapple juices, resisting our bartender’s desire to sell us something more alcoholic because two of our investment managers are breastfeeding. He lets us get away with it. This area has changed so much — all of Berlin has. For many years, it’s been a centre for start-ups in Europe. Now it’s also home to the first female founder fund (Kudos!) and a huge number of inspiring impact businesses. And of course, that’s why we’re here.
Sometime during the second pineapple juice, the conversation turns philosophical. Have we only been investing in zebras so far? But are we chasing unicorns now? If so, what would we call them? Impact unicorns? We agree that “it definitely has to be a horse-like creature — otherwise it won’t work with the other metaphors!”
“We should call them ‘Pegasuses’,” I suggest. “They’re just as rare as unicorns, but because they can fly, they have a different view of the world and will create businesses that are better for people and the planet than their horned, rainbow-coloured colleagues.” Karla argues they should be called ‘donkeys’. She’s still under the influence of a donkey hike weekend outside Berlin. “They are extremely intelligent and unbelievably resilient — they’re also strong-willed and won’t just agree to what their investors want from them.”
But in the end, we agree to call them impact unicorns for the lack of a better word.
Do impact unicorns exist? Absolutely. But would an investment strategy based on finding them when we started in 2010 have been a good idea? Probably not. Instead, we’ve co-created some of the most outstanding zebras in the market. Yet we now have some unicorn prospects in our portfolio, because something changed two or three years ago. When the world was in lockdown, they quietly left their magic forests, then started to gallop across the great plains of Berlin, London and Silicon Valley.
Beating the four-minute mile
A study by dealroom.co argues that there are about 180 impact unicorns so far, and that 40% of them were added to the ‘impact hall of fame’ in just the last 15 months. Obviously, not all of these would fit our impact criteria at Ananda — but that’s not the point. It shows an unstoppable trend.
Is this our industry’s equivalent of the four-minute mile? The received wisdom was that nobody could run a mile in under 4 minutes until Roger Bannister broke through that barrier in 1954 — and yet his record only stood for 46 days, with thousands of athletes since having run sub-four-minute miles. What this demonstrates is that if a goal is shown to be achievable, then others will be inspired to attain that goal. If they can imagine it in their minds and make their bodies feel it, they will ultimately reach it. Great athletes know this, and so do world-class entrepreneurs and investors.
Considering the amount of capital that has poured into impact investing over the last couple of years, I believe that Blackrock CEO Larry Fink and others are correct when they say there will soon be thousands of impact unicorns, all of them getting ready to run their personal four-minute miles.
To us and the many other pioneers in impact investing, this is great news. For too long, we were indulgently dismissed by traditional VCs, because our investment case was still emerging. We had to wait until our companies grew up, nurturing them with passion and coaching them through puberty. And now here they are. We’ve raised 400m EUR so far for our portfolio companies — and half of this money comes from traditional VC investors, who we’re happy to say have now jumped on our bandwagon!
Investors! From now on, you don’t have to believe in a fairy tale to find an impact unicorn.
Founders! Creating an impact unicorn doesn’t have to be a moonshot project, but a logical part of how the world can work together to fight climate change, rethink education, redefine healthcare, and create a more equitable humanity.
Impact investment is our best opportunity
Some say that we’re trying to solve the problems created by capitalism with more capitalism. Believe me, I have given this a lot of thought. But my personal conclusion is that impact investing is the most powerful instrument we have in our hands right now to change things for the better. What else should we do? Sit around and hope that change will happen on its own? Future generations may be smarter, more deeply connected with nature, more empathetic with each other, and ultimately come up with better solutions. But for now, impact investment is our best opportunity.
I recently spoke with Dr. David Ko and Richard Busellato, two extremely smart ex-hedge fund managers, and the authors of The Unsustainable Truth. They argue that an alternative solution to our world’s problems is offered by the millions of small start-ups and organisations around the globe that aren’t designed to be scaled. I agree, and privately, I’ve initiated a few of them, and I know hundreds of other people that are on this mission.
But as an impact venture capitalist, I am in the business of backing impact unicorns. And that will be our mission at Ananda for the foreseeable future.
But we know that it won’t just be impact unicorns that help to change the world. It needs all of us, from grassroots entrepreneurs to zebras and corporate outliers. Together, we have the power to move mountains — and our contribution will be to help traditional capital flow into ever more impactful companies and more sophisticated forms of impact creation.
Ananda also believes that an impact unicorn needs a different kind of support. We believe in protecting founders’ mental health, in the power of diversity, and in being truly aligned with the vision of the companies we back. It’s a long journey, and we all want to arrive at our destination sane and healthy. As each prepares to achieve its four-minute mile, let’s not forget to also enjoy the ride. We’ve created a beautiful unicorn stable at Ananda. Some very likely to-be-unicorns are already enjoying their new home here, and many others are about to join them.
It makes me truly happy to see what impact investing has become and for the fact that nearly every VC and investor talks about impact these days. Together, we can do this. We can iterate, pivot and improve — because human beings are actually really good at these things — and harness our powers to create the change we all crave.
Johannes Weber is Managing Partner and Co-Founder of Ananda Impact Ventures
