How Venture Capital is Creating Meaningful Impact

We explore important impact trends and sample investments from our portfolio across established and emerging sectors

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Investors and consumers alike turn to diverse teams from a wide variety of backgrounds to address some of the largest problems facing society. Historically, diverse founding teams have earned a 3.26x median return — 30% higher than homogenous teams. And even amid the pandemic, the majority of environmental, social, and governance (ESG) focused funds outperformed the S&P 500 in early 2021.

These results are why established VC firms maintain dedicated ESG funds. According to Pitchbook, $286 billion in AUM has been deployed in VC impact funds as of Q4 2020. Just two examples: Bain Capital closed an $800 million fundraise for its Double Impact Fund last fall, while TPG Capital’s impact-focused The Rise Fund has grown to $12 billion AUM.

Alumni Ventures recently launched our third dedicated Impact Fund. However, AV has always invested in companies with a strong ESG and anti-bias appeal, as well as companies led by traditionally underrepresented groups in venture capital. Our portfolio contains multiple examples of promising companies that are ESG-focused and/or founded and led by women, people of color, and members of the LGBTQ+ community. We endeavor to work with founders who possess strong convictions and are dedicated to spurring long-term and positive social changes through their company’s products, services, and values.

Our pool of impact investments stems from Alumni Ventures’ network of ~50 experienced investment professionals and external community of more than 600,000 subscribers. We’ve identified a number of important trends and sample investments from our portfolio across both established and emerging sectors to highlight our ability to source promising impact opportunities.

Impact Fund Open Through Q1 2023

Our Impact Fund will invest in a diversified portfolio of ~20-30 companies addressing ESG (environmental, social, governance) opportunities, anti-bias solutions, and underrepresented groups. The fund will be invested over ~12-18 months with a large reserve (~20-25%) for follow-ons. Every investor becomes a member of the Impact Venture Club, with opportunities to invest in Syndications, learn, and network.

To learn more, click below to review fund materials or connect with a Senior Partner.

Addressing Climate Change

The effects of climate change are “widespread, rapid, and intensifying,” according to the latest report from the Intergovernmental Panel on Climate Change. Greenhouse gas emission from human activities has contributed to increasingly irreversible shifts in global climate. Startups are helping consumers and organizations transition to alternative and renewable energy sources. According to a PitchBook report, global investors in 2021 closed as many climate-focused funds as were raised during the previous five years combined. This increased activity indicates the belief among investors that climate tech companies will form an integral part of the overall economy.

Sample Climate Tech Investments From AV’s Portfolio

The following are past investments AV has made, but reflect the types of promising companies we aim to include in this year’s Impact Fund.

Arcadia has developed a clean energy tech platform that provides individuals and organizations access to solar power and greater transparency into their energy usage. Read More »

Nitricity is developing a system to produce carbon-free fertilizer using only air, water, and renewable electricity. Learn More »

ZeroAvia is creating a zero-emission solution for aviation through an innovative suite of electric powertrains powered by hydrogen fuel cells. Read More »

Mental Health and Addiction

VC investment in the digital health space is experiencing unprecedented momentum in the wake of the global pandemic. According to a report by RockHealth, $14.7 billion was committed to 372 U.S. digital health deals during the first half of 2021, with an average deployment of $39.6 million. Of that funding, 59% came from 48 large deals, each over $100 million. Next-generation medical device startups are helping drive this wave of investments, and there are strong social impacts for a good portion of these companies.

Sample Mental Health Investments From AV’s Portfolio

The following are past investments AV has made, but reflect the types of promising companies we aim to include in this year’s Impact Fund.

Pocket Naloxone has created an over-the-counter naloxone product, providing individuals and clinicians with a lifesaving antidote that reverses opioid overdoses. Learn More »

SonderMind is an online mental health platform connecting the three-sided marketplace of consumers, private practitioners (therapists), and partners/enterprises. Learn More »

Tempest offers virtual services to address alcohol use, misuse, and addiction, including an online sobriety school and aftercare program. Learn More »

Social Causes and Diversity Initiatives

Investing in diverse founding teams has strong potential to offer investors outsized returns. A 2018 survey by Morgan Stanley suggests that “multicultural and women-owned businesses could account for $6.8 trillion in gross receipts if they matched their percentage of the labor force and business revenues were equal to traditional firms.” The same survey puts the missed opportunity in the area of $4.4 trillion. The capitalization of these historically overlooked opportunities offers the potential of outsized returns.

Sample Social Impact Investments From AV’s Portfolio

The following are past investments AV has made, but reflect the types of promising companies we aim to include in this year’s Impact Fund.

Boundless provides U.S. immigrants with tools, information, and personalized support to navigate the naturalization process. Read More »

Hello Alice uses machine learning to provide personalized resources for small businesses, with a focus on supporting companies with diverse founding teams. Read More »

Serif is a digital community that connects LGBTQIA+ people through curated, virtual experiences on topics like parenting, work, and culture. Learn More »

ESG Fintechs

Increasingly, investors want their beliefs and values reflected in their investment portfolios. A growing number of founders are launching companies to help facilitate this type of impact investing. One report by S&P Market Intelligence noted that “many large investment funds with environmental, social and governance criteria outperformed the broader market” during 2020. Additionally, more founders are aiming to democratize financial services by developing platforms for the “unbanked or underbanked.” These fintechs are aiming to provide support services for the nearly 25% of U.S. adults who don’t have a checking or savings account and/or rely on alternative financial services to make ends meet.

Sample ESG Fintech Investments From AV’s Portfolio

The following are past investments AV has made, but reflect the types of promising companies we aim to include in this year’s Impact Fund.

OpenInvest provides users with custom ESG portfolios, reporting tools, and more, with a goal of making socially responsible investing more accessible. Read More »

SoLo Funds offers a peer-to-peer lending platform that allows members to access and supply non-predatory, short-term loans. Learn More »

True Link provides provides customizable debit cards and financial services for older adults, people with disabilities, and people recovering from addiction. Read More »

Positive Social Change Through Venture Capital

Alumni Ventures’ Impact Fund embodies our core values of leveraging venture capital to effect positive social change while creating value for our investors. Our past investments in innovators within the ESG space have proved the fund’s core thesis is a winning one. This point is perfectly captured in our whitepaper, The Diversity Gap and Opportunity in Venture Capital:

We believe that venture funds can invest for profit and make a positive impact by investing in underrepresented founders serving underrepresented consumers.

The Diversity Gap and Opportunity in Venture Capital
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Alumni Ventures identifies and sources deals with the possibility for positive change and profitable returns. Through our robust due diligence process and exclusive investor network, we offer investors what we deem are promising impact deals with the potential for strong upside and positive change for the world. For investors looking to invest in important causes with the potential for returns, Alumni Ventures’ Impact Fund offers a diversified array of impact investments.

Impact Fund Open Through Q1 2023

Our Impact Fund will invest in a diversified portfolio of ~20-30 companies addressing ESG (environmental, social, governance) opportunities, anti-bias solutions, and underrepresented groups. The fund will be invested over ~12-18 months with a large reserve (~20-25%) for follow-ons. Every investor becomes a member of the Impact Venture Club, with opportunities to invest in Syndications, learn, and network.

To learn more, click below to review fund materials or connect with a Senior Partner.

Contact [email protected] for additional information. To see additional risk factors and investment considerations, visit av-funds.com/disclosures.