Impact Engine announced today the close of its first private equity fund. The $31.5M fund makes strategic investments in growth equity and buyout impact funds and invests directly in growth-stage companies driving improvements in economic empowerment, education, environmental sustainability, and health.
Led by Managing Partner Priya Parrish, the fund was launched to catalyze and support an ecosystem of impact investors in the middle market. Private equity funds can create social and environmental value at scale and are an essential part of the impact investing industry. Unfortunately, high barriers to entry often hold back independent funds unaffiliated by large asset managers from launching.
“The size and scope of the middle market opportunity set is large and growing, yet launching a new private equity fund with a strong commitment to driving positive impact has proven to be difficult unless you already have access to capital,” said Parrish. “We launched this fund to fill that gap, as companies need purpose-aligned capital throughout their life cycle. We’re here to support proven private equity professionals building high caliber investment firms that drive superior results for investors and society.”
The fund extends Impact Engine’s reputation as an early-stage investor in impact companies through its two existing venture funds. The Chicago-based, women-led investment firm believes that investment dollars can and should have a positive impact on society and the environment, and that those positive impacts can be tied to financial success.
”Our investor base continues to grow as family offices and institutions are drawn to our team’s rigorous and authentic approach to investing and assessing impact, as well as the support Impact Engine provides them in exploring broader impact investing opportunities and connecting with their impact investing peers,” said Jessica Droste Yagan, Impact Engine’s CEO.
Limited partners in the fund include Surdna Foundation, William Harris Investors, and the Libra Foundation, as well as investors throughout the United States, Canada and Asia. Candide Group, an impact investment advisor, facilitated the Libra Foundation investment. "The fund is exciting from an impact perspective given that it provides access to a portfolio of quality managers investing in more mature businesses that are often underrepresented in impact portfolios,” said Aner Ben-Ami, Candide’s Founding Partner. “Most importantly from our perspective, Impact Engine is not just allocating capital to these managers -- it is also actively supporting them in deepening and refining their impact practices."
The fund will invest approximately 60% of its capital in growth or buyout private equity funds with a firm-wide commitment to investing in companies driving positive impact. Given the nascency of this market, many of these funds are managed by emerging managers. Others are “impact whisperers”, or established managers quietly evolving their investment process towards intentional impact outcomes. Impact Engine supports both types of funds through first-close capital, impact management thought leadership and mentoring, and its network of purpose-driven investors and companies.
Lumos Capital Group is one of the fund’s strategic investments. “Impact Engine has been a valuable partner in helping us develop and execute on our impact management strategy,” said Victor Hu and James Tieng, co-founders and Managing Partners at Lumos. “The team understood our vision from the beginning, and has served as a trusted sounding board as chair of our Impact Advisory Council.”
40% of the fund’s capital will be invested directly in operating companies. By leveraging the fund’s network of purpose-driven investors in the middle market, Impact Engine supports its companies in scaling impact alongside profits at this critical growth stage where tensions between the two goals can arise.
The fund recently invested in Footprint, a company on a mission to eliminate single-use plastics through its sustainable food packaging products. Footprint’s plant-based packaging products are used by leading global brands, including Conagra, Tyson Foods, Molson Coors, and Sweetgreen. The company has prevented over 61 million pounds of plastics from entering our environment to date, and thereby decreasing the carbon footprint of disposables by more than 44,730 metric tons, equivalent to driving around the planet 4,494 times.
“As our company grows, we want investors that will help us achieve our environmental mission while scaling profits,” said Troy Swope, CEO at Footprint. “Impact Engine understands that these two goals are intertwined, connected us with mission-aligned investors, and is helping us continue to improve our sustainability practices.”
About Impact Engine
Impact Engine is a women-owned and led, Chicago-based venture capital and private equity firm investing in companies driving positive impact in economic empowerment, education, environmental sustainability, and health. The firm manages $63M AUM and was included on the 2019 and 2020 ImpactAssets50 lists, which recognize outstanding impact investment funds with a demonstrated positive social, environmental and financial impact. Across its portfolio, Impact Engine has invested in companies with 44% women CEOs and 24% non-white CEOs, and 56% of companies headquartered between the coasts.
