An exciting night with Climate-KIC startups and investors

Turning impact investment into the ‘new normal’

Last 13th of June, I came back to my roots, the banking sector, and attended the Climate-KIC Entrepreneurship Night event at the UBS offices in Zurich.

The topic: impact investment. The audience: a mix of bankers, investors, students and startups. The venue: a conference room, an intimidating and elegant shark tank with a landscape cinema screen and a real forest on the side. A promising event was about to start.

But, one more time, what is impact investment?

From the vibrant discussions of the night, one can conclude that impact investment is the decision of investors to direct their money towards businesses that can contribute to society while still generating substantial financial returns simultaneously. Investors can invest their capital more consciously in areas where it is needed most, such as businesses that aim to support the achievement the Sustainable Development Goals (SDGs).

Investors certainly have power

The main question is how are investors using that power to create a win-win situation that benefits their pockets, but at the same time benefits the society. In the end, it is about investors’ values and awareness, but it goes beyond philanthropy and charity. It is about financial sustainability while supporting as well innovation and entrepreneurs.

The evolution of impact investment

Two decades ago, impact investment consisted in excluding investment in the tobacco, alcohol and weapon industries. Later, social responsibility sought to compensate the unsustainable businesses practices of long-term negative environmental, the assessment of which was not standardized across the institutional investors. Impact assessment has evolved significantly since, to a point of sophistication that provides elaborated systems such as ENCORE (Exploring Natural Capital Opportunities and Risks), a systematic monitoring of risk stemming of natural capital usage, which was launched by UBS and the Swiss Sustainable Finance Institute, a few months ago. Only this level of systematic and rigorous approach can help address the urgent societal challenges and imminent climate crisis, said Randiana Rakotomalala Senior Investment Advisor.

Management of wealth and assets

Experts and impact investors from the panel discussion of the Climate-KIC Entrepreneurship Night agreed that impact investment is about better management of assets and wealth across global businesses and industries.

Assets and wealth managers also have the power to influence conventional investors who are working hard to solve the world’s most pressing issues to look for more attractive and innovative business opportunities.

Driving forces of impact investment

A combination of personal values, satisfaction, power and adequate financial returns are the forces needed to drive impact investment.

The most important thing is to make a change. Things are moving, and the present generations cannot manage wealth by only using the very old fashion matrix of risk and return. They must include a third variable: Impact.

Below-market returns can be compensated with higher economic, social and climatic impact. It is again a matter of doing the right choices and the capacity of measuring the expected impact.

Are the start-ups ready for impact investment?

Fundraising is still a nightmare for startups and not all sectors are ready to attract impact investment, but Climate-KIC startups that include digital solutions can pave the way to a new generation of entrepreneurs that have the capacity to move impact investment more easily. Some examples of the night: Kitro presented their product to measure and reduce food waste by automatizing food waste management for commercial kitchens; Medusoil showed the world’s first bio-based carbon mineralization agents for ground stabilization solutions; Carbon Delta brought their solutions to identify how much a company’s value is possibly affected by climate change by automatizing and forward-looking metric “Climate Value at Risk”; AgroSustain closed by presenting a plant-inspired treatments against a broad range of plant fungal pathogens for post-harvest applications on fruits and vegetables.

Finally, is the market ready for impact investment?

The quick answer from the panel discussion was “not yet”. Financial terms are not as easy and standardized as required, and there is not enough coordinated action to create more meaningful businesses in collaboration with key players, such as governments and corporations. However, Renato Galli, Climate-KIC Startups Community Manager, emphasized that investors are interested and banks such as UBS and organizations such as Climate-KIC are ready to support startups and facilitate sustainable deals for impact investment.

How your start-up can become part of the Accelerator!

The Climate-KIC DACH Accelerator Call for applications is officially open and runs until 22nd July 2019. If you are an innovative and change driven start-up, use this opportunity to apply to join our programme and gain potential opportunities to present your solution at events like the Climate-KIC Entrepreneurship Night in Zurich in Collaboration with UBS. Check out our website for more information. Locations in DACH are Berlin, Munich, Zürich and Vienna.
 
Thanks to Anje Kluth. 

Author: Eliana Silva, EIT Climate-KIC