2. Both share an interest in social and environmental outcomes
3. Both recognize good investments require more than just cash
4. Both have an appetite for collaboration
As far as converging interests around key sectors, according toGlobal Corporate Venturing (GCV) Analytics, health and energy were two of the top ten sectors for Corporate Venture Capital (CVC) deals in 2016. On the impact investing side, according to the Global Impact Investment Network’s (GIIN) Annual Impact Investor Survey, the largest sectors by asset allocation are those meeting basic needs, such as housing, energy, financial services, food and agriculture, and healthcare. Approximately 25% of respondents (of the survey) have plans to increase their proportional allocations to food and agriculture in 2017, as well as in the energy, education, and healthcare sectors.
In terms of the overall size of the market, over 200 GIIN survey respondents reported $114 billion impact investing assets currently under management. “In aggregate, 205 respondents invested $22.1 billion into nearly 8,000 impact investments in 2016 and plan to increase capital invested by 17% to $25.9 billion in 2017.”
Clearly, there are strategic opportunities for collaboration amongcorporate VCs and impact investors. The outlook is also brighter on the deal flow side.There are over 2,100 certifiedB Corps(for profit businesses which are run for the benefit of both shareholders AND stakeholders) from 50 countries which represent 130 different industries. These businesses are one potential source of ‘profit with purpose’ deal flow. Likewise, there is a growing number of intermediary organizations cropping up in different markets to help accelerate the investment readiness of social enterprises that seek both social and financial returns.
In Latin America and the Caribbean, for example, over 30 impact-focused accelerators and incubators have launched since 2010, and traditional incubators and accelerators are increasingly integrating an impact focus into their activities. For instance, this integration of impact into traditional acceleration activities is a key part of an effort underway in Brazil to catalyze the country’s nascent impact investing ecosystem, whereby at least 40 incubators and accelerators will be fortified with an impact focus. Led by the Instituto de Cidadania Empresarial (ICE), this ecosystem building project also entails channeling a larger volume of capital from diversified sources to the sector. Just a portion of the $350 billion on the balance sheets of publicly traded Brazilian firms could play a catalytic role here.
Positive Outcomes in Action
There are many forms that corporate venturing can take to generate positive social and/or environmental outcomes. For example, in Chile, corporate investors CODELCO (the Chilean National Copper Corporation) and Mitsui & Co. invested in the $50 million AURUS Fund, along with other multilateral, public and private investors, to finance innovation and environmentally-focused investments around the copper and mining industries. To date, AURUS has invested in environmentally-friendly technologies for scrap tire recycling, sensors for selective ore extraction, and the use of antimicrobial copper in off-shore fish farming systems and in textile fibers. Another example is the French multinational electric utility company ENGIE’s corporate impact venture fund, ENGIE Rassembleurs d’Energies, which invests in profitable, local enterprises providing B to C, sustainable and relevant energy access solutions to poor and remote populations in Africa, Latin America, Asia and Europe. In April 2016, ENGIE reinforced its fund, raising its endowment from €10 million to €50 million.
In sum, many corporate venturing teams realize that change is happening and they are seeking ways to invest, innovate, and collaborate with others who similarly believe that it is possible to move beyond the binary to create both profit and purpose. With the resources these corporations have available – both financial and non-financial assets that they can bring to partnerships – let’s set a big table. There are many opportunities in the world today to create positive outcomes together.