Median Impact vs Non-Impact IRR

Upon examining the data from 2013 to 2020, it's apparent that impact funds typically require a longer duration to yield returns compared to non-impact funds, but they may offer higher returns once they mature, as demonstrated by the performance of impact funds in 2013. In the shorter term, defined as 0-7 years, non-impact funds generally achieve greater returns.

This trend is expected given the nature of impact funds, which frequently invest in startups needing extended investment periods akin to those in the deep technology sector. Such startups usually demand more patient capital than traditional tech startups, which attract conventional venture capital and anticipate quicker financial gains.

Related Report

The Business of Impact Investing in 2023

Impact investing is a form of investing that believes that every dollar invested can make a difference, while producing a profit. Over the past 20 years, impact investing has undergone a remarkable evolution, driven by a confluence of societal, economic, and technological factors. These influences have propelled impact investing into a crucial mechanism for addressing societal needs, traditionally the domain of public funding. In 2022, the impact investing market sat at US$1,146 billion, growing at a healthy compounded annual growth rate (CAGR) of 29% over the last four years. This special report features interviews with thought leaders in the impact investing space, and offers an insightful perspective on the current and future state of impact investing, its challenges and opportunities, and highlights case studies of investors, social enterprises, and the impact they are having on the world.

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