The flow of transactions at Hatcher was analysed and data on third-party transactions gathered to assess the effect of investment returns. This report examines both ESG (overt sustainability) and impact. We discovered that multiplications of impact-influenced investors were significantly greater.
We conclude that impact strategies are more likely to yield a higher return than traditional early-stage investment strategies. This post will focus on series A and the earlier investment strategies. Hatcher has sufficient transaction amounts that we can analyze these strategies.
The analysis looks at changes in valuation over a time period. However, valuations are able to change but not necessarily reflect realized value as most investments fail to fully realize their potential within the given time frame. We analyze the time elapsed to determine if any relevant signals have been in place and therefore we discount any recent valuations (possibly down to zero).
The graph below illustrates the impact. The chart below is a summary of one perspective. The chart below includes the early stages of rounds, recent investments and a 5-year horizon. It's representative of the relative performance of all the views we studied. However, the numbers are scenario-specific and sensitive to changes in view parameters.
Impact Vs. Non-Impact Investment vs. Not Categorised
This review has a number of confusing elements. We aren't aware of the intentions of each investment, but we can measure the performance of Impact investments versus the complementary pool of investments.
There are indications that Impact investors might be drawn to traction-based entities. In other words, they choose better outcomes and pay more, but this may reduce portfolio gains. But, the overall performance is superior for companies that have a 'impact in both a valuation multiplication and longer-term basis.
We identified high-frequency venture investors who explicitly mention "impact" or have similar objectives. We can identify large numbers of investments in our data by tagging high-frequency venture capitalists. We then identified investment portfolios as having an impact investor, get more info or a blend, a known' impact investment that is not a non-impact one, or both.
Since this isn't an analysis of transactions at a specific point in time, many individual investments are definitely not appropriately classified. This is just a small sample of investors. Investors who have recently employed impact themes were more Impact-friendly than those who did not.
Other elements are in play, other more than the particular purpose or type of investor. The greater self-selection and scrutinizing that goes with aligning with the goals of impact even on a vague basis leads to greater focus on the feasibility, scalability, team composition and other elements that affect valuation trajectories. Many impact investment themes have an intrinsic return that is most likely to be substantial.
The strong connection between the multiples of return for investors and investment goals can be summarized in the following way: This allows for positive feedback from impact investments which further boosts impact objectives.