In Impact Investment, you absolutely CAN “have your cake and eat it”
ClearlySo CEO Rodney Schwartz discusses the potential for some impact investments to generate substantial impact and sensational financial returns.
If press reports are to be believed, Bulb’s implied valuation has increased dramatically, demonstrating that some impact investments have the potential to generate substantial impact and sensational financial returns. As the recent Digital Agenda article notes, ClearlySo acted in an investment banking capacity in the previous Series A round, which took place in 2017. I feel it important to brag about the progress of this company for selfish reasons, but also so that individual and institutional investors are aware of the exceptional opportunities which can be available in impact investment.
2017 also presented another bragging opportunity, as a longstanding client, JustGiving, was sold to US software firm Blackbaud for almost £100 million–an exit multiple of almost 20 times the capital invested. I refrained from shouting about this one because I had many conflicts, including being a shareholder (which would have made crowing a bit unseemly) and had also been Chair of the company between 2003 and 2006. We have no similar encumbrances in the case of Bulb, other than our obligations to our client, which of course we will adhere to.
In addition to their exceptional performance there are four other interesting similarities between Bulb and JustGiving (and many other impact enterprises we work with):
- Both firms were significant users of technology. JustGiving enabled individual donors to contribute to charitable causes and easily reclaim gift aid in far less time. This was a boon for givers but also reduced work for the charities receiving the donations. In the case of Bulb, new customers can switch providers in under a minute (!). Technology is also massively deployed by Bulb to service their customers, who get 100% renewable energy but also outstanding service, according to the website TrustPilot.
- Secondly, both firms offer a service that is simply useful and impactful. In the case of Bulb, it is the easy availability of 100% renewable energy, which customers want, and the capacity to switch from what many customers view as the “crappy energy incumbents”. In the case of JustGiving it concerned making the whole process of connecting individuals with good causes, far more efficient. Companies providing socially useful services generate impact as well as value—this is the key.
- Third, Bulb and JustGiving were strongly supported by high-net-worth individual investors. It is amazing and impressive how these angels, including some of our own at Clearly Social Angels, rallied to support these fine companies and provided them with the badly needed capital they required. We are not at liberty to disclose the investors but if the information in the press is correct, they will be immensely satisfied by recent events.
- Finally, and most critically, both firms are fundamentally sound businesses. I mean that they are both aiming to be, and have always sought to be sustainable, profitable, and valuable. We never believed that impact came instead of financial return, in fact we always felt that the two were positively correlated–meaning that high-growth profitable businesses will also achieve the most impact. The Body Shop is another excellent example of such a business.
We cannot guarantee to our investors that every deal will be another Bulb or JustGiving–in fact I’m sure this will not be the case (there have been and will continue to be write-offs). However, the two featured in this piece are not isolated examples. Past ClearlySo clients such as Third Space Learning, IESO (formerly Psychology Online), Upside Energy and many more have seen their implied valuations increase substantially according to publicly accessible databases—and are generating enormous educational, health and environmental benefits for society. High returns cannot be guaranteed, but ClearlySo does guarantee that every single enterprise with which we work passes intensive scrutiny for whether it is an impact firm, according to our definition. Thus, investors putting capital to work in such businesses can feel highly confident that it aims to generate impact.
ClearlySo started with the motto of “helping to create 100 JustGivings”, meaning helping raise capital for innovative firms seeking to generate significant impact and also realise high returns for investors. We are proud of all our clients but wanted to use this blog to shout about just some of those that enable individual and institutional investors to have their cake and eat it.