IMP Matrix Rating: C4
What: ETF Partners III is a venture capital / private equity fund investing in European companies whose business models promote sustainability through innovation. The fund invests across three main verticals: smart cities, smart industry, and smart energy. We view the fund as being strategically positioned to invest in the largely B2B tech infrastructure underpinning the sustainability revolution, squarely in between sustainable infrastructure such as renewable energy generation plants, and end-user products such as electric cars.
Who: The main beneficiary is the environment, via reduced carbon emissions, resource optimization, and generally the promotion of more sustainable production and consumption. A secondary beneficiary are sustainable companies, that see their business model enabled or secured by the technology solutions ETF invests in.
How Much Impact: During the early investment phase, their impact methodology is centered on evaluating the impact potential of the technologies they support. Limited output and outcome data is available at the individual deal level. For example, the company listed below, Phenix, every day prevents about 100,000 meals (or 50 tons of food) to be wasted.
Our Contribution: We provided capital at the first close of the fund, and have held meetings with the partners to help them refine their impact assessment approach, specifically with respect to the development of more robust theories of change and impact-aligned KPIs, further alignment with the Impact Management Project taxonomy, and refining an approach to more gender-sensitive investment in an industry where gender balance is far from being achieved (both environmental technologies and the VC/PE space itself).
Impact Risk: The breadth of the strategy could lead to some investments only tangentially generating positive environmental impact. With these kind of tech bets, the hope is that several companies in the portfolio develop scalable solutions that can shift paradigms and generate outsized, systemic impact. This is yet unproven.
Sample Investment: Phenix, a circular economy startup focusing on reducing food waste.