Fi Gathering Lisbon: Backing impact-driven startups

A gathering taking place in Lisbon next week, organised by Social Nest Foundation and Casa do Impacto, aims to guide VC funds through the opportunities that investing in impact-driven companies can bring

We talk to Margarita Albors, founder and president of Social Nest Foundation and Inês Sequeira, founder and director of Lisbon-based Casa do Impacto, about their upcoming Fi Gathering in Lisbon which will explore investment opportunities in impact-driven startups.

Impact Investor (II): You have organised a series of meetings across European capitals this year, Lisbon being the latest. Do you think that the concept of investing for impact is well understood?

Margarita Albors (MA): Definitely, the notion of impact investing is trending now more than 10 years ago. However, despite the enthusiasm, there is a need to translate it into action on a bigger scale. Confusion around what impact investing means might prevent the growth of the sector. Asset owners, as family offices, HNWIs, or corporates, traditionally have managed their business/investing activity separately from their philanthropy or CSR efforts, so it is challenging for them to execute a strategy that mixes those approaches.

There is a need to change the mindset around the spectrum of possibilities that arise from the combination of impact and financial return. In that regard, it is essential to educate investors around all the possibilities that they have to invest with impact.

One approach that we promote in our community is the continuum of capital that helps investors to see themselves as actors that might play a role in both impact-only investing but also in investing in different combinations of social and environmental impact, financial returns, and risk. So, depending on their interests and appetites they might choose the impact investing strategy that suits them better. Also, it is important to show diversity of investment opportunities across that spectrum.

II: Which are the main barriers preventing further growth in impact investing?

MA: I would say, some barriers are common for asset owners and asset managers, and there are others that are more specific for each of them. Regarding the common barriers, there are challenges regarding the “illiquid” nature of impact investing products which might make investors reluctant regarding the inclusion of impact in their portfolios.

There is also a common concern regarding financial returns, there is still agnosticism regarding the possibility of having greater social impact alongside financial returns. However, as I said before, investors might align their financial expectations with their values across an spectrum of opportunities, including through impact investments with market returns. Currently, the deal flow of investments with these characteristics has increased, especially in Europe.

The lack of standardisation of impact measurement is also a barrier for asset owners and asset managers. The existing frameworks do not completely satisfy all the required social and/or environmental measurements, and as such, generates divergent views as to what actually constitutes impact.

Finally in line with that, the sector is suffering from an abundance of investment opportunities branded as “impactful” which are not so much, even because they are not measuring impact or because their measurement systems might not be compared with others. The risk of “impact washing” is latent and prevents many investors from deploying capital towards impact.

II: Regarding your upcoming event – why Lisbon and why now?

MA: We aim to contribute to each of the ecosystems where we are working with innovative content and opportunities. In the case of Lisbon, we found the opportunity to co-organise a gathering for mainly asset owners, promoting the opportunities that ‘tech-for-good’ companies represent for VC funds, and as a consequence for LPs. Doing it together with our partner Casa do Impacto, and in the same week of The Web Summit Conference, seemed to be a huge opportunity to inspire investors and present investment opportunities.

II: Which are the main priorities of Casa do Impacto?

Inês Sequeira (IS): Casa do Impacto was created in 2018 to bring innovation to Santa Casa da Misericórdia de Lisboa, the oldest charity organisation in Portugal, and to prepare a new generation of entrepreneurs with impact at the center of their mission. This initial goal was achieved as we developed and increased the impact startups ecosystem in Portugal.

Through our activity, we have become the biggest impact entrepreneurship hub in the country and our work accelerating and investing in disruptive startups will continue to be our focus. But right now our main priority is positioning Casa do Impacto as the right partner for public entities and private companies to develop their sustainability practices – we provide tailor-made solutions for these players to explore the best ways to incorporate the famous ESGs.

II: How is the impact investing ecosystem developing in Portugal compared to other European countries?

IS: The general investing ecosystem has been developing at a rapid rate for the past decade. That is not yet the case for impact investing, due to the intrinsic characteristics of impact startups’ work, and that is why organisations such as Casa do Impacto and Social Nest Foundation are key to turn things around.

In all fairness, due to the difficult social and environmental state of our planet we have seen a growth in interest of investors in the area of impact in Portugal, which is exciting although it’s not easy to compare Portugal’s impact investing ecosystem with other European countries’ because the bulk of impact investing is done by institutional investors, including hedge funds, private foundations, banks, pension funds, and other fund managers, and our country is lacking in some of those players.

We have seen that investment comes easier when we’re talking about environmental sustainability innovation. Topics related to social issues are easily forgotten by investors as the idea that governments and charities should be the ones taking care of those issues is very much alive. That’s the reason why we created our own philanthropic fund to kick-start some projects that, without our intervention, would be practically impossible to rise.

II: What are you hoping to get out of this collaboration with Social Nest and the upcoming Lisbon gathering?

IS: After being so well received in the gathering in Amsterdam earlier this year, the upcoming Lisbon gathering is a fantastic way to strengthen our partnership with the Social Nest Foundation. We are very happy to have found a partner that shares our mission and vision and that is as interested as us on growing an Iberian impact entrepreneurship ecosystem.