ImpactAlpha LP/GP: Novel strategies in an impact fundraising drought

Greetings, Agents of Impact! 

Welcome to this week’s ImpactAlpha LP/GP, where we take you inside the real business of impact investing and the dynamic relationships between owners, managers and intermediaries of impact capital.

🗣️ Agents of Impact Call: The real returns of impact-first fund managers. Deep impact can come from unlikely bets. Fund managers able to invest in early stage, novel solutions in tough markets with fit-for-purpose capital and necessary support can deliver their investors big wins. Impact-first managers may generate market-rate returns – or even impact alpha – but their first priority is addressing the problem to be solved. On this month’s Agents of Impact Call, Open Road Impact’s Caroline Bressan, Rhia Ventures’ Erika Seth Davies, Global Partnerships’ Tara Murphy Forde, Echoing Green Signal Fund’s Daniel Tellalian, Acre Capital’s Hussein Sefian and other impact-first fund managers will explore the true costs – and returns – of impact-first investing, Wednesday, Jan. 21, at 10am PT / 1pm ET / 6pm London. RSVP today.

• True cost. Open Road Impact, along with Acumen, Kiva, the Miller Center for Global Impact and other impact-first fund managers, quantified the effect of smaller ticket sizes and enhanced hands-on support in “The true cost of impact-first investing.” The report found that such costs “reflect the price of inclusion.”  

In this week’s newsletter:

• Novel strategies in a fundraising drought
• Tideline’s survey of institutional LPs
• Apis & Heritage’s largest employee-led buyout
• Velveteen Ventures’ “unfair advantage”

Featured: Investor Sentiment

In impact fundraising drought, novel strategies and private credit stand out and, yes, size matters. First, the bad news: Fundraising for impact investment funds tanked last year – for the third consecutive year. Pension funds, family offices and other LPs are writing fewer checks to fund managers, from startup investment firms with completely new strategies to established managers raising billions in well-understood asset classes. The good news: Savvy and persistent managers are navigating the parched landscape to ride the upswing when it comes. Investors aren’t less interested in impact, they’re just sitting on their checkbooks. Nearly 90% of LPs are sticking with or growing their impact mandates, according to a recent Pitchbook survey. “Good managers are having success raising capital. While closing timelines often are longer, particularly among venture strategies, closings are happening, and happening at size for managers focused on achieving both compelling impact and financial return targets,” observes Jacob Haar of Community Investment Management.

• Differentiated edge. The latest Pitchbook data on private impact fundraising shows funds closing just $36.7 billion in commitments last year. Those numbers could bump up as more data trickles in from smaller funds. Still, the total is far below the $82.6 billion raised in 2024, and way down from the peak of $161 billion in 2022. ImpactAlpha has nevertheless tracked dozens of fundraising milestones in the past year. Today Bridges Fund Management announced the close of its sixth sustainable real estate fund for the UK and Europe. New York-based Superorganism, a first-time fund manager, this week closed its flagship fund for biodiversity-focused tech startups at $25.9 million. “It’s not about convincing people, it’s about finding people that are excited about what you are building,” Superorganism’s Kevin Webb and Tom Quigley tell ImpactAlpha.

• Real economy. Investors’ renewed skittishness about emerging markets was especially hard on fund managers in Africa, where the average time to close fundraising has stretched to more than two years, according to AVCA, an industry association for private equity investors in Africa. To encourage interest, “we just keep layering downside protection until it looks like it’s really hard to lose money,” says Isaac Marshall of TLG Capital, which provides bank-guaranteed loans to mid-sized businesses in Africa’s least developed markets (for background see, “From Singapore, Tsao Family Office expands the LP pool for impact strategies in Africa”). Debt funds like TLG’s fared better than their equity-focused peers through last year’s collapse in development finance. Credit funds are taking positions in “real-asset, cash flow-positive businesses in telecoms, essential healthcare, schools,” Marshall says. “It’s very ‘real economy.’”
  
• Keep reading, “In impact fundraising drought, novel strategies and private credit stand out and, yes, size matters,” by Jessica Pothering and Lucy Ngige. 

Survey: Institutional LPs seek consistent data and better ways to get their money back. Nearly all respondents in Tideline’s new survey of over 40 impact-focused limited partners, representing $19 trillion in assets under management, cited lack of liquidity as a critical obstacle. Tideline’s study, with the Institutional Limited Partners Association and Campbell Lutyens, a London-based private capital advisor and placement agent, assessed “state of market institutionalization” of impact funds. Survey respondents included AllianzGI, Temasek, UBS Global Wealth Management and APG Asset Management. “By addressing barriers such as limited liquidity head-on, the industry can unlock greater institutional capital and move closer to delivering the scale, performance and impact outcomes investors expect,” says Campbell Lutyens’ Paula Langton. 

• Scale limitations. The survey also found that the investment policies of many institutional LPs effectively exclude smaller funds. More than a quarter of impact funds are led by first-time managers. When institutions are able to commit, smaller ticket sizes require LPs to take on more risk and devote more resources to diligence. The lack of established track records has made it hard for LPs to comprehensively evaluate these newer managers. “Many LPs are unable to deploy capital at their preferred scale, particularly outside of climate-focused strategies,” the report states.
   
• Keep reading. 

Dealflow: Ownership Economy

In its largest buyout, Apis & Heritage helps thousands of B and B Maintenance workers become owners. For almost 50 years, B and B Maintenance’s full- and part-time workers have provided cleaning and other services for government, education, healthcare and other commercial facilities in 20 US states. Apis & Heritage is financing an employee-led buyout, through which all of B and B’s workers will become owners under an employee stock ownership plan, or ESOP. The transaction represents A&H’s largest deal to date, more than doubling the roughly 400 worker-owners of its other five portfolio companies (see, “Apis & Heritage aims to help business owners ‘exit responsibly’ – to their employees”). “More workers, more wealth,” A&H’s Tobi Adewodu told ImpactAlpha. “We always get excited about having more workers in ESOPs.” Neatland Holdings, a facility maintenance investment firm, will exit its investment in B and B, but two of Neatland’s executives, Daniel Ik-Obazee and Terry Cooley, will take on management roles at B and B. “We believe that employee ownership will empower our workforce and drive long-term success for everyone involved,” said Ik-Obazee.

• Ownership culture. A&H says it plans to work closely with B and B’s management and new employee-owners, using its ownership culture framework to “strengthen the company’s culture of efficiency, resiliency and respect.” A&H has brought on Melissa Hoover from the Democracy at Work Institute to lead its ownership culture strategy. B and B joins the portfolio of A&H’s first $58.1 million fund. The firm expects to close its second fund this month.
  
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Agricultural Commodity Transformation Fund secures anchor backing from Invest International. The Agricultural Commodity Transformation Fund reached a first close of $40 million to provide debt finance and technical assistance to small and medium sized agricultural businesses in Africa, Latin America and Asia. The ACT fund, established by the UN-affiliated Common Fund for Commodities, aims to reach about 275,000 farmers and increase “farmer productivity while restoring soils, biodiversity and carbon stocks.” Netherlands-based Invest International anchored the fund. The Common Fund for Commodities committed $20 million in first-loss capital. 

• Dutch expertise. The Netherlands is the world’s second-largest food exporter. Invest International’s investment requires that at least 20% of the portfolio companies have Dutch ownership, supply Dutch agri-trading companies, or use Dutch processors for European distribution. ACT fund is targeting $75 million in total by the end of this year, with plans to make roughly 70 investments. “By combining impact-oriented finance with Dutch sector expertise, we help unlock capital for small businesses that are building resilient, inclusive food systems – and strengthen global value chains in the process,” said Invest International’s Michiel Slootweg.
  
• More.

Dealflow overflow. Investment news crossing our desks:

• Impact Fund Denmark, Denmark’s development finance institution, committed $15 million to a Verdant Capital fund to invest in African financial institutions serving small and mid-sized businesses. (Impact Fund Denmark)

• California-based HCAP Partners acquired Core Analytics Lab & Radiology, a provider of radiology and laboratory services with 300 facilities in California. Listen to HCAP’s Hope Mago on the firm’s “gainful jobs” strategy. (HCAP Partners)

• African Development Partners secured $50 million from Germany’s DEG to provide growth capital to mid-sized companies in Africa working in healthcare, transport, financial services and retail. (DEG)

GP Spotlight: Returns on Inclusion

Indigenous-led Velveteen Ventures backs overlooked founders with an “unfair advantage.” The Chicago-based fund manager invests in founders that have an “unfair advantage” because of their life experiences and unique perspectives. The Native-led fund, launched in 2024, writes checks of $500,000 to $4 million in seed and Series A financing rounds for companies in healthcare, climate and consumer tech. Velveteen’s thesis is that entrepreneurs with lived experience can better spot innovative solutions. “The number one thing we look for is founder-market fit,” Velveteen’s Betsy Fore told ImpactAlpha. Velveteen’s first fund has backing from the MInnesota-based Bush Foundation (not related to the Bush political family);it has already made three investments. “In order to truly shift the power within the nation and who’s getting funded, we need to be on the other side of the table making these decisions,” Fore said.

• Values-driven. Fore, one of the first Indigenous women to raise Series A financing, reflects Velveteen’s thesis. She founded the baby food company Tiny Organics when her son was infant, and in two years scaled the brand to $13 million in revenues. Earlier, Fore built WonderWoof, a pet wearables brand, for her dog. Fore’s partner, Karla Brollier, an Alaska Native, helped develop Patagonia’s perpetual purpose trust and spun out the Home Planet Fund, an innovative fund that invests all of Patagonia’s profits into climate solutions. She also worked for Al Gore’s climate nonprofit, the Climate Reality Project. “What Karla and I have in spades – and our real unfair advantage – is that Native voices were never really at the table,” said Fore, author of “Built on purpose“. “We’re not coming at it from groupthink. We’re coming at it from a values-driven perspective.”
  
• Keep reading. 

Agents of Impact: Follow the Talent

The Small Foundation promotes Liz Wilson to CEO; Conor Brosnan continues as executive chair and chief investment officer… Convergence Blended Finance’s Joan Larrea joins the Bretton Woods Committee… New England Impact Investing Initiative seeks an impact fellow… Upstart CoLab has an opening for a grant writer. 

Catalytic Finance Foundation is recruiting two consultants to coordinate blue economy convenings… Goldhirsh Foundation is looking for an investment analyst and fund manager in Los Angeles… New York Green Bank seeks an impact intern… Dalberg has openings for a senior consultant in Mexico City, Seattle, and Washington, DC… California Endowment is recruiting an investment analyst… Reciprocal and UC Davis Chile are hosting a startup bootcamp for early-stage agtech ventures in Chile.

Blue economy: The Ocean Enterprise Accelerator is accepting applications from blue economy startups… The Nature Conservancy and Newlab seek proposals for the Global Ocean Innovation Challenge, an accelerator for ocean conservation tech in Indonesia… Hatch Blue and WWF have opened the Blue Catalyst accelerator program for blue carbon projects in Asia.

👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.

Thank you for your impact!

– Jan. 14, 2026