ImpactAlpha, March 25 – i(x) launched in 2016 to offer early and growing impact companies a more patient alternative to traditional venture capital and private equity-type investments. It has now raised $12 million in its own Series A investment round towards a $15 million goal, and has secured backing from Airbnb co-founder Joe Gebbia and Veronica Chou and Angelica Fuentes, prominent high net worth individuals from China and Mexico respectively.
i(x) is a permanently capitalized holding company, which means it makes equity investments off of its own balance sheet, without the timeline pressures of an investment fund. The company buys shares in private impact businesses in renewable energy, waste reduction, green real estate, gender equality, and other sectors. It’s backed by 30 wealthy individuals and family offices, who are all shareholders in the company and whose investment capital is used to seed other equity investments.
“We believe this is an efficient structure for wealth creation and for social impact because you’re freed from the arbitrary timelines and duration and decision making of funds,” i(x) co-founder Trevor Neilson told ImpactAlpha.
The New Alternatives: Holding Companies that Build Assets and Impact of ‘Infinite Duration’
That indefinite—and highly illiquid—structure isn’t always easy for investors to stomach. (See: “Impact holding companies: Breaking the chains of the 10-year fund is harder than it looks.“) But Neilson says i(x)’s investors are on-board with the company’s long-term investment strategy, and aren’t gunning for exits or pay-outs.
“In the early years, you don’t want to pay distributions because you defeat the purpose” of the holding company model, Neilson explains.
But just because i(x) is patient doesn’t mean it’s passive. Neilson says its laser focused on “driving towards cashflow and profitability” across the platform. It also actively works with its investors to help them identify other impact investments that can complement i(x) in their portfolios. That includes presenting them with direct investment opportunities that come across i(x)’s desk and helping them negotiate such deals efficiently and cost-effectively.
A good example is WasteFuel, which is developing technology that can convert plastic and other waste into biofuel for the aviation industry. i(x) helped co-found and seed WasteFuel and is now supporting its feasibility plans for waste refineries in Panama and Colombia by both investing its own capital and helping it raise an additional $10 million through its investor network. Once WasteFuel is through the feasibility phase, i(x) will then support its nine-digit fundraising needs to actually build the plants.
It’s because of i(x)’s holding company structure that it can back emerging technologies like WasteFuel that take time to develop and commercialize.
Other investments include carbon capture technology company Carbon Engineering, which itself just raised a $68 million equity round. i(x) was also the first investor in BRAVA Investments, a gender-focused investment fund that has backed companies like birth control and reproductive health startup Cadence.
For its own growth plans, i(x) is focused on closing its Series A round. Its goal is to raise another $3 million, which will bring it to about a $75 million valuation, Neilson says. That capital will in turn be used to grow both its current portfolio companies and its portfolio, with an eye towards investments in new sectors, including food, agriculture and material science.