Yes, impact VC can be a sustainable and (let’s be clear) profitable investment
Emerged after the 2008 financial crisis, “Impact investments are investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return” (GIIN). Merging Impact Investing approach and Venture Capital potential , this is what we do into XAnge Impact funds, our Impact VC range of funds (Siparex group). Out of the investment, we are expecting a double benefit : a financial one, of course, and a significant impact on the society and the environment.
In 2015, the market of Impact Investing represented 15.2 billion USD and 7.551 impact investments[1]. And 19% of the investments outperformed the financial expectations last year (see graph).
A generational bias.
The fast-growing social entrepreneurship goes hand-in-hand with the development of impact investment. Some studies show that Millennials are more eager to invest their money in these types of social and environmental companies, that “make sense”. This trend is also coinciding the democratization of the practice of investing, which is becoming more accessible (crowdequity, etc.).
This being said, when becoming investors, Millennials will be more than likely shifting “from “traditional investments” to alternative investments such as private equity and angel or venture capital”. Basically, what it shows is that with our new generation, a “new kind of customer” is arriving, with a real commitment in investments. This Millenials-for-impact lobbying is apparently reaching out our fund ;)
S’FAIR is a pioneer on the French market with already 16 millions Euros invested and 17 companies supported.
Urgence means opportunities.
We adapted the UN’s Sustainable Development Goals (SDGs) to the French market and implemented them as a guideline for impact investments in tech companies. According to the Global Impact Investing Network last conference (Investor forum 2016), more than 89 trillion $ is needed to achieve the SDGs before 2030. We decided to do our part.
Inspired by the UN’s SDGs, we have targeted six “Great Causes”, urgent and powerful, that our impact VC funds focuses on, from Health & Dignity to Environmental stakes and Education.
Those causes are basically underpinning all of the investments we make, in order to help tackling some of the society’s main issues at stake, either environmental — today 80% of our arable land is used, and 15 % depleted[2] — or health issues — 900.000 deaths being caused by the environment[3], to name a few.
Along them, many new solutions have emerged, with a substantial number of them originating from tech startups. And the funds, after focusing on SMEs, have also become increasingly specialized in impact investing.
Example of 3 tech startups for impact.
S’FAIR is launching the very first funds dedicated to tech startups with impact in France. We marry sustainable development concerns and booming business models. Why so? Because no doubt that with the help of technologies, the impact has a multiplier effect! Some companies we accompanied in their growth are true icons of this philosophy of investment:
- La Ruche Qui dit Oui ! (Food Assembly, in English): through “assemblies”, the company enables people to buy food from local farmers. And that way, it realizes a triple objective: (1) the small farmers diversify their distribution channels ; (2) the persons handling the Food assemblies therefore find a way to have extra incomes — most often stay-at-home Moms and retirees, (3) the system promotes healthy and local food. The company, in which we invested back in 2012 with dozens of Food assemblies (“ruches”), is now present all around Western Europe and is still growing (hundreds of Food Assemblies).
-Amoéba produces a disruptive green biocide, in order to eliminate the bacteria risk in water, has a double impact: both on health — since it treats legionella and avoid legionnaire disease cases & on the environment — it prevents from discharging chlorine and other chemicals onto the water. The Lyon-based startup, which we accompanied since 2011, has even succeeded in realizing one of the most impressive stock listing introduction in July 2015!
-Arcure, a Paris area and Normandy based startup, dedicates its activities to the implementation of BLAXTAIR® technology. It is a video system detecting pedestrians on work sites and industrial sites, in order to prevent accidents — an urgent need given every 15 seconds, a worker dies from a work-related accident or disease in the world. For instance, in 2013 there were 541 deaths due to work-related accidents in France (only). The company we supported since 2014 is tackling this issue and now has half of its revenues earned abroad.
Things are changing, and this is exciting! That means there are many more tech entrepreneurs who engage themselves on this road, & more and more money to support them. In impact VC, the best is yet to come … and that’s why we are currently raising another fund (third one in Impact tech)and we are eager to connect with tech entrepreneurs with impact to meet these opportunities ;) !
Contact us !
Committed tech entrepreneurs with the same philosophy? => we are eager to meet you :)
[1] See The Annual Impact Investment Survey 2016, The GIIN, https://thegiin.org/knowledge/publication/annualsurvey2016
[2] Source: the French Agriculture Ministry.
[3] Source: Abbé Pierre foundation, 2014.
