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In this week’s LP/GP:
- Impact fund managers are (again) trying to ditch the VC model
- Alternative assets for 401(k)s
- Circulate Capital’s corporate and European LPs
- VCs grapple with responsible AI
Featured: Fund Structures
Leaning into outcomes, impact fund managers move away from the VC model. The typical 10-year, “two and 20” fund model has been declared obsolete many times, especially among impact investors, for whom the standard private equity or venture capital fund structure is often particularly ill-suited. And yet, it persists. Now, market conditions and more clear-eyed assessments of value-creation strategies are combining to support another wave of fit-for-purpose structures. “What’s changed is not just volatility, but the breakdown of assumptions,” said RCPK’s Chintan Panchal, an impact lawyer who has helped structure funds across the ecosystem. “Traditional fund structures assume stable exit pathways, clear pricing of risk, and aligned investor expectations. In many impact sectors today, those assumptions don’t hold.”
- Outcomes over instruments. Some managers are starting from scratch and building a playbook for impact fund design. Bogotá-based Innpactia reflects the frustration founder Juan Carlos Lozano experienced watching public-sector projects fall short not for lack of capital, but because of how they were structured. “We need impact investing funds to start differentiating radically from understanding themselves as venture funds,” Lozano tells ImpactAlpha. Innpactia helped design Alborada Ventures, a $2 million pilot co-managed with Radical Flexibility Fund that backs migrant-owned businesses that traditional impact investors overlook, deploying nearly half its capital as loans, with the remainder split across recoverable grants, outright grants and technical assistance. Innpatia is also putting together Fondo para la Democracia, a proposed $10 million fund with Bogotá-based impact investor Corporación Inversor that pay organizations based on improvements in electoral integrity, media independence and civic participation.
- Structured equity. Redemption rights, in which ownership stakes are returned to the venture over time as investors are repaid, are en vogue again among investors in tech for good, True Wealth Ventures’ Laurie Felker Jones writes in a separate guest post on ImpactAlpha. She cites Chattanooga-based Capacity Capital, which helps founders “hire” the right kind of capital and often encourages founders to avoid venture capital altogether, and if they take it, to structure multiple pathways to liquidity. In Colorado, Howdy Partners incorporates structured equity options alongside traditional venture terms to recycle capital for rural technology ventures. And from Costa Rica, Atta Impact Capital, is applying structured approaches in Mexico and Central America, where traditional venture models often fall short. “What these strategies share is not a single structure, but a common aim: to better align the way a business grows with the way capital is returned,” Felker Jones writes. Read her full post.
- Climate capital reset. The default 10-year fund model fails many climate solutions, which often have longer time horizons to commercial success, according to a new report from Onramp Capital, MOTIV Partners, and Great Circle Capital Advisors, which interviewed more than 150 investors, executives, policymakers, and philanthropic leaders to chart the direction of climate investment. “Deploying the same climate capital strategies used from 2015-2025 will not work in the coming decade,” they conclude. Participants pointed to the need for new models, funded at scale, that rethink traditional assumptions about equity, debt, risk, duration, and internal rates of return to appeal to institutional investors. Instruments such as the Development-SAFE, a twist on the “simple agreement for equity” widely used in Silicon Valley created by Elemental Impact and the law firm Wilson Sonsini, address the needs of startups developing their first pilot plants or commercial facilities.
- Keep reading, “Leaning into outcomes, impact fund managers move away from the VC model,” by Erik Stein.
Situational awareness: The Department of Labor this week released its long-awaited proposal for integrating alternative assets, such as private equity and private credit, as well as cryptocurrencies, into retirement plans. Private equity and credit funds are eagerly eyeing the $14 trillion market for 401(k)s, even as they already face redemption requests for their private-credit funds (see, “Larry Fink calls for long term investing and wealth-building solutions”).
- Sound off. The release kicks off what is likely to be a lively 60-day public comment period. Secretary of Labor Lori Chavez-DeRemer said the new rule would let plan sponsors consider products that better reflect today’s investment landscape, and usher in “a new golden age” for US workers. Critics argue that such alternatives may prove complex, risky or costly for many Americans. Where do you stand? Drop us a line.
Dealflow: Circular Economy
Corporate LPs level up commitments to plastic-waste reduction with Circulate Capital. Singapore-based Circulate Capital eight years ago developed a novel approach to tackling Asia’s rampant plastic waste problem: Raise capital from corporations with large plastic footprints to invest in local recycling infrastructure and capacity. “It was a frantic time of looking for solutions to ocean plastic,” recalls Circulate’s Rob Kaplan. “All of them are now much smarter about their strategies” (revisit our conversation with Kaplan, “Catalyzing capital to prevent plastic waste”). The Singapore-based firm has raised $220 million for its second Asia-focused fund, with key strategic investments from Coca-Cola, Procter & Gamble, Danone and Dow. All four companies earlier backed Circulate’s first fund, which raised more than $100 million and invested in 17 companies. It has fully exited Recykal, a company in India connecting waste generators to processors and recyclers. Its partial exits include Tridi Oasis, a woman-led company in Indonesia that specializes in PET plastic recycling, and India-based Lucro, which specializes in flexible plastic recycling. “The market has matured significantly in the last five years,” Kaplan said, but there remains “a lot of low hanging fruit.”
- 🟢 Live on Edge. Circulate’s long list of LPs also includes Allianz Global Investors and Achmea Investment Management, which invested on behalf of an unnamed Dutch pension fund; International Finance Corp., the European Investment Bank and development finance institutions from the UK, France, Australia, Denmark; family offices Builders Vision, Stella and Clotho; and responsAbility, Wire Group and Fondation Prince Albert II de Monaco. ImpactAlpha Edge has identified more than six-dozen European institutions that are investing to accelerate a global circular transition. The €300 million European Circular Bioeconomy Fund, for example, was anchored by a €100 million commitment from the European Investment Bank to focus on solutions that use renewable biological resources instead of fossil inputs. Among the investors Rotterdam-based Infinity Recycling has added for its €175 million ($190 million) Circular Plastics Fund are the Dutch insurance group ASR and ING Sustainable Investments. Edinburgh-based Circularity Capital has attracted investments from BNP Paribas, AXA Investment Managers and German chemical and consumer goods company Henkel. Get the ImpactAlpha Edge
- Closed loop. Circulate Capital spun out of New York-based Closed Loop Partners, a private equity firm that invests in recycling infrastructure in the US. Closed Loop announced a new investment, taking a majority stake in Seattle-based Sutter Metals. Sutter Metals is helping salvage critical metals like copper, brass and aluminum from electronic waste and industrial waste. “The need for a stronger domestic metals supply chain has come to the forefront, with used metals and minerals an underutilized, yet critical supply source,” Closed Loop said in a statement.
- Check it out.
Dealflow overflow. Investment news crossing our desks:
- New York-based Upstart Co-Lab, through its Inclusive Creative Economy Strategy, invested $1.5 million in Alante Capital, an early stage sustainable fashion venture firm co-founded by fashion designer Eilieen Fisher. (Upstart Co-Lab)
- Houston-based private equity firm Del Monte Capital acquired a majority stake in DLG Infrastructure Services, a local provider of municipal maintenance services for flood mitigation, wastewater rehabilitation and other water infrastructure upgrades. (Del Monte Capital)
- ThinkLabs AI, a provider of grid intelligence to electric utilities spun out of GE Vernova, raised $28 million in Series A funding from Energy Impact Partners, NVIDIA’s venture arm NVentures and Edison International. (ThinkLabs AI)
- The African Development Bank Group will invest €5 million in equity and €2.5 million in a junior tranche in Breega’s Africa Seed Fund, which backs early-stage African tech founders expanding access to healthcare, education and financial services. (AfDB)
Signals: Shaping the Algorithm
VCs agree responsible AI is good business. Now they need to do the work. “AI is more suited to ‘move slow to move fast,’ than to ‘move fast and break things,'” one partner at a billion-dollar-plus VC firm told Reframe Venture, ImpactVC, and Project Liberty Institute for their latest research on AI and VC. The comment “is striking coming from an industry built on disruption,” Oliver Nixon of ReFrame writes in a guest post on ImpactAlpha. The survey of 56 venture capital professionals around the world suggests that VCs see responsible AI as financially material, but few are successfully integrating such concerns in their decision-making. The finding echoed the buzz at ReFrame’s responsible AI conference, which brought together 70 VCs and LPs in New York last month.
- ‘AI responsibility stack.’ Nearly three-quarters of the VCs surveyed believe that companies with stronger responsible AI practices will be more financially successful; that figure rose to 83% for respondents with more than five years of investing experience. Similar majorities see investment opportunities in companies that make responsibility core to their proposition. The VCs see a gap for practical, commercially viable safety infrastructure. Big Tech creates standards that mainly serve their own interests, they say, and many nonprofits focus on frontier risks rather than deployment guidance.
- LP pressure. Just 14% of VCs surveyed rated their firm’s AI risk assessment capabilities as “good”; only 27% feel they have sufficient internal expertise on responsible AI. With a push from LPs, they are starting to overcome their knowledge gaps. In the US, where federal AI regulation remains fragmented and ESG-specific language carries political baggage, LPs are stepping into a governance vacuum. In Europe, where funds have longer experience with regulations, VCs report less LP pressure. About half of VCs, regardless of geography, expect concerns about responsible AI to come up in their next fund raise. VCs must step up to the commercial opportunity of responsible AI, says Nixon. “LPs are likely to reward them for it.”
- Read the whole post.
Agents of Impact: Follow the Talent
Meeta Kothare, who founded the Global Sustainability Leadership Institute at the McCombs School of Business at the University of Texas at Austin, is stepping down from her role as managing director. GSLI is recruiting a new managing director to help lead the institute.
Minderoo Foundation taps Andrew Lill, previously with Legalsuper, as chief investment officer, effective in July… Health Forward Foundation welcomes Brian Henke, former operations director at the Kauffman Foundation, as chief financial officer… Nia Hope Bess is promoted to head of social impact integration at JPMorganChase… Thomson Reuters has an opening for a social impact senior director.
Galvanize Climate Solutions is recruiting a venture and growth associate in San Francisco or New York… In Montreal, FinDev Canada seeks a chief finance and operations officer and an investment officer and portfolio manager; In Cape Town, the development finance institution is looking for a South Africa-focused senior investment associate… In Nairobi, FSD Africa is recruiting a development impact analyst and Accion is on the hunt for an investment and portfolio associate.
T. Rowe Price is hiring a responsible investing analyst in Baltimore… JPMorganChase launches the American Dream Initiative to expand access to entrepreneurship, housing, wealth building, healthcare and career opportunities in US communities… ImpactAssets Tim Freundlich will join a virtual discussion on aligning investment and philanthropy towards systemic change, Tuesday, April 7 at 11:30am ET.
👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.
Thank you for your impact!
– April 1, 2026
