As global interest in sustainable investing continues to rise, so too does the need for data surrounding investors and companies that aim to be environmentally and socially responsible. Certainly, this investing trend—often referred to as ‘impact investing’—has garnered its share of interest, but a lack of clarity about who is making such investments and which companies count as ‘impactful’ remains a challenge for the space. This post sheds light on this expanding asset class, explains how we at PitchBook identify impact funds
and highlights five companies that have received investment from impact funds that are poised to make a big difference in the world.
What is impact investing?
Impact investing is a strategy that seeks to create financial returns, in addition to positive social or environmental effects. These investments are most commonly made through the familiar structure of closed-end venture capital and private equity funds. In 2017 alone, VC and PE impact funds secured approximately $4.25 billion in commitments globally.
Unlike socially responsible investing, which is predominately used with public market securities, impact investing is a private market investment strategy that actively targets investment in social enterprises or impact funds. Social enterprises are companies that are both financially stable and create positive externalities through the goods and services they offer, the populations they serve, the jobs they create or a combination of these factors. Because of the subjectivity of “impact,” investors actively track outcomes with unique metrics that correspond to their specific goals and often require their portfolio companies to do the same.
Impact at the fund level
Funds are specifically identified as “impact funds” if they aim to gain financial returns, intentionally create positive social or environmental impact and actively measure impact (or self-identify as an impact fund). We highlight fund location and investment focus to shed light on where impact capital is concentrated and examine common strategies employed by impact investors.
The PitchBook platform tracks data on over 702 impact funds that are managed by both impact-focused firms and mainstream firms overseeing discrete, dedicated impact funds.
Five companies making a real impact
The following five companies are backed by impact funds tracked in the PitchBook platform—and are poised to make a big difference in the world. Take a look!
Lekela Power is a Pan-African renewable power generation company delivering utility-scale projects that supply much-needed clean energy to communities across the continent. The company’s current portfolio includes more than 1,300 megawatts across projects in Egypt, Ghana, South Africa and Senegal.
Check out the Lekela Power profile preview
on PitchBook to learn more.
Provider of an online recruitment platform intended to make the recruitment process more effective, accurate and unbiased. Pymetrics applies proven neuroscience games and cutting-edge AI to reinvent the way companies attract, select, and retain talent.
Explore the Pymetrics company profile
to learn more about how they’re modernizing the hiring process.
Provider of a digital secured lending platform designed for lending, investment and financing at lower interest rates. The company's platform provides Brazilian consumer loans at affordable rates by using borrower collateral like homes and automobiles from investors or through partnerships with other, traditional financial institutions, offering borrowers with funds for one-fourth of what they pay to domestic lenders.
Check out the Creditas profile preview
to see investor and valuation history data.
Digital investment platform designed to help women take control of their investments. The company's digital financial advisory platform uses a proprietary algorithm that incorporates women's unique salary trajectory and assets and recommends goal-specific portfolios, target amounts, and savings for a completely customized investment plan, enabling female investors to prioritize their financial goals and optimize market returns.
Check out the Ellevest profile preview
to learn more.
Provider of financing services intended to make it easy and affordable to finance energy, water and other vital improvements. The company's services are long term and authorize municipalities to work with private capital providers to provide financing to commercial property owners for qualifying improvement projects, enabling clients to increase their value and decrease environmental impact.
Check out CleanFund’s profile preview
to see cap table information, the company’s latest financing and more.