How venture capital can have a ‘double impact’
Impact investing is on the rise, and Elena Walder-Schiavone is at the forefront. She is a member of the Swiss Green Fintech Network and managing partner at Übermorgen Ventures. Tanya König of finance.swiss spoke with her to find out where we are in impact investing and how Switzerland can contribute.
finance.swiss: Can you describe what you do at your company and what the business model is?
Elena Walder-Schiavone: Übermorgen Ventures is a Swiss venture capital company that invests in early-stage start-ups that develop innovative technologies and business models to mitigate climate change. Our belief is that our generation’s biggest challenge—climate change—is a big business opportunity. We have to invest in winner technologies, and winner technologies are the ones with no CO2 footprint or that help reduce CO2 emissions. We invest today in the technologies that are important and fundamental tomorrow.
Your focus is “double impact.” What does that mean?
Double-impact means that we have a financial return and a CO2 reduction target that we want to achieve with investors’ money. And in numbers, that also means that we want to reduce 1 million tons of CO2 equivalence all-together with our portfolio companies in 10 years.
And where do you invest?
We invest in three areas: agri- and food tech; clean energy and smart transportation; and alternative materials.
Who are your investors, and what’s your track record?
Our investors are entrepreneurs that have an understanding of venture capital in their DNA, see the business opportunity, and are on purpose driven. In terms of track record, I must say we just got started. We have invested in five portfolio companies so far, and we are now investing in three new ones next month. But I’m pretty sure that there are lots of interesting opportunities waiting for us, and I'm really excited.
A key feature of impact investing is the commitment of the investor to measure and also report the social and environmental performance of the underlying investments. So how can you even measure impact?
We at Übermorgen Ventures have a strong commitment toward our investors so we only invest in start-ups that have a significant environmental impact, and we evaluate the CO2 reduction potential of every investment. We elaborate an impact model.
What is an impact model?
We defined an emission baseline, and as a second step we define the levels with which these emission baselines can be reduced.
You also mentioned that there is a need to mobilize private capital to tackle those global challenges—climate change, greenhouse gas reduction. What is the role that Switzerland, as a major wealth manager, can play?
Switzerland with its well-off financial market and with more than 7.8 trillion Swiss francs assets under management could play a key role here. So if sustainable investing is not only a trendy word and asset managers out there would just allocate at least a small amount of their assets under management to the ventures and venture capital firms in this green and clean impact space, that could be a big impact. So I think it would be really helpful if this would happen, and it would give Switzerland a first-mover role here.
How vibrant is the venture capital community here in Switzerland? Are we moving in the right direction?
I think the venture capital community is quite vibrant. I see a lot of successful funds out there. However, I must say that there are only a few funds that are dedicated to impact so far. But I think it's coming, and I think it's going to be great. And what I really like is the collaborative spirit between the venture capital firms. We join forces, we exchange experiences, and we even give access to investment opportunities to each other. So we learned from the start-up community here. This is something that already happens between founders, and now the venture capital firms are also copying that.
You’re also a member of the SIF Green Fintech Network. What's the purpose behind that?
The purpose behind the Green Fintech Network is a close collaboration between the key experts of the green fintech ecosystem with the State Secretary of International Finance. We believe that a collaboration between sustainable financial services and green technology could really be helpful in positioning Switzerland as a leader in this respect.
Green Fintech Network is now bundling the last months’ results of the discussions between the different experts and is finishing an action plan. The aim and the goal of this plan is to identify areas to improve the framework condition for Swiss digital finance and to help Switzerland to become a leader for green technologies, and maybe financial service should be a driving force behind it.