After a record-setting year for impact startup funding in 2021, things got off to a slower start amid overall sluggishness in the broader equity markets in 2022. Impact startups raised $12.9 billion globally during the 2022 first quarter, a decline of 15% from the prior year, according to the Dealroom website.
Despite the slowdown, it was still the fifth-highest quarter on record.
Meanwhile, the market was bolstered over the summer with the announcement of two inaugural impact funds that raised nearly $700 million.
In mid-June, London-based alternative investment firm LGT Capital Partners announced that it raised $550 million for the final close of Crown Impact, its first impact-focused private equity investment fund. The amount raised exceeded LGT’s original target of $350 million.
Less than three weeks later, on July 6, multinational investment services provider Partners Capital announced the closing of its inaugural private equity environmental impact fund, called Partners Capital 15 degrees Fund. The fund raised $143 million in client commitments.
LFT’s Crown Impact fund will invest across three main impact areas – climate action, inclusive growth, and healthcare – and pursue co-investments alongside conventional and impact fund managers.
The investments it makes will be subject to certain impact assessments, including alignment with UN Sustainable Development Goals.
“Crown Impact will be a well-diversified portfolio across sectors, investment styles, and geographies while applying rigorous impact measurement and management practices, which also include external impact verification and transparent impact reporting,” LGT Managing Partner Tycho Sneyers said in a statement.
Although Crown Impact is LGT’s first fund focused solely on impact, the company has a long history of Environmental, Social, and Governance (ESG) investments. It first began integrating responsible investment provisions in 2003 and was among the first alternative investment managers to set up client programs as regulated structures in Ireland and Luxembourg.
In 2009, LGT launched dedicated sustainable bond and equity offerings.
LGT was one of the first alternative investment firms to sign onto the Principles for Responsible Investment (PRI), becoming a signatory in 2008. It is also a signatory to the Montreal Carbon Pledge.
Crown Impact is classified as an Article 9 fund under the EU’s Sustainable Finance Disclosures Regulation (SFDR). The fund’s base of investors includes pension funds, insurance companies, endowments, and family offices across Europe, Latin America, Asia, and Australia.
The second inaugural impact fund – Partners Capital’s 15 degrees Fund – will invest in proven technological innovations and established businesses deemed critical to the global transition to net-zero carbon emissions.
The fund will take a two-pronged approach, acting as a private equity investment partnership using specialist fund managers and directing co-investments in various sustainability areas. Those areas include renewable energy generation and storage, transportation and mobility, industrial processes and management, food/agriculture, smart buildings, water, waste, plastic, and recycling.
John Beil, Head of Private Equity and Real Estate at Partners Capital, said that while his firm is excited about investing in these areas, it will also take a cautious approach.
“The energy transition will provide many high-impact, high-returning opportunities, but is critically dependent upon many scientific, technological, regulatory, geopolitical and consumer behavior developments which are highly complex and largely unknown today,” Beil said.
Partners Capital was founded in 2001 with an initial base of 70 clients. It has since grown to become an adviser to small to mid-sized endowments and foundations as well as institutional clients, family offices, and entrepreneurs. The company currently has more than $48 billion in assets advised, with a customer base that is about equally divided between private individuals and institutional clients. It has seven offices located around the world.