How Private Capital creates 'impact’
It’s a real pleasure to be a judge for this year’s BVCA ‘Excellence in Impact’ awards. At the Impact Investing Institute, we act as a bridge between capital markets and new economic ideas. Private markets remain one of the most effective tools to connect capital with impact. This is particularly true considering the urgent need to mobilise capital for two of the largest challenges facing society today: a fair and inclusive transition to a Net Zero economy that goes beyond a singular focus on reducing carbon emissions and addressing local and regional inequalities in the UK.
While impact investing is not an approach exclusive to private markets, we have seen again and again how private equity and venture capital can deliver sustainable growth and economic innovation for communities across the UK. The Bridges Sustainable Growth Funds, for example, support SMEs through private equity, debt, and business support as well as residential and commercial real estate projects. To date, the funds have raised £321million and backed 41 businesses. Beyond the UK, LeapFrog’s Emerging Consumer Fund III, LP (2017) is a $743 million fund focusing on high quality financial services and healthcare businesses across Asia and Africa. The fund invests in businesses that provide quality, relevant and affordable products to the two billion (and rising) underserved consumers in emerging markets, living on less than $10 a day. By June 2021, the fund had reached 93 million people after four years, surpassing the 70 million target for the full life of the fund.
These are only two examples that show the power of private markets to unlock impact at scale and we are excited to see what submissions in the BVCA impact award bring forward. We are particularly keen to see how trends like impact-linked incentives as a powerful mechanism that aligns fund managers’ interests with impact creation, employee ownership, and blended finance leveraging both public and private sector resources, are reflected in the entrants.
Meaningful community engagement that ensures views and ideas by local residents are considered in the investment process is another exciting area within impact investing. Later in September, the Institute will publish a step-by-step guide for successful community engagement, which will help investors to deepen their impact investing approach or get started on their journey.
The ‘Excellence in Impact’ awards are an exciting opportunity to showcase and celebrate best practice in impact investing and inspire others to invest for the benefit of people and the planet.
Sarah Teacher
Executive Director of the Impact Investment Institute, and member of the BVCA Excellence in Impact 2023 Awards judging advisory panel
