Delivering on Venture Capital’s Potential for Positive Impact

Douglas Sloan, Managing Director of Impact Venture, Better Society Capital

I’m delighted to be participating as a judge in this year’s BVCA Excellence in Impact awards and look forward to reading about the ways in which VC and PE firms in the UK are using investment to improve lives and protect the planet.

This is a topic close to my heart and closely links to my work at Better Society Capital (BSC) and ImpactVC. At BSC, we are working to channel more capital to tackling social issues and inequalities in the UK – and see early-stage investment in innovative technology solutions as a key way to do that. At ImpactVC, we aim to unlock the impact potential of venture capital globally to address the most pressing challenges facing both people and planet.

Growing Momentum For Impact

I believe the most important companies of the next decade will be solving the world’s most pressing challenges and that venture capital has a huge role to play in nurturing and scaling those companies effectively.

This belief is shared by others: the ImpactVC community has grown to more than 800 VCs from more than 600 firms in little over a year and venture firms are increasingly interested in investing for impact. Dealflow stats at startup level show capital flowing to impact companies growing by many multiples in recent years. At fund level over a similar timeframe, we saw a 10x increase in the number of venture firms with an impact lens seeking to raise capital from us at BSC.

So why the interest? We believe there are compelling fundamental drivers that position impact as a growth area for venture capital as people increasingly make choices about where they work, spend, and invest with reference to their values. We think these dynamics mean being impact-driven can help startups drive competitive advantages with talent, customers and investors. In short, impact makes good business sense.

Therefore, we think this trend will only become more prominent in the ‘decade of purpose’ ahead.

Taking Impact To The Next Level

However, there are missing pieces of the puzzle: to unlock venture capital’s ability to solve the world’s most pressing challenges, the ecosystem needs better resources on how to effectively ‘do impact’ as a VC and better connectivity among peers to discuss and develop best practices.

These are the gaps we are seeking to address through ImpactVC – bringing together hundreds of VCs at different stages in their engagement with impact on regular basis online and in-person, and together with these VCs co-developing Impact Playbooks for VCs and for Founders.

To go to the next level, we believe we need to do more.

Firstly, we need further examples of great firms pushing the boundaries on impact in venture and building high-performing impact companies addressing the challenges we face at truly transformative scale. I hope to read of entries blazing a trail in this way for the BVCA Excellence in Impact Awards and to be able to amplify the stories and insights in the winning entries for the wider ecosystem to learn from.

Secondly, we need more training for venture capital investors in how to ‘do impact’ in practice in a way that drives value and is proportionate to early stage investing. At ImpactVC, we are delighted to be partnering with the BVCA on an Impact Investment training course this year to do just that.

Finally, we need to continue to broaden the community and deepen collaboration among those in venture capital who are interested in impact. We aim to do this through the ImpactVC community itself and also through work with institutions like the Impact Investing Institute, the City of London Corporation, and the BVCA with whom we are pushing forward the impact agenda through a series of events and wider collaboration this year.

Together we can deliver on the impact potential of venture capital – please do reach out if you’d like to be a part of that journey.

Please contact [email protected] to learn more about BSC’s investment programme in venture, ImpactVC’s work building the community and resources needed to unlock venture capital’s impact potential or the upcoming training and coaching programmes we are running for VCs.
 

Authored by Douglas Sloan
Managing Director of Impact Venture, Better Society Capital