This is a resource published by ImpactVC in the pursuit of building community and resources that unlock venture capital’s (VC) ability to solve the world’s most pressing challenges.
This playbook has been designed for VCs to help them source, select and support the most exciting impact startups and help them maximise their potential.
It draws heavily on work done at Big Society Capital, and has been iterated and developed through engagement with the broader ImpactVC community. For a full list of contributors, see here. If you want to contribute, give us feedback, or have any questions, please do get in touch.
The world faces increasingly pressing social and environmental challenges. We believe technology has an important role to play in tackling those challenges, if used with the right intent, in the right context, and with an aligned business model. We also believe that building an impactful business can be a driver of value – whereby managing for positive impact can reinforce and enhance commercial performance.
Many entrepreneurs and VCs share these beliefs. An ever-greater number of entrepreneurs see purpose and impact as core to their work, and an increasing number of VCs are looking to back impact startups. These VCs need to engage with impact topics in order to effectively source, select and win investments into impact-driven companies.
However, topics such as identifying high-impact startups, assessing founder intent and maximising impact value over time, can be relatively new aspects of the investment process, even for the most seasoned VCs. In addition, prospective investors in VC funds increasingly expect VCs to be able to clearly articulate their impact thesis and demonstrate their impact management and reporting capabilities.
Here we break down some of these core aspects of impact investing, in a way that is practical and relevant for the VC community. We draw on expertise from the pioneers in impact venture who have paved the way for others, as well as drawing on fresh perspectives and ideas from the wider VC community, who are earlier in their impact investing journey.
The playbook is for VCs looking to better understand how to embed impact thinking into their investment process, to maximise impact and financial returns. We hope it is useful for both those new to impact and those with more experience, as we have contributions from leading impact investors. While the focus is predominantly European (given the makeup of our community), we hope it is useful to other geographies too.