Impact investment has long suffered from the cliché that it is simply the less profitable version of mainstream investing. While there is a range of VC funds investing into impact startups with returns equal to or exceeding those of mainstream VC investments, there is still a clear gap in educating angel investors about the opportunity investing in impact startups can bring.
At the same time impact investing is, as large parts of the investment world, suffering from a diversity problem with only 13% of VC Partners being women according to Atomico and Diversity.VC and little representation of BAME groups.
What could be done to get a broader set of angel investors from diverse backgrounds involved in funding the startups solving some of the world’s largest societal problems?
Unreasonable Group’s CEO Daniel Epstein and their Head of Investment Pratibha Vuppuluri believe they have found an answer to that question.
Unreasonable is one of the leading impact investors and accelerators. With its newest initiative, the Unreasonable Collective, it now embarks on the mission to make impact investing more accessible and diverse.
The company does so by connecting high-profile, diverse investors with startups in their network that show exceptional traction.
Founding members include Fossil Group’s Chief Sustainability and Diversity Officer Janiece Evans-Page, the Bill and Melinda Gates Foundation’s former Chief Communications Officer Kate James as well as Mohanjit Jolly, former Partner at Silicon Valley VC Draper Fisher Jurvetson.
The members of the Collective receive access to upcoming investment rounds of Unreasonable Group’s 234 portfolio companies which have raised $4.7B in funding and generated $3.7B in revenue so far. This opens the door to invest alongside leading investors such as Sequoia, Accel Partners, Khosla Ventures & Social Capital, all of which hold stakes in one or more of Unreasonable’s startups.
Unlike other angel syndicates, the Collective does not charge any management fees but will receive 15% carry on the profits made by members. Furthermore, Unreasonable charges a fixed annual membership fee to the members of the Collective.
Pratibha Vuppuluri, Head of Investment at Unreasonable, who is responsible for the initiative, elaborates on the profile of the Collective’s members:
“Members are typically passionate about doing good and doing well and do not believe the two are mutually exclusive. A typical Collective member has a deep sense of community and a deep belief in collaboration and supporting each other.”
However, the Collective is aiming to be far more than a syndicate that is facilitating investment transactions.
“Whilst, of course, the investment opportunities are an attractive benefit of joining the Collective, what we are seeing is the community aspect, the opportunity to learn from each other, sharing experiences and expertise is the underlying common thread.”, says Vuppuluri.
With this approach, Unreasonable joins similar initiatives such as Atomico Angels and Social Capital’s Emerging Managers programme. While numbers of participating investors are generally limited, the question is whether this type of programme can help establish new ways of working for the industry: Sharing dealflow with underrepresented and diverse investors as a new normal, not an exception.