Now that impact investing is reaching mainstream audiences, Warner Philips, managing partner at Amsterdam-based Rubio Impact Ventures (formerly known as Social Impact Ventures NL), reflects on what he thinks is still holding it back.
“It’s a mix of things,” he says. “Impact is in the eye of the beholder; everyone has different perspectives on what it is.”
A refrigerator company is not necessarily an impact company in Europe, he explains, but if it develops a solar-powered refrigerator to help rural Africans preserve food and medicines, then it’s definitely impact.
“Similarly, lighting is not really considered impact in Europe, but solar-powered LED lighting in off-grid markets is truly empowering for many communities.”
Warner started his career in venture capital in 1996. After a successful stint in San Francisco for Tendris, the investment firm that he co-founded, and as an angel investor, he moved back to Amsterdam in 2015 to join Rubio and launch its first fund (€40mn in 15 companies). Rubio is now investing out of its second fund (€100mn).
Rubio sets impact targets for each investment it makes, and these targets align business with impact at the investment level. “Rubio is a cooperative so that affects how we approach it,” says Warner.
“The impact targets are approved by our Impact Advisory Board pre-investment, and confirmed by a council of members post-investment. The companies we invest in have their impact mission stated in their corporate documents and these are only changed with qualified voting by stakeholders.”
How do you contend with the brush-off that impact investing is philanthropy?
“Yes, you get that from many commercial investors who consider impact investing an extension of charity or something for their annual report’s CSR (corporate social responsibility) section. We believe you can make investments in companies that scale commercially, where impact and business are fully aligned and where healthy returns – the same if not better than market – are viable.”
“Rubio’s track record alone is evidence that impact investing is coming of age and pays healthy returns. Our first fund is bearing fruit and we’ve almost completed fundraising for our second fund, which already has nine portfolio companies.”
And what about businesses who don’t recognise their own (impact) image in the mirror?
“Nice visual. True, many entrepreneurs don’t realise they ‘qualify’ as impact entrepreneurs, so might not seek to position themselves as such, even though they are or at least could be.”
“Consider the US ride-hailing company Lyft. Its original mission was to reduce cars on the road, make transport greener and basically give anyone with a car, driver’s license and insurance a chance to work. Nobody would consider them an impact company today, but when they started, and with that mission, it most certainly would be. By the way, I was an early investor in Lyft.”
You invested in Samasource (renamed Sama) in 2019. What drove that decision?
“Sama is a fantastic showcase for our investment thesis that you can build great companies while growing business, growing impact and generating healthy returns, and even compete on a global scale with leading artificial intelligence and machine-learning companies."
Read here our story about Sama and the randomised controlled trial to measure its impact.
Any plans for follow-up investment in Sama?
“We continue to support the company actively in several ways, and follow-up investing is and will be one of them. In fact we’ve participated in every round since we invested and intend to do so for as long as we can."
“The MIT trial results and B Corp certification certainly help and further emphasise Sama’s deep commitment to continuous improvement on all fronts, including on how to understand, measure, report and improve their impact since this is core to its values and also to its differentiated position in the market."
“That makes the company a preferred supplier to many leading tech giants in several industries, all seeking to be at the forefront of how artificial intelligence will change the ways in which we live and work.”
Would you encourage other companies in your portfolio to pursue similar trials/standards?
“Absolutely. Although the level at which each company can do so is naturally different, depending on which stage they’re at (budgets, resources). At Rubio, we believe – and we’re seeing more evidence all the time – companies that embed impact into their core proposition will also add more differentiation and attract more (and more loyal) customers, strengthening their brands, while attracting more capital/investors.”