Hatcher's dealflow and third party transaction data were examined to assess the impact of Hatcher's "impact" choices on the return of investment. This report examines both ESG (overt sustainability) and impact. We discovered that multiples are substantially higher for those invested in impact.
The conclusion is that impact strategies tend to earn more than traditional early-stage plans for investment. This post will examine series A, in addition to earlier investments. Hatcher's focus is on this particular topic, and it is able to handle the volume of transactions required for the analysis.
Our analysis compares valuation change over a certain time. The value of the asset fluctuates however they don't necessarily translate into value. Most more info investments don't realize their value within the specified timeframe. We analyze the time elapsed to determine whether any relevant signals have been present and we therefore discount any recent valuations (possibly down to zero).
The result is shown in the graph below. This is a summary of one perspective. We have included the early stages of rounds, investments made in recent times, and a five-year period of time. It's representative of the relative performance of all the views we examined. The results are subject to change in the parameters of view and are highly sensitive to changing scenarios.
Impact Vs. Non-Impact Investment vs. Not Categorised
There are a variety of confounding factors that affect this study. While we don't have the ability to discern the objective of every investment, we do know that the performance of Impact investments is comparable to that of the complimentary pool.
There is evidence that suggests Impact investors are attracted by organizations that have momentum. They usually pay a premium that could reduce portfolio gains and consequently, invest in scalability. But, the overall performance is better for 'impact touch' companies as a result of both a value multiplication and longer-term basis.
We looked for investors with clear references to impacts or similar objectives on their website, or with an apparent absence of an approach that resembles impact and then tagged the investments as impact investment. The tagging of high-frequency investors enables us to label significant amounts of investments in the information. We identified investments as being a 'known impact investor', or a mix or neither.
Given this is not an analysis of transactions at a specific point in time, many individual investments are certainly inappropriately tagged. It is only a small sample, however, and investors who recently have included impact themes in their strategies are more impact-friendly.
Beyond the objective of the investee there are other elements to be taken into consideration. It is possible that the increased self-selection, examination, and concentration on aligning with goals for impact (even in a fuzzier manner), leads to more emphasis on scalability feasibility team composition and other factors that influence valuation trajectories. In addition, many impact investing themes may have a high intrinsic return.
In short, there's a significant alignment between investor returns multiples (and impact investment focus). This results in positive feedback for impact investing that can be used to further enhance the impact of goals.