- Supply and demand for growth capital in socially responsible companies has grown.
- Specialized infrastructure, networks and expertise are necessary for impact investing.
- Impact measurement will improve with more impact investing.
The world has reached a critical juncture in the relationship between industry and society. We are no longer in a period where, as Milton Friedman said, “the only social responsibility of business” is to continually increase its profits. Today, we live in a new era of “and”, in which businesses must work to address social challenges and simultaneously generate growth in order to achieve success.
Over the past many years, awareness of this shift in priorities has increased and evolved. Stakeholder groups like the Business Roundtable and the World Economic Forum’s International Business Council have helped drive that conversation, emphasizing the obligations of companies to create positive social and environmental impact.
In this context, both the supply of capital available – $502 billion in impact investing AUM worldwide – and the demand for growth capital has expanded, creating a two-sided marketplace where entrepreneurs and investors can meet in the middle.
Since TPG’s inception, we have been at the forefront of social, consumer and demographic change. Five years ago – alongside Bono, Jeff Skoll, and a Founders Board with deep collective experience in social purpose – we created The Rise Funds, which sit at this nexus of supply and demand. Since then, we have funded more than 25 impact businesses across sectors. We have learned a lot along the way.
Here, we offer practical insights based on our experience doing this work to help the overall community enhance effectiveness and accelerate impact.
1. Impact investing can scale
Impact investing is no longer just venture investing. There are significant opportunities for scale, including both growth market investments and sizable companies. We have deployed more than $1.7 billion in capital and we’ve raised more than $4 billion dollars across our platform.
Scale can create impact and growth-driven “flywheels” that spur additional impact beyond the original thesis of the investment. For example, Rise has quietly become one of the world’s largest education investors – investing across career learning tools, education technology, and quality private education for underserved students. Each investment in these industry sub-sectors has informed future investments and provided valuable insights that help our portfolio companies enhance growth, reduce costs and increase impact.