We can expect our investments to generate a positive financial return, but can they also have a positive societal effect? Can your capital make an impact? As it turns out, there's a strategy that can do that. It's called impact investing, and it's been having a good run for more than a few years either as other forms of investing have been getting criticized. I'm Barry Rudeltson on today's edition of
At the Money. We are going to discuss how your money can not only generate gains, but substantially improve your community or your country. To help us unpack all of this and what it means for your portfolio, let's bring in Saraya Darabi of the venture firm TMV. She's been an early investor in seven different unicorns, some of which that when public like Figs, Casper and cloud Flair. Others were acquired like and Lightwell, so, Soriyah, let's just start
out with the definition. What exactly is impact investing?
Well, first of all, Barry, thanks for having me on. It's always nice to talk to you. Impact investing is pretty straightforward. It's simply a strategy that allows folks to invest in companies that create a positive social or environmental impact while also generating great financial returns. And so impact investing is pretty straightforward. It's simply a strategy that involves investing in companies that create a positive social or environmental
impact while also generating a financial return. And I emphasize that also because sometimes when people hear impact investing they think it's synonymous with philanthropy. It's not. It really is allowing people to feel good about doing well in the markets while also doing right by society. Huh.
I like that answer. So how is this distinct from other forms of value based investing like environmental, social and governance or various religious affiliate in investing. What makes impact so different?
Well, I think it encompasses everything that you just mentioned, But everybody has a different definition, and when you're an early stage investor, you are allowed to be a bit broader with your definition. And so at TMV, we just made up the rules for ourselves and said we are going to be investing our capital and voting with our dollars by investing into some of the fastest growing cakers in the world which happened to do right by society.
So we invest in tech enabled sustainable solutions. We invest in accessible and equitable healthcare, which is considered to be value based care. Now we invest in AI and the future of work so that democratizes access to work and wealth for middle class and low income Americans. So, as you can see, this is very specific and niche, but it's our definition of impact, and we're allowed to make it up because we're not subsiding to anybody's rules but our own.
We know how to measure financial gains. Here's how much I invested. Here is what I got back. How do you measure the societal or environmental impact of investing in any given startup?
There are great methodologies to which we adhere. We largely leverage something called IRIS plus, sort of an industry standard these days, and it's really good for measuring impact alongside un sustainable development goals SDGs. So we do do that, and we specifically do that. By the way, we report for our limited partners who give it DAN. Some of them invest in TMV, and I would put the Visa
Foundation in that camp. Some of them invest in US specifically because they want to align with those aforementioned verticals. Some of our LPs are investing in TMV because we just deliver great returns for them full stop. So what's interesting is we're neither a generalist firm nor a vertically specific firm. We have both impact LPs and an impact initiative, but it's not necessarily what we lead with when we
define who we are to the world. You'll see on our website, we lead with the sectors in which we invest to plus year old antiquated industries and ripe needive innovation and reimagination. We invest in verticals that have founders at the helm who are you know, successful, have had a front row seat to success before, who can consider creating new industries or reimagining ones in great need of imagination.
And so you know, this might sound like generic VC jargon one oh one, but breaking it down, we invested into tally AI and Ambient Scribe to help doctors dealing with burnout, you know, leverage AI to reduce fifteen hours of note taking a week and to give patients more discernible and actionable access to their information. You know, some might just say that's a savvy AI investment. We see it as an impact investment.
To boot it sounds like some of your LPs are very intentional when it comes to impacting investing. Other investors are simply saying, hey, you seem to have a formula for generating good returns on invested venture dollars. What's that mix like?
It's really fun and interesting. So we're one of the few funds I know that are backed by a pension fund for nuns, and I'm very proud of this, by the way, And so clearly the nuns care a lot about our impact bend and they would only be you know, investing their well earned capital into TMV if they thought we were machine aligned. And so you know, for the nuns, we're really specific about the kind of healthcare investing that we do because we want to do right by them.
But then you know, we're also backed by as I mentioned, five banks, including a European bank, and they love TMV because they're extremely excited about all of the efficiencies and disruption and hyper innovation that's occurring right now with the advent of AI. And as a firm, we've been investing in AI, albeit in those three verticals, but we've been investing for the last decade, and so an example of
a great and successful AI investment would be Clockwise. AI recently partnered with Microsoft, which you know overseas ninety eight percent of America and the world world's calendars Office Calendars, and Clockwise basically uses predictive analysis to go in and help you rethink how you're spending your time. So important.
I'm using it right now this is podcast time, and then to follow I have an hour focus time, and then Clockwise combined two different investment meetings this afternoon into one to allow me to run my day more efficiently. I'm using Granola AI. It's not an investment. It's out of London. I hope they let me invest. But I'm using it right now to record our podcast so it can send me a transcription after we speak about the
main topics we discussed today. So all this to say, we're good venture investors, but we happen to think whether it's AI for efficiency or healthcare investment that gives greater access to broadly healthcare for low income Americans. This is how we define impact ATMB.
So you've mentioned a couple of different sectors you like to invest in. My first my assumption is these are all equity investments. You're not doing any credit or fixed income type of lending. But second, so you've mentioned healthcare, you've mentioned AI. What other sectors do you like to invest in?
My business partner, Marina comes from a two hundred plus year old shipping family, and my other partner, Asi is from the Annelli family and they created exor Fiat Piaggio, Ferrari, you name it. And so what's pretty cool about these two next gen women is that they are incredibly informed and accessed, to say the least, into traditional automotive and
industrial industries. And as such, you know, we're proud to invest in a business that is both a tech enabled sustainable solution as we coin it, and also a mobility company. Two examples quickly ridwell privatized recycling business now available and subscribed to by over one hundred thousand Americans. We were a pre seed investor in this company back when valued at five million valuations a lot bigger now. And what they do is they make it easy for Americans to upcycle.
We call it the fourth bin. Not recycling, not trash, not composting, but upcycling things that are hard to recycle, so.
Such as what is in what do you upcycle?
Paint, battery, plastics? And this is going to be a massive industry in the future when regulation requires cities to be more efficient, their their carbon footprint to be more efficient, and also as we think about shortages of necessary materials and so Ridwell is helmed by an incredible repeat founder and the board now consists of Spark and CRV. We have investors from the Midas List like John dor And and Sargur actually sars Paul I'm having later today. And
all this to say for TMV. We came in at the pre seed and we led that round because we saw something pretty remarkable at the intersection of mobility and sustainability.
Really interesting. So you mentioned some of your large investors before. Who is the typical investor in an impact fund? Is it an ultra high net worth individual, institutions, pension funds, foundations, family offices. Who puts money into impact funds?
It's all of the above and so which which is lucky for me. We have foundations as I mentioned, Visa Foundation being one, pension funds. I mentioned the non pension fund, which is just a fun and colorful example to use. Uh. We are backed by five banks including JP Morgan and Bank of America and Rothchild Bank. Backed by publicly traded companies like Synchrony Financial, Next Era Corporation. We're backed by innumerous ultra high network family offices globally, in fact, some
of the most recognizable last names around the world. Because the Principles, especially Next Gen Principles especially them, care so much about impact investing. And with this one trillion dollar wealth transfer that's taking shape right now, you better believe it that fund that don't have an impact lens are going to suffer.
So I'm so glad you brought that up. There's been a growing trend, particularly among younger investors and women, towards impact. And let me throw some numbers that I found in my research. Over forty percent of millennials report engaging in impact investing versus just twenty percent of baby boomers. I'm assuming you're seeing that amongst your investors and potential investors.
One hundred percent. There's really nothing to add. It's just mic drop one hundred and twenty one hundred and eighty percent. I mean, we have again, and this is showcased by two of my partners and the families from which they derive. We're living in a really complicated time and access to information is also access to anxiety and for younger people growing up. They feel like the world was set up badly for them, And we won't won't shift all the
blame onto baby boomers. But let's point fingers where fingers deserve to be pointed. And so we're inheriting this earth. If you are a sustainability freak like I am, you believe inheriting it for a short period of time, and you know, we have to think about how we're spending our days on this planet. It's an existential crisis. It's a philosophical question. It's a mental health question as much
as it is about driving great financial returns. So if you believe this and you speak about it somewhat eloquently, I hope I have, and you're passionate, this will resonate with young people who will happen to be inheriting wealth. It will also resonate with young people who aren't wealthy, who just give a damn and want to take action. And so we think we're in the right Our fund has skipped over a lot of really interesting but kind of wacky industries over the years. We're not chasing buzz
or hype. We ignored Web three for better or for worse, as one example. But we've stuck to our guns about investing in healthcare, sustainability and supply chain and mobility and AI as it helps access and democratize work to give us back time. And giving us back time, Barry, means better mental health, It means more time with our families. It means hybrid and flexible work. We think all this stuff just adds up to a better Earth.
To say the least. So to wrap up areas like healthcare, sustainable agriculture, renewable energy, affordable housing, AI and education allow us to generate not only a good return on your capital, but to have a positive impact as well. I'm Barry Ritolts, and this is Bloomberg's At the Money Imagine