An In-Depth Look at Alumni Ventures’ Impact Fund

Could you summarize the thesis of Alumni Ventures’ Impact Fund?

The Impact Fund will offer a portfolio of companies developing impactful Environmental, Social, and Governance (ESG) or anti-bias solutions, and/or led by people that are typically underrepresented in venture capital. That includes women, people of color, and members of the LGBTQ+ community — folks who aren’t typically represented as material members of a cap table. Examples of investments could range from a women-led investing platform built specifically for women, to an online service helping first-generation immigrants apply for U.S. citizenship. We also target entrepreneurs with strong conviction who are interested in spurring long-term, positive social changes, which are often reflected in their products, services, and values.

The fund will invest in ~20-30 of these kinds of deals, which will be further diversified by industry, stage, geography, and lead investor. Diversification is a crucial element of any investing strategy as it seeks to maximize return while mitigating risk. The fund maintains ~20-25% reserves for follow-on investments in companies that are achieving break-out success, and who raise downstream rounds. 

Is there value to investing through a “social impact” lens?

Venture is about finding the disruptors, and they are often found when investing outside the mainstream venture verticals. Founders who lead impact companies often overcome enormous personal challenges to defy the odds. Their clarity of purpose and tenacity helps build great businesses, and other established investors agree. 

Alumni Ventures has made two co-investments with The Rise Fund: Persefoni, which helps organizations measure and report on their carbon footprint; and WorldCover, which provides crop insurance for smallholder farmers in Africa and around the world. Our Impact Fund will seize upon these types of opportunities: pursuing outsized returns by investing alongside established VCs while supporting inclusive companies driving positive social change. Again, doing well and doing good.

What are some of the qualities that make for an attractive Impact Fund investment?

When it comes to the leadership team, we like to see deeply embedded conviction behind the business’s offering, and ideally past leadership experience — whether success or failure. We also like to see market challenges being solved from unique or underrepresented perspectives — a place where Impact Fund portfolio companies can excel. Beyond these qualities, we apply our conventional diligence metrics around the company’s business model, its monetization path, scalability and upside potential, how mission-critical is the solution, capital frugality, can the team scale with the business, the lead investor’s conviction and commitment to the company, etc., to determine the business’ potential.

How will Alumni Ventures oversee this fund?

As with every Alumni Ventures fund, all deals added to our Impact Fund portfolio must first pass our disciplined due diligence process. Companies will be graded with our proprietary scorecards and receive three rounds of scrutiny from seasoned investment professionals. This process will ensure we build a portfolio of high-potential deals while upholding the core investment thesis of the fund.

Our Focused Funds team leads deal sourcing, vetting, and investing efforts under the direction of Managing Partner Lacey Farrell Johnson (Boston) and Principal Jonathan Mo (New York). Lacey has held several key investing roles during her time at Alumni Ventures and previously worked at J.P. Morgan, Goldman Sachs, and CareGroup Investment Office. Before joining our firm, Jonathan performed diligence in many verticals during his time at 11.2 Capital, Avery Dennison Ventures, and Silicon Valley Bank.

Additionally, we leverage the deal flow sourced by our more than 50 in-house investing professionals, geographically dispersed across six U.S. offices, all in key venture hubs. Every member of our team brings unique experience and a broad network of entrepreneurs, industry experts, and fellow VCs to our deal sourcing pipeline.

From among all the deals that Alumni Ventures will invest in during the upcoming year, we will select ~20-30 investments that fulfill our Impact Fund thesis. Each selection will also meet our internal guidelines for diversification across sector, stage, region, lead investor, and geography. In other words, an investor in the Impact Fund will own a diversified portfolio of companies, though exclusively developing ESG and anti-bias solutions and/or led by a diverse founding team.

Do Alumni Ventures’ own diversification efforts play into these deals?

Ensuring we fund entrepreneurial teams who represent every background, race, and sexual orientation is one of Alumni Ventures’ key north stars. We believe our initiative to invest in traditionally underrepresented entrepreneurs and their visions has only helped to establish Alumni Ventures as one of the most active VCs in the industry. When it comes to our record in organic diversity, we outpace other venture firms. 

What’s one of Alumni Ventures’ previous successful impact deals?

A good example is OpenInvest, a startup that empowers its customers to assemble investment portfolios centered around specific values and causes, such as climate change or LGBTQ+ rights. We originally invested in the company’s $10.4 million Series A in 2018. Three years later, and after OpenInvest had raised over $24.3 million in five funding rounds, the company was acquired by JP Morgan.¹ OpenInvest only serves to illustrate how our investment teams source deals with solid business fundamentals and promising economic upside, while delivering valuable social impact. 

To learn more about adding impact investments to your portfolio, we invite you to check out our fund materials or reach out to our team.

¹To see the performance of each exited investment for all Alumni Ventures funds over the last twelve months and our historical performance since 2014, click here.