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Impact Investment Firms
In recent years, there has been a surge in interest in impact investing, driven in part by a growing awareness of social and environmental issues, as well as the increasing number of companies and organizations that are committed to creating a positive impact.
Key Takeaways
- Impact investing uses capital or money for good socially, environmentally, or otherwise
- Majority of investors who take on impact investing also look for market-rate returns
- Impact investing has gained traction in healthcare, education, renewable energy, affordable housing, and sustainable agriculture
- There are still challenges to overcome such as the lack of standardization and transparency in impact measurement
Disclaimers
The contents of this article are for educational purposes only. They are not intended to be a source of professional financial advice. You will find experts on financial planning and financial management here. More on disclaimers here.
What is Impact Investing?
Impact investing is a strategy that aims to create positive and beneficial social or environmental changes in addition to financial performance. The whole point of impact investing is to use capital or money for good socially or environmentally. This way, the negative effects caused by businesses and their activities can be reduced to a certain extent.
A good example of impact investing is when an individual or company invests in conservation of natural resources, a fund seeks to reduce private debt, or a food program for children in needy schools because they believe that this type of investment will cause a positive social impact in society. At times, impact investing is considered an act of philanthropy.
Types of Impact Investments
Impact investing takes on many forms and it provides investors with different possibilities and opportunities when it comes to the returns generated.
According to research done by the Global Impact Investing Network (GIIN), a majority of investors who take on impact investing are also looking for market-rate returns. And the industries where impact investors focus on includes Sustainable Agriculture, Education, Energy (especially Clean and Renewable Energy) and ESG.
If you're seeking to partner with a firm that focuses on impact investments, get on board with Bay Street Capital Holdings to guide you on your socially and environmentally responsible journey.
Top 10 Impact Investing Firms
Vital Capital Fund
Vital Capital Fund manages approximately $350 million in assets and is a private equity firm investing in several impact areas. The firm uses its expertise in operations to identify overlooked opportunities and invest in them in order to enhance and transform the quality of life of communities living in, primarily developing nations mostly in sub-Saharan Africa. While doing this, they also ensure that the investors get high returns on their investment.
Over the years, the private equity firm focused on the development of housing projects, development of infrastructure, renewable energy, education and health care. Among the fund's investments are the Luanda Medical Center in Angola and WaterHealth International.
Triodos Investment Management
Triodos Investment Management is an impact investment management firm and wholly-owned subsidiary of Triodos Bank. The firm has been actively involved in impact investments for more than 25 years. Located in Zeist, Netherlands. Their main aim is to invest in projects that create a positive social or environmental impact, in addition to recording a healthy financial performance.
The firm manages a number of sustainable investments and it has about $5 billion in assets. Their primary areas of focus when it comes to impact investing include renewable energy, sustainable food and agriculture (including organic farming), health care, and education.
Triodos is one of the founding members of the Global Impact Investing Network. The firm's investments are spread throughout Europe, South America, Africa, India, and Southeast Asia.
Gates Foundation (Bill & Melinda Gates Foundation)
The Gates Foundation was founded by Windows pioneers, Bill and Melinda Gates. Driven by the belief that all lives have equal value, they transferred $20 billion of Microsoft stock to their foundation in order to take on some of the toughest and most important global challenges. Among the problems that they address include gender equality, global development, global growth and opportunity, global health, global policy and advocacy and U.S program.
While the foundation is mostly involved in philanthropic work, it also has a strategic investment fund with $2.5 billion under management, which is invested in ventures that align with the foundation's goals of improving health, education, and gender equality. The strategic investment fund supports organizations or projects that benefit the world's poorest and low income investment fund having been overlooked by traditional investors.
Soros Economic Development Fund
The Soros Economic Development Fund (SEDF) is a New York-based investment firm that is part of the Open Society Foundations. It was founded in 1997 by billionaire philanthropist George Soros. In total, Soros has contributed approximately $18 billion to the Open Society Foundation. Among the $18 billion contribution, $90 million has been actively invested in impact ventures.
The foundation seeks to open societies by promoting democracy, legal reforms, higher education, and journalism, as well as other fields. The foundation has made investments in the following fields financial services, agribusiness and logistics sectors and makes program-related investments in frontier markets. Among the causes that the foundation fights for include democratic practice, economic equity and justice, health and rights among many others. The foundation has additional offices in London, Johannesburg and Freetown.
The Ford Foundation
The Ford Foundation was founded in 1936 by Edsel and Henry Ford. Initially, it was funded by a $25,000 endowment from Edsel Ford. Today it has among the world's largest private endowments with about 14 billion under their management.
The foundation has a strong belief in the inherent dignity of all people. Through its headquarters and ten international offices, the Ford Foundation gives out grants to support causes that align with the foundation's values. Among the causes that they support include social justice, diversity, equity and disability inclusion among others.
BlueOrchard Finance S.A.
BlueOrchard is among the leading companies in the impact investment management space. It has its principal office in Switzerland and operates in more than 80 emerging and frontier markets around the world, including areas in Asia, Latin America, Africa, and Eastern Europe.
The company was established in 2001 by initiative of the UN as the first commercial manager of microfinance debt investments worldwide. Their mission is to generate a long-lasting positive impact for communities and the environment while still giving back attractive returns to their investors. From then onwards, the company has evolved into a leading global impact investment manager, connecting millions of entrepreneurs in frontier and emerging markets with investors.
To date, the company has invested over $8 billion across 90+ countries. As of June 2021, 223 million people with low income in emerging and frontier markets received access to financial and related services with the support of BlueOrchard.
Community Reinvestment Fund, USA
Community Reinvestment Fund, USA was established in 1988 as a national non-profit certified community development financial institution. The institution works to address social and economic inequity through new financial solutions that help empower people, build sustainable communities and inspire systemic change. So far they have facilitated more than $2.4 billion in loans, impact investments and bonds to economically transform challenged neighborhoods into communities that thrive.
The Community Reinvestment Fund partners with local private lenders to provide financing capital for community development projects. These include small business loans for the purpose of growing a business, expanding staff or increasing energy efficiency. With more than $250 million in assets, along with access to additional long-term loan capital through the Community Development Financial Institution Bond Guarantee Program, the Community Reinvestment Fund also provides funding assistance for community housing projects, health care centers, charter schools, daycare centers, and small businesses.
Fresh Ventures
Fresh Ventures is a venture-building program and startup studio based in the Netherlands, that launched in 2021 to work alongside founders to address the world’s most pressing problems through scalable impact ventures. They co-found companies with experienced professionals and entrepreneurs to address systemic challenges in the food system.
The goal of the program is to help founders understand and get validated solutions to challenges in the food system from a systemic point of view.
Good Fashion Fund
The Good Fashion Fund is an initiative that was created with an aim of creating systemic change within the textile and apparel industry as the fashion industry supply chain creates negative environmental and social impact. Although there were ready solutions to these challenges, the fund's main contribution was to address the only problem of lack of capital to scale technologies within the various supply chains.
The Good Fashion Fund works by financing the implementation of highly impactful and disruptive production technologies in Asia. The fund targets long-term USD debt investments in textile & apparel manufacturers in India, Vietnam & Bangladesh.
Obvious Ventures
Obvious Ventures is a company that was founded with the belief that the largest companies in our time will make use of technologies to solve systemic problems in a profitable and scalable way. The fund offers support to entrepreneurs who are building such disruptive solutions. The funds issued to the entrepreneurs are meant to create positive social impact, transform capitalism while delivering great financial returns.
Capital Impact Partners
Impact Partners are part of a financial movement driving change and investing in an equitable future by eliminating racial disparities and uplifting community-led solutions that enable economic mobility and wealth creation for everyone.
Impact Partners work together with communities to create programs that address the needs of the people they partner with. The firm is now part of the Momentus Capital family of organizations.
Advance Global Capital Inc.
Advance Global Capital is a worldwide impact investment management firm that holds the belief that private capital, when invested prudently, can bring about positive change. Through collaborating with local financing partners, we ensure equitable access to capital for small businesses in marginalized communities around the world, empowering them with the credit necessary to develop and expand their operations.
The Way Forward
Impact investing has gained the interest of traditional investment firms with a venture capital firm. And it has gained traction in a wide range of emerging markets, including healthcare, education, renewable energy, affordable housing, and sustainable agriculture.
The growth of impact investing has also led to the development of new financial products and services, such as green bonds and social impact bonds, which enable investors to target specific social or environmental outcomes.
While impact investing has made significant progress, there are still challenges to overcome, such as the lack of standardization and transparency in impact measurement, which can make it difficult to assess the actual impact of impact investments.
Nonetheless, the momentum behind impact investing is encouraging, and it is likely that impact investing will continue to grow and evolve as investors increasingly seek to align their financial goals with their values.
As a HNWI, if you are in search of impact investment firms to partner with, look to the expert team at Bay Street Capital Holdings to guide you on your socially and environmentally responsible journey.
Bay Street Capital Holdings
Headquartered in Palo Alto, CA, Bay Street Capital Holdings is an independent investment advisory, wealth management, and financial planning firm that prioritizes managing total risk and volatility in order to maintain and increase total assets and income. While other advisors may focus solely on maximizing returns, Bay Street places a higher priority on managing risk.
The firm was founded by William Huston, who previously supported the United States' largest retirement plan Thrift Savings Plan for 13 years, and was recognized as Investopedia’s Top 100 Financial Advisors in 2021. In addition to its dedication to risk management, Bay Street was also founded to advocate for diverse and emerging fund managers and entrepreneurs.
In Scottsdale, Arizona, Ekenna Anya-Gafu CFP, AAMS has been recognized as one of the Best Financial Advisors for his responsiveness, friendliness, helpfulness, and attention to detail, further cementing Bay Street's commitment to exceptional service. The firm was recently named a finalist in the Asset Manager for Corporate Social Responsibility category, competing against over 900 firms across the US.
Sources
https://vital-capital.com/about-us/
https://www.triodos-im.com/about-us
https://www.gatesfoundation.org/about/our-story
https://www.opensocietyfoundations.org/who-we-are
https://www.fordfoundation.org/about/about-ford/mission/
https://www.blueorchard.com/company/
https://freshventures.eu/#about
https://www.capitalimpact.org/
https://thegiin.org/research/publication/impact-investing-market-size-2022/
