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At The Money: When Your Investments Make an Impact · Masters in Business

• 0:10
  Speaker 1: We can expect our investments to generate a positive financial return,
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  Speaker 1: but can they also have a positive societal effect? Can
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  Speaker 1: your capital make an impact? As it turns out, there's
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  Speaker 1: a strategy that can do that. It's called impact investing,
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  Speaker 1: and it's been having a good run for more than
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  Speaker 1: a few years either as other forms of investing have
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  Speaker 1: been getting criticized. I'm Barry Rudeltson on today's edition of
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  Speaker 1: At the Money. We are going to discuss how your
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  Speaker 1: money can not only generate gains, but substantially improve your
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  Speaker 1: community or your country. To help us unpack all of
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  Speaker 1: this and what it means for your portfolio, let's bring
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  Speaker 1: in Saraya Darabi of the venture firm TMV. She's been
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  Speaker 1: an early investor in seven different unicorns, some of which
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  Speaker 1: that when public like Figs, Casper and cloud Flair. Others
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  Speaker 1: were acquired like and Lightwell, so, Soriyah, let's just start
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  Speaker 1: out with the definition. What exactly is impact investing?
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  Speaker 2: Well, first of all, Barry, thanks for having me on.
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  Speaker 2: It's always nice to talk to you. Impact investing is
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  Speaker 2: pretty straightforward. It's simply a strategy that allows folks to
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  Speaker 2: invest in companies that create a positive social or environmental
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  Speaker 2: impact while also generating great financial returns. And so impact
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  Speaker 2: investing is pretty straightforward. It's simply a strategy that involves
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  Speaker 2: investing in companies that create a positive social or environmental
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  Speaker 2: impact while also generating a financial return. And I emphasize
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  Speaker 2: that also because sometimes when people hear impact investing they
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  Speaker 2: think it's synonymous with philanthropy. It's not. It really is
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  Speaker 2: allowing people to feel good about doing well in the
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  Speaker 2: markets while also doing right by society. Huh.
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  Speaker 1: I like that answer. So how is this distinct from
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  Speaker 1: other forms of value based investing like environmental, social and
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  Speaker 1: governance or various religious affiliate in investing. What makes impact
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  Speaker 1: so different?
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  Speaker 2: Well, I think it encompasses everything that you just mentioned,
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  Speaker 2: But everybody has a different definition, and when you're an
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  Speaker 2: early stage investor, you are allowed to be a bit
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  Speaker 2: broader with your definition. And so at TMV, we just
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  Speaker 2: made up the rules for ourselves and said we are
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  Speaker 2: going to be investing our capital and voting with our
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  Speaker 2: dollars by investing into some of the fastest growing cakers
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  Speaker 2: in the world which happened to do right by society.
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  Speaker 2: So we invest in tech enabled sustainable solutions. We invest
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  Speaker 2: in accessible and equitable healthcare, which is considered to be
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  Speaker 2: value based care. Now we invest in AI and the
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  Speaker 2: future of work so that democratizes access to work and
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  Speaker 2: wealth for middle class and low income Americans. So, as
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  Speaker 2: you can see, this is very specific and niche, but
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  Speaker 2: it's our definition of impact, and we're allowed to make
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  Speaker 2: it up because we're not subsiding to anybody's rules but
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  Speaker 2: our own.
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  Speaker 1: We know how to measure financial gains. Here's how much
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  Speaker 1: I invested. Here is what I got back. How do
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  Speaker 1: you measure the societal or environmental impact of investing in
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  Speaker 1: any given startup?
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  Speaker 2: There are great methodologies to which we adhere. We largely
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  Speaker 2: leverage something called IRIS plus, sort of an industry standard
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  Speaker 2: these days, and it's really good for measuring impact alongside
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  Speaker 2: un sustainable development goals SDGs. So we do do that,
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  Speaker 2: and we specifically do that. By the way, we report
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  Speaker 2: for our limited partners who give it DAN. Some of
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  Speaker 2: them invest in TMV, and I would put the Visa
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  Speaker 2: Foundation in that camp. Some of them invest in US
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  Speaker 2: specifically because they want to align with those aforementioned verticals.
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  Speaker 2: Some of our LPs are investing in TMV because we
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  Speaker 2: just deliver great returns for them full stop. So what's
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  Speaker 2: interesting is we're neither a generalist firm nor a vertically
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  Speaker 2: specific firm. We have both impact LPs and an impact initiative,
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  Speaker 2: but it's not necessarily what we lead with when we
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  Speaker 2: define who we are to the world. You'll see on
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  Speaker 2: our website, we lead with the sectors in which we
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  Speaker 2: invest to plus year old antiquated industries and ripe needive
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  Speaker 2: innovation and reimagination. We invest in verticals that have founders
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  Speaker 2: at the helm who are you know, successful, have had
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  Speaker 2: a front row seat to success before, who can consider
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  Speaker 2: creating new industries or reimagining ones in great need of imagination.
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  Speaker 2: And so you know, this might sound like generic VC
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  Speaker 2: jargon one oh one, but breaking it down, we invested
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  Speaker 2: into tally AI and Ambient Scribe to help doctors dealing
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  Speaker 2: with burnout, you know, leverage AI to reduce fifteen hours
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  Speaker 2: of note taking a week and to give patients more
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  Speaker 2: discernible and actionable access to their information. You know, some
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  Speaker 2: might just say that's a savvy AI investment. We see
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  Speaker 2: it as an impact investment.
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  Speaker 1: To boot it sounds like some of your LPs are
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  Speaker 1: very intentional when it comes to impacting investing. Other investors
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  Speaker 1: are simply saying, hey, you seem to have a formula
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  Speaker 1: for generating good returns on invested venture dollars. What's that
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  Speaker 1: mix like?
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  Speaker 2: It's really fun and interesting. So we're one of the
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  Speaker 2: few funds I know that are backed by a pension
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  Speaker 2: fund for nuns, and I'm very proud of this, by
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  Speaker 2: the way, And so clearly the nuns care a lot
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  Speaker 2: about our impact bend and they would only be you know,
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  Speaker 2: investing their well earned capital into TMV if they thought
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  Speaker 2: we were machine aligned. And so you know, for the nuns,
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  Speaker 2: we're really specific about the kind of healthcare investing that
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  Speaker 2: we do because we want to do right by them.
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  Speaker 2: But then you know, we're also backed by as I mentioned,
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  Speaker 2: five banks, including a European bank, and they love TMV
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  Speaker 2: because they're extremely excited about all of the efficiencies and
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  Speaker 2: disruption and hyper innovation that's occurring right now with the
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  Speaker 2: advent of AI. And as a firm, we've been investing
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  Speaker 2: in AI, albeit in those three verticals, but we've been
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  Speaker 2: investing for the last decade, and so an example of
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  Speaker 2: a great and successful AI investment would be Clockwise. AI
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  Speaker 2: recently partnered with Microsoft, which you know overseas ninety eight
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  Speaker 2: percent of America and the world world's calendars Office Calendars,
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  Speaker 2: and Clockwise basically uses predictive analysis to go in and
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  Speaker 2: help you rethink how you're spending your time. So important.
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  Speaker 2: I'm using it right now this is podcast time, and
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  Speaker 2: then to follow I have an hour focus time, and
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  Speaker 2: then Clockwise combined two different investment meetings this afternoon into
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  Speaker 2: one to allow me to run my day more efficiently.
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  Speaker 2: I'm using Granola AI. It's not an investment. It's out
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  Speaker 2: of London. I hope they let me invest. But I'm
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  Speaker 2: using it right now to record our podcast so it
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  Speaker 2: can send me a transcription after we speak about the
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  Speaker 2: main topics we discussed today. So all this to say,
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  Speaker 2: we're good venture investors, but we happen to think whether
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  Speaker 2: it's AI for efficiency or healthcare investment that gives greater
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  Speaker 2: access to broadly healthcare for low income Americans. This is
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  Speaker 2: how we define impact ATMB.
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  Speaker 1: So you've mentioned a couple of different sectors you like
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  Speaker 1: to invest in. My first my assumption is these are
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  Speaker 1: all equity investments. You're not doing any credit or fixed
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  Speaker 1: income type of lending. But second, so you've mentioned healthcare,
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  Speaker 1: you've mentioned AI. What other sectors do you like to
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  Speaker 1: invest in?
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  Speaker 2: My business partner, Marina comes from a two hundred plus
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  Speaker 2: year old shipping family, and my other partner, Asi is
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  Speaker 2: from the Annelli family and they created exor Fiat Piaggio, Ferrari,
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  Speaker 2: you name it. And so what's pretty cool about these
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  Speaker 2: two next gen women is that they are incredibly informed
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  Speaker 2: and accessed, to say the least, into traditional automotive and
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  Speaker 2: industrial industries. And as such, you know, we're proud to
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  Speaker 2: invest in a business that is both a tech enabled
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  Speaker 2: sustainable solution as we coin it, and also a mobility company.
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  Speaker 2: Two examples quickly ridwell privatized recycling business now available and
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  Speaker 2: subscribed to by over one hundred thousand Americans. We were
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  Speaker 2: a pre seed investor in this company back when valued
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  Speaker 2: at five million valuations a lot bigger now. And what
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  Speaker 2: they do is they make it easy for Americans to upcycle.
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  Speaker 2: We call it the fourth bin. Not recycling, not trash,
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  Speaker 2: not composting, but upcycling things that are hard to recycle, so.
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  Speaker 1: Such as what is in what do you upcycle?
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  Speaker 2: Paint, battery, plastics? And this is going to be a
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  Speaker 2: massive industry in the future when regulation requires cities to
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  Speaker 2: be more efficient, their their carbon footprint to be more efficient,
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  Speaker 2: and also as we think about shortages of necessary materials
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  Speaker 2: and so Ridwell is helmed by an incredible repeat founder
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  Speaker 2: and the board now consists of Spark and CRV. We
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  Speaker 2: have investors from the Midas List like John dor And
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  Speaker 2: and Sargur actually sars Paul I'm having later today. And
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  Speaker 2: all this to say for TMV. We came in at
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  Speaker 2: the pre seed and we led that round because we
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  Speaker 2: saw something pretty remarkable at the intersection of mobility and sustainability.
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  Speaker 1: Really interesting. So you mentioned some of your large investors before.
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  Speaker 1: Who is the typical investor in an impact fund? Is
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  Speaker 1: it an ultra high net worth individual, institutions, pension funds, foundations,
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  Speaker 1: family offices. Who puts money into impact funds?
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  Speaker 2: It's all of the above and so which which is
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  Speaker 2: lucky for me. We have foundations as I mentioned, Visa
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  Speaker 2: Foundation being one, pension funds. I mentioned the non pension fund,
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  Speaker 2: which is just a fun and colorful example to use. Uh.
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  Speaker 2: We are backed by five banks including JP Morgan and
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  Speaker 2: Bank of America and Rothchild Bank. Backed by publicly traded
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  Speaker 2: companies like Synchrony Financial, Next Era Corporation. We're backed by
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  Speaker 2: innumerous ultra high network family offices globally, in fact, some
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  Speaker 2: of the most recognizable last names around the world. Because
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  Speaker 2: the Principles, especially Next Gen Principles especially them, care so
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  Speaker 2: much about impact investing. And with this one trillion dollar
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  Speaker 2: wealth transfer that's taking shape right now, you better believe
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  Speaker 2: it that fund that don't have an impact lens are
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  Speaker 2: going to suffer.
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  Speaker 1: So I'm so glad you brought that up. There's been
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  Speaker 1: a growing trend, particularly among younger investors and women, towards impact.
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  Speaker 1: And let me throw some numbers that I found in
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  Speaker 1: my research. Over forty percent of millennials report engaging in
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  Speaker 1: impact investing versus just twenty percent of baby boomers. I'm
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  Speaker 1: assuming you're seeing that amongst your investors and potential investors.
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  Speaker 2: One hundred percent. There's really nothing to add. It's just
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  Speaker 2: mic drop one hundred and twenty one hundred and eighty percent.
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  Speaker 2: I mean, we have again, and this is showcased by
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  Speaker 2: two of my partners and the families from which they derive.
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  Speaker 2: We're living in a really complicated time and access to
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  Speaker 2: information is also access to anxiety and for younger people
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  Speaker 2: growing up. They feel like the world was set up
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  Speaker 2: badly for them, And we won't won't shift all the
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  Speaker 2: blame onto baby boomers. But let's point fingers where fingers
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  Speaker 2: deserve to be pointed. And so we're inheriting this earth.
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  Speaker 2: If you are a sustainability freak like I am, you
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  Speaker 2: believe inheriting it for a short period of time, and
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  Speaker 2: you know, we have to think about how we're spending
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  Speaker 2: our days on this planet. It's an existential crisis. It's
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  Speaker 2: a philosophical question. It's a mental health question as much
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  Speaker 2: as it is about driving great financial returns. So if
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  Speaker 2: you believe this and you speak about it somewhat eloquently,
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  Speaker 2: I hope I have, and you're passionate, this will resonate
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  Speaker 2: with young people who will happen to be inheriting wealth.
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  Speaker 2: It will also resonate with young people who aren't wealthy,
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  Speaker 2: who just give a damn and want to take action.
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  Speaker 2: And so we think we're in the right Our fund
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  Speaker 2: has skipped over a lot of really interesting but kind
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  Speaker 2: of wacky industries over the years. We're not chasing buzz
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  Speaker 2: or hype. We ignored Web three for better or for worse,
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  Speaker 2: as one example. But we've stuck to our guns about
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  Speaker 2: investing in healthcare, sustainability and supply chain and mobility and
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  Speaker 2: AI as it helps access and democratize work to give
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  Speaker 2: us back time. And giving us back time, Barry, means
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  Speaker 2: better mental health, It means more time with our families.
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  Speaker 2: It means hybrid and flexible work. We think all this
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  Speaker 2: stuff just adds up to a better Earth.
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  Speaker 1: To say the least. So to wrap up areas like healthcare,
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  Speaker 1: sustainable agriculture, renewable energy, affordable housing, AI and education allow
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  Speaker 1: us to generate not only a good return on your capital,
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  Speaker 1: but to have a positive impact as well. I'm Barry Ritolts,
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  Speaker 1: and this is Bloomberg's At the Money Imagine