A report from the Amsterdam-based firm shows 122 impact funds launched in 2024, bringing the total number of launches since 2015 to almost 3,000 funds.
The amount raised by impact funds since 2015 rose 160% to €701bn by the end of 2024, according to the latest annual report from Phenix Capital on the impact fund universe. It is a figure that underscores the momentum behind the in the sector, despite a challenging economic and geopolitical backdrop.
The Dutch-based impact investment consultancy also reported a 190% growth in the number of impact funds on its database since 2015 to 2,907 with almost 46% open to investments. Total target sizes of all funds on the database combined rose 28% to €377bn in 2024, reflecting continued optimism in the sector, even if it represented slower growth than the 63% annual rise recorded in 2023.
Niki Natarajan, head of research at Phenix Capital, told Impact Investor that, although the impact investing market had come a long way over the last decade, much more investment was needed to tackle the UN Sustainable Development Goals (SDGs).
“The report shows the sector is growing, but if we look at the SDG 2030 deadline, which is less than five years from now, and also the change that needs to happen if we want to hit net zero by 2050, then investment has to scale up,” she said.
The number of new fund launches added to the database slowed to 122 in 2024 compared to 153 in 2023, while the average target size of impact funds fell 11.8% to €345m. The latter figure may, in part, reflect caution among managers of smaller funds, in particular, over pitching target sizes too high in an uncertain fundraising environment.
Global backdrop
The challenges created by global economic and political instability have been complicated further since the end of 2024 by US president Donald Trump’s stringent cuts to US international development finance since he assumed office in January, as well as the potential for some US institutions to curb their impact lending strategies.
However, with much of the impetus for impact investing coming from Europe and other regions besides the US, there is hope that public and private institutions from other countries can fill the breach.
“The real scale is likely to come from Europe, because at the moment, that’s where the regulations are in place, and where the investors want to do it,” Natarajan said.
The entry of larger institutions into impact investing in recent years is likely to continue to drive an increase in fund sizes at that end of the market and, potentially, shift attention towards investments in real assets and larger-scale infrastructure. Phenix reported that 80% of investors favour infrastructure assets, with pension funds committing more than 50% of their allocation to it.
Affordable and clean energy, SDG 7, remains the SDG targeted by most impact funds on the database, with 37% of the funds selecting SDG 7 as a theme. Other leading themes for investors were SDG 9 on industry, innovation and infrastructure, SDG 3 on good health and well-being and SDG 2 targeting zero hunger.
Dirk Mueleman, Phenix Capital Group’s CEO, commented in the report that he believed climate and nature, as well as alleviating poverty and hunger, would remain important investment themes.
“But given the aging population in most of the developed world I can see healthcare becoming more important as a theme, as well as biodiversity. Both of these topics are broadly supported, but investing in peace and justice, which is traditionally one of the smaller themes in impact investing, may see a growth,” he said.
Private equity dominates
Of the new funds launched in 2024, over 55% were private equity funds, of which 70% were focused on developed market private equity, and 16.4% on the emerging markets, while 13.4% had a global remit.
The 24 private debt launches in 2024 accounted for 20% of total new funds launched. Of those private debt funds, 54% focused on the developed markets and 42% on the emerging markets. Real asset fund launches made up 20% of total launches in 2024 as well, but here 75% focused on developed markets, while 21% had a global remit.
The three fund-of-funds launches during the year had a global remit, while there was one new fund each for public equity and public debt strategies, which had global and emerging market remits, respectively.
In terms of the overall impact fund universe, Phenix said private equity continued to be the favoured asset class for impact investors, making up 48% of the overall impact fund universe.
Real assets were the second single largest strategy with 22% of the universe. Of these real asset funds, 331 were focused, at least in part, on infrastructure, 173 on real estate and 106 on timber and forestry with 81 real asset funds investing in cropland and farming.
