Impact investing has received increased attention over the past year, with the world’s largest asset manager Blackrock recently predicting that the global market for ESG funds (funds managed in accordance with certain ethical, social and governance standards) will grow from $25 billion today to more than $400 billion by 2028. Whilst the UK’s early-stage impact investment scene remains minor in scale, it has experienced fair growth since 2015. It should be remembered that the early-stage funding landscape in the UK as a whole has also grown rapidly in this time, so it would be hard to argue that impact investing is growing faster than the rest of the market. However, some dedicated investors are working hard with their client’s money to try and make a difference. In this post, we highlight the UK’s top social impact investors.
the UK’s top social impact investors
Nesta Impact Investing
Nesta is an interesting not-for-profit which describes itself as an “innovation foundation”. They work “in areas where there are big challenges to society”, helping to develop new technologies or policies that can prepare society for these challenges. Nesta Impact Investments is their investment arm, providing financial, knowledge and network capital to innovative enterprises that are changing the world for good. Nesta has two investment programs – Nesta Impact Ventures (NIV) and Arts and Culture Finance (ACF). Nesta previously managed a £17.6m impact investment fund through which they invested in companies that could provide solutions to issues being faced by old people, young people and disadvantaged communities. Investments from this fund include FutureGov, Cogbooks, Third Space Learning and Sumdog.
Nesta has been active for almost two decades, making over 200 direct investments since the early 2000s. Whilst the investment strategy has evolved to now focus purely upon impact investments, many of Nesta’s previous technology investments continue to thrive, including Featurespace (AI for fraud detection), Symetrica (highly accurate radiation detection) and Cellcentric (cancer therapeutics). During this time, Nesta has also made hundreds of grants to start-ups seeking to improve the current state of play in their given sectors, typically public service related.
More recently, NIV’s strategy is focussed on making initial investments in Seed or Series A rounds between £500k and £1m in companies operating within three of Nesta’s 6 priority themes of interest; education, health and government innovation. Other historical investments include Bethnal Green Ventures, an accelerator for socially impactful start-ups, and The Behavioural Insights Team, sometimes known as The Nudge Unit, which transfers insights from behavioural economics into government policy.
Managed by the impact investment bank ClearlySo, ClearlySo Angels (CSA) is the UK’s leading group of high-net-worth individuals and families focused on creating social and environmental impact alongside financial return.
Their investments span clean energy startups such as Bulb Energy and Upside Energy, digital health platforms Ieso and Elemental, agri-tech company LettUs Grow, and ed-tech platform Third Space Learning. One particularly interesting investment was Ichthion, which develops disruptive technologies to remove plastics and synthetic waste from rivers and oceans.
No exits have been publicly announced as of yet, but since inception CSA has invested in 95 transactions.
Mustard Seed Impact has developed its own impact investing strategy, which it calls “Lock Step” Venturing. Similar to the above, they’ve also invested in what3words and Switchee. Other investments reveal a strategy designed to tackle food waste, with investments such as Winnow and OLIO. Other interesting ventures include Mush, a social platform for mums which could tackle maternal loneliness, and Beulah, a jewellery brand which employs vulnerable and trafficked women to make its products.
Mustard Seed has publicly announced 19 investments since its inception in 2015. None are yet to exit, but we are still well within the short-term exit cycle horizon.
Impact Ventures UK
Impact Ventures UK is the UK offshoot of LGT Venture Philanthropy. This is in turn the venture philanthropy arm of LGT, the world’s largest family owned private banking and asset management firm. LGT stands for the Liechtenstein Global Trust, and it is owned by the Princely House of Liechtenstein. It’s currently led by CEO Prince Maximilien of Liechtenstein, the son of the microstate’s monarch.
The fund has taken part in 12 announced funding rounds in the UK since 2014. Most recently they invested in Elvie, the femtech startup featured in our recent list of the UK’s top wearable startups. They recently exited on their investment in Unforgettable, en e-commerce site featuring products tailored to those with dementia.
Sustainable Accelerator is focussed almost entirely on the twin issues of climate change and resource scarcity. The managing team is led by Andrew Wordsworth, an ex-Bain consultant who founded the first startup to exit after raising equity finance via crowdfunding – E-Car Club, which was acquired by Europcar in 2015.
11 public investments have been made since the first in 2017, meaning this fund is still in the first movements of the investment cycle. These have been spread across a range of companies operating in the circular economy and clean technology spaces. These include DryGro, which is developing technology that allows crops to be grown in desert environments, Petit Pli, which develops baby clothes that expand in size with the baby’s growth, and Negawatt, which provides energy efficiency products to the student accommodation sector.
Perhaps their most interesting investment has been in Food Clubs, sort of a blend between an online retailer and community forum. Food Club’s platform encourages neighbours to form “clubs”, through which they can buy ethical products in bulk and as such benefit from wholesale prices.
Triple Point Impact EIS
Founded in 2004, Triple Point manages over £1.5b of private, institutional and public capital. The organisation manages many funds across four themes: property, debt, infrastructure and venture capital. The Impact EIS fund falls under the venture capital arm, supporting UK companies with the capacity to generate significant capital growth, as well as a measurable and positive contribution to society. As its name suggests, this fund invests exclusively in EIS-qualifying companies.
Although the fund has no formal sector restriction, it focuses on companies operating in the areas of environment, healthcare, children and young people, and inequality.
The fund deployed its first round of capital in 2018 with a growth-stage investment into MWS Technology, a company that combines tools for job-seekers on its online platform, Aptem. Since then, we’ve tracked four further investments by the fund, with Kafoodle, Nature metrics, GripAble and We Are Digital joining their portfolio. The fund’s exit horizon is between four and seven years, so it will be some time yet before we see how successful these investments are.
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