Launching ImpactVC to unlock venture capital’s impact potential

Katapult Foundation is thrilled to be a founding funder and partner to Impact VC – a community of VCs accelerating impact within venture capital. Katapult Foundation is Katapult Group’s non profit foundation catalysing people, capital and technology for good. We are excited to work with the Big Society Capital team and other mission aligned organisations to build this community and upskill investors with impact and investing training which is very much aligned with Katapult Foundation’s focus on movement building, impact investing, tech for good and good tech, and field and ecosystem-building. We look forward to contributing to this important initiative. Sharing, learning and failing (and learning from this) with the Impact VC community. (Alison Fort & Evita Chiang Zanuso) 

ImpactVC is founded in the belief that venture-backed companies can make a huge difference for the people who need it most. 

Technology isn’t inherently good – but when used with the right intent, in the right context, and with the right business model incentives it can deliver transformative positive change in outcomes for people and planet.

We could tell many stories showing you how this is the case, but will limit ourselves to three: 

• Open Bionics develops smart prosthetics for limb different children and adults, using 3D printing technology to provide next generation functionality like pressure control such that people using its Hero Arm can hold an egg gently and then choose to crack it.

• Wagestream aims to deliver financial wellbeing for every frontline worker – through a suite of tools built around ‘earned wage access’ and including financial literacy, savings, and other products. Wagestream is now available to millions of workers and is making a significant and measurable difference to their lives.

• CarbonCure manufactures technology that introduces recycled carbon dioxide into fresh concrete to reduce its carbon footprint without compromising performance.

These companies are making a real difference – and clearly illustrate what we mean by ‘impact’. Through the work we are doing, we aim to see many more companies pioneering this sort of impact.

While we’re on definitions: we see ‘impact’ and ‘ESG’ as different but complementary things. For us, ESG is more about how companies operate, whereas impact is what they do – the positive difference they make through the products and services they provide. Our focus at ImpactVC is on the latter. 

Momentum is building behind impact in venture

Venture firms are increasingly interested in investing for impact. Dealroom estimate that capital deployed to UK startups aligned to the Sustainable Development Goals grew 7x between 2017 and 2021. And at fund level, between 2018 and 2020, we saw a 10x increase in the number of venture firms with an impact lens approaching us at Big Society Capital (BSC) for investment per year.

This trend includes established top tier VCs. Niklas Zennstrom of Atomico has said his firm is “guided by a simple belief: profit and purpose are mutually reinforcing, not mutually exclusive”. Rana Yared at Balderton has spoken of the importance of “supporting this new generation of impact companies… [who have] dual missions to have a positive effect on the world, while being self-sustaining businesses.”

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. 80% of tech company employees think social impact is important when choosing a job. More than half of consumers buy from brands based on their values – a figure that rises to nearly 90% for Gen Z consumers. Two-thirds of investors in venture funds say they prefer impact funds. 

Taken together, we believe these datapoints – and our experience as investors in impactful venture funds – shows that being impact-driven can help startups drive competitive advantages with talent, customers and investors. In short, impact makes good business sense. And one that, we think, will only become more prominent in the ‘decade of purpose’ ahead.

We think this adds up to a significant shift: more venture firms interested in impact, more capital flowing to impact, top industry players speaking in impact terms, and fundamental drivers propelling this trend further forward. This opens a window of opportunity – in which we can act to accelerate the shift towards impact, and shape the trend towards meaningful impact.

However, there is a missing part that we need in order to unlock the real impact potential here.

Missing piece 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. 

Currently, impact resources have been developed without VCs in mind – often being tailored for later stage investment or other asset classes. VCs with impact expertise have made their own tools, but those have often been built in isolation. And generalist VCs interested in impact have struggled to know where to access quality resources.

We are missing practical impact resources tailored to early stage venture capital. We are missing a community of peers for VCs to test and learn about impact alongside. And we are missing high quality resources for those VCs newer to impact. These are the pain points that ImpactVC is seeking to address.

Enter ImpactVC – unlocking venture capital’s impact potential

ImpactVC is a community of VCs accelerating impact within venture.

ImpactVC is founded in the belief that 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.

Our purpose is to build community and resources to unlock the impact opportunity for venture capital. 

In practice this means we do two big things:

• Build a community of leaders within venture capital. There are nearly 200 VCs in the community so far, including both VCs experienced in impact and top tier mainstream VCs who are newer to impact. This community will learn together, share insights, and foster collaboration to accelerate impact within venture capital.

• Co-develop a suite of open-source tools and products that help venture firms invest effectively for impact. We’ve launched our first playbook to help VCs source, select and support the most exciting impact startups and maximise their potential. Get access to the VC Impact Playbook.

ImpactVC is currently being incubated within Big Society Capital (BSC), the UK’s leading investor in impact venture funds – building on its learning over the last decade – but over time it is designed to spin out to be led by the community in the UK, Europe, and beyond.

ImpactVC is supported through sponsorship from BMW Foundation Herbert Quandt, NCM Fund Services, Taylor Vinters, Vauban, Katapult Foundation, Morgan Lewis, and Amazon Web Services. These sponsors bring a range of interests in impact and venture, including continuing efforts to support social good, a track record of investment in funds and a desire to gain and share insights from other members of the community. We’re delighted to be working with them to accelerate ImpactVC’s journey.

Expect events, resources, knowledge sharing and more in the months and years ahead as together we unlock venture capital’s ability to solve the world’s most pressing challenges.

We welcome VCs with an interest in impact to join the community. Sign up on our website and we’ll be in touch.