3 Game-Changing Impact Investment Firms

By Kenny Kline

Impact investing, though still relatively new, is an exciting and profitable way to enter the business of sustainability. For those not in the know, a recent report done by Cambridge Associates defines impact investments as “investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return.”

As many individuals struggle to balance profit and responsibility when it comes to investment, impact investment firms remain at the forefront, innovating ways to advance economically with due respect to the environment and those within it.

With that in mind, here are three impact investment firms that I believe stand as strong examples of how profitable enterprise can be merged successfully with social good.

Vital Capital Fund

Vital Capital is a $350 million dollar private equity fund based in Western Europe. The firm mostly works in sub-Saharan Africa, investing in communities while delivering significant returns to investors. Vital wants to show that impact investment is not a matter of compromise: you can make very real positive changes to lives of local populations while still generating appealing and risk-adjusted returns for its investors. In other words, doing good can be profitable.

Vital works in high-demand areas like energy, education, housing, small business, agriculture, and water. In this way, the firm tries to address the foundational elements in creating healthy communities in both rural and urban contexts.

Recently, the company exited two investments in Angola successfully: an electricity transmission project and a water accessibility project. Both were finished within budget and time parameters, and the projects saw an internal rate of return of 24 percent.

Community Reinvestment Fund

With over $250 million dollars in assets and projects in 47 states, this Minneapolis-based firm is developing impressive momentum in the impact investment world. The Community Reinvestment Fund (CRF) works with local lenders to offer capital for projects aimed at community development. While focusing on small business loans (with an emphasis on stimulating business growth, improving energy efficiency, and on-boarding staff), CRF also invests in other community institutions like schools, community facilities, day care centers, and housing projects.

In 2015, CRF was chosen by Goldman Sachs’ foundation for a long-term, low interest loan of $5 million to be used for small business loans around the country. The loans are directed at businesses with over two years of experience, and will seek to serve minority-owned businesses in lower-income neighborhoods.

Gray Ghost Ventures

Gray Ghost is headquartered in the USA and Canada. It offers capital solutions to entrepreneurs working in emerging markets in disadvantaged communities—mostly in Africa and South Asia. The company has invested over $100 million in various social initiatives, with a strong emphasis on empowerment through technology.

Gray Ghost’s upcoming investments will focus exclusively on businesses that use mobile technologies to deliver products and services, reflecting the wider, public fascination with mobile solutions, from package delivery to home security. Although the firm has about 400 companies in its pipeline, it only invests in about three or four per year—this allows Gray Ghost to give higher quality attention to its portfolio.

 

As the impact investment space continues to grow, companies like these and others represent strong roadmaps for those following in their footsteps, as well as proof of concept that firms can both be profitable and concerned with social good.

Kenny Kline is a serial entrepreneur. His ventures are primarily focused on media and digital marketing. When not in front of his computer, he can be found beekeeping, knitting, and being as Brooklyn as humanly possible.

Image credit: skys the limit 2, Flickr CC