Impact investing - choices
Hello everyone,
The subject of impact investing hasn't been very prominent on this site so far, but maybe there is someone here who could help. I'm currently in M&A at a strong MM shop in a major city and but decided to abandon banking for international development / impact investing. I've secured direct investment (PE/VC style) offers from two different places - one is a development bank (think IFC / EIB / EBRD / ADB) and the other is an investment arm of a prominent philanthropic foundation. Comp is comparable and both teams seem very credible. What in your view is a better option? While I'm keen to dabble in development finance, I want to avoid burning bridges to more mainstream buyside roles down the line.
Honestly it depends on what your goals and interests are, particularly when it comes to impact investing where people have different personal passions and you are presumably entering the field because you want to make a difference to something that matters to you.
Decide for yourself how you want to invest: - Geography: Domestic developed markets (US) vs. international developed markets (e.g. Europe) vs. emerging / developing markets (e.g. Africa, SE Asia, South America) - Sector: Tech vs. health and wellness vs. renewable energy vs. financial inclusion vs. education vs. sustainable consumer products (or some combination) - Stage: VC / startups vs. early stage PE / growth businesses vs. later stage PE / more mature businesses - Asset Class: equity vs. preferred equity / mezzanine debt vs. project finance vs. real assets etc. - Returns: Market-rate returns / mission-related investing (MRIs) vs. below market rate / program related investing (PRIs) / venture philanthropy
If you want the ability to go to a traditional buyside role later on, then I would probably recommend joining a firm that targets market-rate returns (rather than below market rate / PRIs) because the financial analysis would be similar. The other factor would be choosing a sector where many traditional VC/PE firms operate (like tech, healthcare, or consumer - typically in developed countries) so that you'd gain some industry knowledge and have more options - although you may be able to argue that becoming an expert in a niche area can be valuable as well.
To my knowledge, most large foundations (e.g. Gates Foundation, Rockefeller Foundation, Packard Foundation, Skoll Foundation) engage in below market rate investing. Not entirely sure about development banks - think some do below market rate as well but might depend on which one it is. Obviously there's a lot of factors at play here and I'd need more information to give you a better / more specific recommendation, but hope this helps.
Source: I left a top BB after 2 years as an IBD analyst to become a PE associate at an impact investing firm
If you don't mind PM'ing me with some additional information, I might be able to help.
bumping this - also interested in any advice on making the transition from traditional IB to impact investing
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The rise fund, bain capital double eagle, pegasus capital, dbl partners, g2vp are all pe/vc doing impact investing. Heard kkr will move into the space too.
Info on Rise recruiting? On cycle? Done? Off cycle?
What is the recruiting process like for any of these funds (if any)?
And yeah, KKR launched their Global Impact Fund earlier this year
Hi everyone, I'm also very interested in Impact PE after 2 years in banking. Are the megafund impact funds recruiting on-cycle? Is it a two year and out program? Do they do actual controlling LBO investments or are most of these growth / VC focused funds? At the banks you guys work at, is there a lot of buzz around impact investing or do you think its not as competitive as normal megafund / upper-MM PE?
Most are growth focused (look at Bain and KKR). It is definitely not as competitive, but look through Bain's team page. They certainly aren't taking any slouches. They recruited on cycle, but I am not sure about the other funds. I only know about this having gone through Bain's interview process, which was tough (consulting focused and I am not so hot at case study framework interviews...)
Thanks for the reply and insight! I just PM'd you.
Anyone else have any thoughts on recruiting timelines or if there are an Impact Buyout shops?
what was the impact consulting case like?
Figured I'd bump this. Really hoping to learn more about Impact PE recruiting.
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