The new kid on the impact investing block is not a fund or a fund of funds. It’s not a registered investment advisor or wealth manager. It’s not a tax-advantaged foundation or donor-advised fund.
Instead, Trimtab Impact is an “unapologetically impact-first” holding company that has so far raised more than $60 million from seven wealthy families that are looking to generate the highest risk-adjusted impact possible, rather than the highest risk-adjusted financial returns. With their blessing, its fiduciary duty is to maximize impact, not profits.
“Having a corporate balance sheet, rather than a closed-end fund or an SEC -regulated investment vehicle, allows us to get up and running and to be making investments with a lot of flexibility and fluency,” Trimtab’s Caleb Ballou told ImpactAlpha.
“Being a corporation that can raise common equity – if you can access that capital – operationally and strategically makes an enormous amount of sense.”
Trimtab, which was incubated by The ImPact, a community of high-net worth families, has made 10 investments totaling $15 million with fund managers including Acre Impact Capital, Common Trust and Seven Generations Capital. It could eventually launch subsidiary businesses, including fund management or advisory services, and even make grants. It’s even considering making documentary films.
But Trimtab’s larger mission is as a demonstration of a purpose-built financial institution that can attract significant capital from the small, but perhaps growing, group of investors that want to optimize for maximum impact, not maximum returns. The thesis: More asset owners, particularly family offices, would be willing to make high-impact catalytic investments if only the process wasn’t so difficult (the name comes from the trim tabs that boaters use on their rudders to alter the flow of water and improve performance).
“Many people have asked us, ‘How do you identify investments that are pursuing the highest return on impact for each dollar?’” said Blue Haven Initiative’s Liesel Pritzker Simmons, who helped hatch Trimtab and became one of its earliest investors. With Trimtab, she told ImpactAlpha, “That legwork on identifying teams that live and breathe maximum impact is removed.”
What Trimtab is not, Ballou acknowledges, is tax-efficient, as investors gain no tax deductions. Nor is it low-risk. The commitments, initially in the form of a simple agreement for future equity, or SAFE, have been transferred to Trimtab’s balance sheet where they are completely at risk. For all that, the company is targeting a portfolio-wide return in the low single-digits. An annual liquidity pool will allow investors to recoup some of their capital.
“Trimtab could be catalytic for a transformation of the existing financial system, or it could be a waste of time and money, or anything in between,” said Manuel Contreras Pietri, the head of a Madrid-based transportation engineering firm and one of Trimtab’s founding investors. “But if we do not invest on what we believe in, on what we talk, then we are part of the problem.”
Trust stewardship committee
Trimtab is one of the first spinouts from The ImPact Lab, reflecting the ambitions of the 90-family strong investor community to do more than simply share and learn from each other (other Lab initiatives include Aunnie Patton Power’s Innovative Finance Initiative, Alison Lingane’s Ownership Capital Lab, and Dominic Hofstetter’s Transformation Capital Initiative).
“Impact-prioritizing capital was just sitting on the sideline at the same time that brilliant capital entrepreneurs were desperately trying to raise that money,” recalls Trimtab’s Trace Welch, who had headed The ImPact Lab.
One of Welch’s first calls was to Ballou, who was then running the Zero Gap Fund, a joint effort of the Rockefeller and MacArthur foundations that deployed $30 million in so-called program-related investments to help advance the UN’s Sustainable Development Goals (for background see, “Rockefeller’s Zero Gap Fund continues to pay dividends”). Ballou confirmed that there was indeed a deep pipeline of investable, innovative, impact-prioritizing opportunities available.
Advisors, including MacArthur’s Debra Schwartz, recommended against the idea of launching another impact-oriented registered investment advisor. “We need a pure-play, purpose-built, impact-prioritizing and market-building institution,” Welch says he heard. “And so that’s what we went out to do.”
The company, a public benefit corporation registered in Delaware, is governed not only by its board of directors but by the “trust stewardship committee” of its perpetual purpose trust. The trust controls a “golden share” that gives it veto power over major decisions and can even shut the company down if it strays from its mission.
“That orientation enables those who contribute capital to trust that it is being used in pursuit of the highest additional impact—and empowers the team to make decisions aligned with that pursuit, free from the traditional forces that shape most asset-management businesses,” said Julie Engelhorn, a member of the committee and CEO of POLLEX GmbH, an impact advisor in Hamburg, Germany. “It’s a subtle but profound shift: pointing fiduciary duty toward impact rather than risk-adjusted return.”
“Trimtab combines both capital innovation and mission-lock through governance innovation that enables it to push boundaries,” said Hanson Gong, who invested through his family office, Oogway Capital. He said he was attracted by Trimtab’s “unapologetically impact first” tag line.
“It still continues to inspire the team as they wrestle with the tensions between the current financial system and the one that is needed to solve the world’s existential challenges.”
Trimtab investor Steven Bonsey, who freely acknowledges that his family’s inherited wealth comes from “an extractive economic system” said he had long sought to invest in generative enterprises among people and in places that have been left behind.
“We found other investors that shared this vision, but were surprised to find that many expected a market-rate return on their ‘impact’ investments,” he told ImpactAlpha in an email. “What on earth for?”
Bonsey said he is excited by the “possible quantum effect” of Trimtab’s demonstration portfolio. “What if voices on the margin were brought to the center of financial decision-making? What if we could turn this entire extractive financial machine inside out?”
Multi-additionality
Conventional wisdom would call for investment managers to have deep expertise in a specific segment. Instead, Trimtab is multi-sector, multi-asset class and global in its ambition.
“Having a broad mandate to be able to address this very inefficient, fragmented market, and to energize a very collaborative space, and all the expertise that exists, allows you to pick the highest risk-adjusted impact across a whole bunch of different opportunities,” Ballou said.
He said Trimtab can source opportunities through its wide network. “Hey, Builders Vision, what are you doing in oceans? Or Ceniarth, tell us about risk-efficient senior emerging market private credit strategies. Or Rockefeller, what are your top carbon plays right now? MacArthur, what are you seeing in affordable housing?”
Trimtab’s pitch deck identifies three levels of impact: on the ground, at a “systems level,” through managers with models that transform markets through replication or ripple effects, and at the Trimtab level, where its capital can help funds launch that might not otherwise.
Trimtab’s $4 million investment in Acre Impact, for example, enabled the London-based private-debt manager to access a $40 million commitment from the European Investment Bank and reach a $100 million first close of its Export Finance Fund last year. The family office Ceniarth co-invested in Acre Impact.
The Acre investment fit into Trimtab’s strategy of “accelerating neglected markets.” Other such fund investments include Blue Forest’s FRB Catalyst Fund, which is financing wildfire risk-reduction and forest restoration; Mombak’s Amazon Reforestation Fund; and Outrigger Impact, which focuses on ocean resilience and small island developing states.
Under its strategy of “annihilating extractive systems,” Trimtab has backed Common Trust to spur business transitions to employee ownership trusts (see, “In-home caregivers get a stake as bigger companies discover employee ownership trusts”) and Seven Generations Capital in Canada, which is piloting a model for First Nations communities to build wealth through real estate development partnerships. Trimtab has taken a GP stake in Mission Driven Finance’s Capital Partners Fund.
Welch said Trimtab sourced its pending investment in Amazonia Impact Ventures through ImpactAlpha’s “Liist” of active fund managers. That investment fits into Trimtab’s strategy of activating the hardest-to-reach markets. Another investee, Near East Foundation’s Siraj Financial Services initiative, for example, is supporting entrepreneurs in war-torn Syria’s northern provinces.
“The aspirations of impact investors to change specific social and ecological systems with their investments are unlikely to be realized unless we change the way money moves through those systems,” said the ImPact’s Sam Bonsey, son of Steve. “Unless asset owners set a different objective, we cannot expect the financial system to enable different results in social and ecological systems.”
Bonsey, who announced in May that he was transitioning out of his leadership role at The ImPact, said Trimtab is an experiment in making it easy for asset owners to explicitly set different objectives for their investments – that is, risk-adjusted additional impact rather than risk-adjusted returns. “I hope it catalyzes many others.”
