Impact investing with returns

We are essen­ti­ally the pioneers of impact inves­t­ing in conti­nen­tal Europe. Our contin­ued success since our foun­da­tion in 2003 can be attri­bu­ted to seve­ral key factors. In the begin­ning, we worked a lot in the non-profit sector, which helped us to anchor our vision and values. A decisive factor was that our co-foun­ders Horst Goß and Bernd Wendeln shared our philo­so­phy of impact inves­t­ing from the very begin­ning and conti­nue to support us today with their exper­tise and persua­si­ve­ness as Advi­sory Board member and Chair­man of the Advi­sory Board respectively. 

In the first ten years, it was a major chall­enge to convey the idea that you can also be finan­ci­ally successful with impact invest­ments. In 2013, we finally made a change in stra­tegy: We swit­ched from partial loans to pure equity invest­ments. This meant that we were not limi­ted in our finan­cial upside, were able to make larger invest­ments and were percei­ved as an attrac­tive fund invest­ment by a broa­der group of inves­tors. At the same time, this allo­wed us to better absorb the dyna­mics of the market, as the indus­try system and the under­stan­ding of impact invest­ments have chan­ged signi­fi­cantly. — Today, the concept of impact inves­t­ing is much better known and many of our LPs incre­asingly under­stand the value and oppor­tu­ni­ties of this market. 

In fact, the under­stan­ding of the impact dimen­sion in certain values varies greatly. There is no uniform method for recor­ding and commu­ni­ca­ting the actual impact of invest­ments at fund level. Of course, there are regu­la­tory frame­works such as the EU’s Sustainable Finance Disclo­sure Regu­la­tion (SFDR), which stipu­late an obli­ga­tion to report on impact. 

But there is still a lot of poten­tial for deve­lo­p­ment here too. With BONVENTURE, we want to actively shape the market and set stan­dards. The impact audit we have intro­du­ced is one such tool. As far as I know, we are the only ones in the indus­try to have the impact KPIs achie­ved by our port­fo­lio compa­nies audi­ted and confirmed annu­ally by an exter­nal audi­tor. Only what we can measure can we under­stand, report to our inves­tors and use to work with our port­fo­lio compa­nies on reali­stic targets and impro­ve­ments. I am convin­ced that the sectors must conti­nue to gain expe­ri­ence and inno­vate in this direction. 

Impact inves­t­ing or paying atten­tion to the impact dimen­sion can become the status quo in the venture sector. Our many years of expe­ri­ence show that measura­ble social and envi­ron­men­tal impact and finan­cial returns are not mutually exclu­sive, but on the contrary go hand in hand. 

Above all, I under­stand this to mean a stron­ger ancho­ring of the aware­ness that invest­ments should be impact-orien­ted — a topic that is being driven by the Next­Gen in parti­cu­lar. This gene­ra­tion is abso­lut­ely commit­ted to impact inves­t­ing, and many of our LPs (Limi­ted Part­ners) come from entre­pre­neu­rial fami­lies. They are consciously lever­aging our deca­des of expe­ri­ence to invest in impact start-ups that are making a measura­ble impact in the areas of health, educa­tion, climate and sustainable consumption. 

It is inte­res­t­ing to note that not only are the port­fo­lio compa­nies in impact funds often more resi­li­ent, but the total volume inves­ted has also decli­ned less than in the tradi­tio­nal VC sector. Impact invest­ments are seen as more resi­li­ent. The mind­set of the foun­ders also plays a role here: they are less incli­ned to give up in the event of setbacks and often imple­ment their ideas more sustain­ably and inven­tively — espe­ci­ally if the impact dimen­sion plays a role from the outset. We pay close atten­tion to these aspects during due dili­gence. We will certainly have plenty of oppor­tu­nity to do this in the near future: We are just start­ing fund­rai­sing for our fifth fund. We are very confi­dent that we will reach the target volume of EUR 100 million. 

About Erwin Stahl

Erwin is one of the “foun­ding fathers” of impact inves­t­ing in Germany. After seve­ral years in the tradi­tio­nal invest­ment world (at Welling­ton Part­ners), as well as foun­ding his own start-up incu­ba­tor, he initia­ted the foun­ding of BonVen­ture, the first fund for impact inves­t­ing in the German-spea­king world, toge­ther with a group of soci­ally commit­ted inves­tors in 2002. — With a degree in busi­ness admi­nis­tra­tion and a docto­rate in statis­tics, he is one of the leading minds in the indus­try, parti­cu­larly when it comes to finan­cing models for start-ups and data-driven impact analyses. 

In addi­tion to his work, Erwin is invol­ved in forestry, fruit growing, forestry and beekee­ping to preserve local biodi­ver­sity, inclu­ding through his own honey production.

erwin.stahl@bonventure.de