Hey all, I have upcoming interviews with an impact fund and am amethyst / grid transition fund. I am keen to speak with WSO monkeys who have knowledge of these sorts of investment funds. I am doing a top down study of the impact and energy transition landscape so that I can understand the roles, investment returns potentials, and other dynamics.
Trending Content
| +26 | VP Level - when to follow up after final round | 10 | 1d | |
| +23 | Sr Asso / VP Unemployment Check-in | 6 | 1h | |
| +20 | Vista Lateral Associate | 12 | 8h | |
| +16 | IB/PE Lifers, Was It Worth It? | 5 | 1d | |
| +14 | EBITDA walkdown to cash flow for debt service | 10 | 5d | |
| +14 | Anyone here work at 777? | 15 | 3h | |
| +14 | Why is Blackstone so dominant? | 9 | 3d | |
| +14 | Boss says one thing and does another | 7 | 10h | |
| +13 | Public company LBO | 4 | 7h | |
| +12 | Late to the PE Recruiting Where Do I Even Start | 2 | 5d |
Career Resources
Eip?
Feel free to DM
sent you a DM
Would you be willing to share some of your thoughts publicly? I think it would be great for everyone to discuss and hear more about this pretty exciting but niche area.
No worries if not, thank you!
Following
Following
I’ve been involved in this space since college. Happy to answer any specific questions here.
Thank you! I have a few questions for you, I really appreciate your time.
1) Are you in an impact focused fund, and if so, what sectors do you look at and why? If more focused on energy transition, what specific sub-verticals are you focused on and why?
2) What does the typical background look like for a junior level member of your team, and what about senior level?
3) How much does "impact" come into play when making investments? Does it drive decisions to invest / not-to-invest, or is it more just that you invest in "impact" related sectors and that is enough?
4) Do you personally derive value / meaning about being focused on investing in companies making a difference? Do you feel detached at all to making an actual impact, or does your firm add substantial tangible value in a way that you can feel involved?
5) Connected to my previous question, are you taking a compensation hit at all to work at your firm? If so, do you feel like the trade-off is worth it?
6) How did you do diligence on the fund that you were joining? If someone is interested in going this route but has little knowledge about the space, how should they think about finding funds that are credible / seasoned investors and not just doing this for marketing purposes?
Thanks again!!
Not OP, but have been on more the pure-play venture/growth side for 1-2 years (think BEV/EIP/G2VP/Lowercarbon/Fifth Wall/Prelude). My takes below.
1. Aligned with the firms above, would say we are more on the climate/decarb side vs . broader impact (HC/Educarion). Within climate, it’s super broad from electrification, next gen generation, circular economy, mobility, etc. with some plays into somewhat adjacent sectors (supply chain, ag, etc.)
2. Would say junior level is a mix as all VC is but generally more banking (IB/Research) than VC in general. Those outside of banking usually come from industry/research/PhD programs. Seniors is a mix because most of these funds are relatively new and minimal partner promotion cycles. Most senior partners came from Clean Tech 1.0, while mid-level was promoted through the last hype-cycle.
3. Think this varies by fund but generally view the funds listed as being better in terms of “impact” vs some of the mega-funds that you have to squint more for (LMM buyout deals in somewhat adjacent markets but not really game changing tech/business - but I’m biased). Think some are more firm on specific CO2E targets while others are more flexible around adjacent use cases / resiliency use cases that aren’t obvious climate plays (i.e. cyber, has, etc.)
4. Really a question of how you view your impact. I mean, in theory, there is a question of if you are the “marginal dollar” into climate, we all want to back the largest and most successful companies with the most impact, so in theory your impact is really only the companies that would have otherwise not been funded. But I digress. I don’t sit on a high horse and think I am personally saving the planet - think only the entrepreneurs get that credit. But overall, I don’t feel bad doing my job - which cannot be said for friends working in O&G (although it’s obviously will be needed in some regard for the foreseeable future)
5. Depends on stage - I think among the firms I listed, they sit between VC/Growth so the comp varies between VC comp and growth comp. Even internally to funds, really depends on the team/partner you are under in terms of hours and WLB. My perspective is there may be some hit on comp vs general PE just due to check size / stage - but in the long run, the upside on the senior white space in the sector is attractive (at a certain point near senior associate, all becomes a game of musical chairs where you need to find a seat with upward mobility - think climate/impact have a lot of potential seats)
6. General view in my perspective is that the fund should at least be successfully or had successfully raised their second fund for the risk/reward as a junior to pencil (assuming truest a new fund, not MF new-strategy). For VC, would shy away from funds under $250-$300M AUM just since it’s hard to comp you and mostly would be carry. Think i’m our space, the success/failure of SPACs will be telling to GPs raising new funds- but Climate has seemed to be one of the more resilient sectors in terms of fund raising but still somewhat TBD. Would look at track record, team, and “exits” / retention.
Would echo a lot of the above. My personal experience below:
(1) I'm at an impact PE fund within a larger multi-strategy firm, and we essentially look at anything with an impact angle across almost all geographies. My focus lately has been energy transition, though others on my team specialize in education, healthcare, financial inclusion, etc.
(2) Senior backgrounds are really all over the place...non-profits/think tanks, development banks, investment banks, traditional PE/VC firms, and operating companies. Juniors are more uniform: we look for IB experience and ideally some buy-side experience too (doesn't have to be at another impact fund). Summer associates are typically recruited from schools like HBS, GSB, and Wharton. We don't have time to train people who are completely new to thinking like an investor, but we can certainly train investors on how to think about impact.
(3) Depends. Sometimes ESG/impact is the biggest topic that we debate in our IC, but in more obvious cases, it's more of a check-the-box kind of thing. For ex, climate deals tend to be easier to underwrite impact metrics, e.g. tons of carbon abated. Whereas education or healthcare companies that come our way can be more ambiguous.
(4) I think it depends on whatever deal I'm working on, but I like that my team makes ESG-related improvements integral to our value creation/portfolio ops projects. Writing a check is only the first step to unlocking impact. Also, visiting businesses that are located in emerging markets makes this feel very real and tangible.
(5) Yes, probably taking a comp hit, only insofar as that most impact funds are earlier-stage or lower-middle-market, which naturally pay less than bigger PE firms due to smaller fund sizes. I can't imagine doing 'normal' investing though, just because of how boring I would find it. Diligencing a random door manufacturer or a dentist roll-up strategy doesn't have the same appeal to me...
(6) I think team culture is one of the most important things to tease out. IMO mission alignment is key to why a culturally aggressive shop like Blackstone tried and failed to build an impact franchise, because it's clear to seasoned investors and LPs that some funds (cough cough Apollo and KKR too) are driven by asset-gathering. The industry is still pretty small so you just have to ask around a bit.
Thank you for the detailed context! Any off-the-cuff thoughts on the following impact funds, and are do these funds tend to be quite similar to their GP's flagship funds in terms of work culture, comp, etc.? Also, any color on whether any/all of these funds do on-cycle vs off-cycle recruiting?
- TPG Rise
- KKR Global Impact
- Brookfield Energy Transition Fund
- CIP Energy Transition Fund
- Bain Double Impact
Almost all of those funds should participate in on-cycle recruiting. You can indicate a preference for the impact group in the same way that you’d indicate a preference for a firm’s healthcare team or tech team. Comp should also be similar to a firm’s other PE strategies (at the junior level).
Though I’d point out that CIP and Brookfield’s impact funds are more infra PE, which is just a different investment style and career track from the others.
Nostrum quo sed qui et error voluptas dolorum. Et tempore esse repellat optio quaerat et.
Et fugit officiis quis nulla quos dolor. Expedita voluptatem nostrum aperiam numquam totam suscipit. Doloribus nobis modi reiciendis eligendi occaecati.
Magni ipsa recusandae consequatur ipsam exercitationem eius. Eveniet laboriosam praesentium quos recusandae placeat magnam porro ducimus.
Quis reiciendis qui delectus velit consequatur minus voluptas. Incidunt ut et aut id illum quo. Cum quo non alias harum eum tempore.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...