How ClearlySo, the Social Stock Exchange, the SyndicateRoom and the Low Carbon Innovation Fund are innovating to make an impact
London-based impact investment bank ClearlySo has developed ATLAS, an online impact compass based on the SDGs that allows private equity firms and venture capitalists to map the environmental and social impacts of their investments and make better-informed decisions. It also provides insight into improving long-term returns.
ATLAS’s methodology uses a series of questions to assess whether or not a company is aligning with the SDGs and sustainability macro-trends. ATLAS aims to give investors a holistic view of a company, looking at what it actually does rather than just how it operates.
“We use the SDGs because they’re the closest thing the world has to a strategy,” explains Lindsay Smart, ClearlySo’s head of impact research and innovation. “They’re supported by governments and they’re gaining traction with businesses and investors, so they represent massive commercial opportunities as well as potential for positive impact.”
Among ClearlySo’s portfolio is Oomph Wellness (pictured above), which improves the lives of elderly people through group-based exercise classes. Smart says this form of investment is not about altruism: “There is a positive correlation between [social impact and financial returns], and one which is only likely to increase as sustainable macro trends play out.”
There is a positive correlation between social impact and financial returns, which will increase as sustainable macro trends play out
Also based in London, the Social Stock Exchange was launched in 2013 to give businesses that need capital to deliver social or environmental impacts access to a regulated public marketplace. It now has 50 members, in sectors ranging from energy to social inclusion and Fair Trade, with a collective market capitalisation of over £2bn.
Clement Huret, head of research at the Social Stock Exchange, says thatin addition to supplying governance and financial data, applicants need to demonstrate the positive social and environmental impacts that they will have, with only around 50% of applicants passing muster.
Based in Cambridge, the SyndicateRoom is an online equity investment platform that, since it launched in 2013, has helped to raise over £100m for its portfolio of more than 120 UK businesses. The company works with private investors, from experienced business angels to other high-net-worth individuals, while also seeking to open up the market to a larger audience by offering smaller levels of investment.
The big innovation is the ability to invest online alongside professional investors.“All online investors are able to see what professional investors are investing in and join them in the funding round,” explains company CEO Goncalo de Vasconcelos. “This means that online investors don’t have to be super well-connected to have access to these previously under-the-radar funding rounds.”
Regardless of whether you invest £1,000 or £1m, everybody will make or lose the same amount of money on a £1-per-£1 invested, he continues, and this allows highly innovative companies to raise money more quickly and efficiently.
One example is Recycling Technologies, which more than doubled its funding target after the SyndicateRoom harnessed investment from 135 different sources. The company has developed a way of re-using mixed plastic waste (MPW), diverting these previously unrecyclable materials from landfill or incineration and converting them into a synthetic hydrocarbon with a lower carbon footprint called Plaxx.
LCIF has invested more than £70m – including £48m of private co-investment – to support 70 companies
The London-based merchant bank Turquoise International is fund manager of the Low Carbon Innovation Fund (LCIF), an early-stageventure capital fund that is operated by the University of East Anglia and backed with over £20m from the European Regional Development Fund.
LCIF’s investment objectives include fostering job creation, promoting environmental improvement and developing the knowledge economy. Turquoise’s managing director Ian Thomas describes the fund as “an evolution in the development of public support for private sector investment into critical but under-funded technologies.”
LCIF has invested more than £70m – including £48m of private co-investment – to support more than 70 companies, including GT Energy, which is developing a deep, geothermal heat plant that will provide district heating in Stoke, and Bactest, a business whose mobile bacterial testing devices is currently being trialled in remote areas of Africa.
This is one of a series of articles on green finance. See also:
SDGs Recycling Technologies GT Energy Bactest ATLAS impact investment