Moving Impact Investing From Hope to Proof and From Proof to Scale

Matthew Weatherley-White Sepia Profile
Matthew Weatherley-White, managing director and cofounder at Caprock, was interviewed on May 17 by Darshini Shah. The following excerpt is pulled from the resultant Q&A published in Bloomberg’s latest Family Office report. Click the link (below) to continue reading.

Q: What do you feel the barriers for investors are when it comes to impact investing?

A: You know, in a traditional investing world, no one would ever say “I might risk losing my money therefore I am never going to invest this way.” People invest in hedge funds and early-stage technology all the time, with perfectly reasonable expectations that there is going to be some loss of capital. And it doesn’t bother anybody. And suddenly you put the label ‘impact’ on it, and everybody goes: “Oh! I don’t want to lose money in impact.” It’s fascinating… and frustrating.

Here’s the way I look at it: over the past 10 years, impact investing has moved from hope to proof, and now we are trying to move from proof to scale. There are some really open questions around what that is going to look like: absorptive capacity being a primary question mark. It’s easy, for example, to say: “Hey I’m going to invest in a handful of organic baby food companies because of consumer demand, blue-sky pricing, revenue growth, etc.” But what happens when the whole category becomes really, really big? What happens to performance at that point? Does it become much more margin-driven rather than mission-driven? Similarly, with the absorptive capacity in emerging and frontier markets — it’s one thing to have the first off-grid solar-power leasing company; what happens when there are 10 of them all competing for market share in Uganda? I don’t think we know the answers to that yet. I would also suggest that if that is the future, then the use of the word “impact” becomes a distinction in search of a difference; the term “impact” becomes meaningless, because that method of investing and operating simply becomes business. Which would be amazing.

Weatherley-White’s Q&A starts on page 20 of Bloomberg’s new Family Office Special Report.

Written by Darshini Shah and published by Bloomberg.