Hatcher's deal flow was examined and data from third-party transactions was taken to determine the impact on investment returns. For this review we will use the concepts of impact and ESG together. The multiples those who invest in companies that are influenced by impacts are much higher than investors who do not.
The conclusion is that impact strategies are more likely to generate a higher return than traditional early-stage plans for investment. We will focus on series A and some other earlier investments in this article. This is Hatcher's primary goal and allows us to perform the analysis with enough volume of transactions.
Our analysis focuses on the change in value across a period of time, as valuations alter, not necessarily a realized value, as most investments do not realize their value within the time frame. Based on the period of time in the analysis, we eliminate any new valuations (possibly up to 0) in the event that no other applicable signals are available.
The following chart illustrates the effect. This is a brief overview of one data source which includes early stage rounds, relatively recent investment times, and the 5-year timeline. It shows the relative performance of many views that we examined. But, the figures may be affected by changes in view parameters.
Impact vs. non-Impact Investor
This report is not exhaustive without confounding factors. We aren't able to discern the objective of each investment, we do know that the performance of Impact investments is comparable to that of the complimentary pool.
There is some evidence that Impact investors might be drawn to companies that have already gained popularity, thus they may be taking a risk on scalability and choosing more favorable outcomes in the end, but generally paying a cost that could be offset by portfolio gains. Overall, the performance of "impact affected" companies is superior on both a short-term and long-term valuation multiple.
We searched for high-frequency investors that had clear mentions of the impact of their investments or similar objectives on their website or in the absence of an impact-like approach and tagged them as impact investors. We eventually labeled a large number of investments with the help of high frequency investors. We then flagged investments as having a 'known impact investor' or a mix, as well as with a well-known non-impact investor, or neither.
Because this isn't an exhaustive list of all transactions, there are a lot of cases where investments could have been inappropriately tagged. However, it is a modest sample set and investors who have included the concept of impact recently tend to be more favourable to impact in their earlier strategies.
Other elements are in play, Learn more here other than the specific purpose and nature of the investor. The greater self-selection and scrutinizing that goes with aligning with the impact goals even on a vague basis, leads to a greater emphasis on feasibility, scalability and team composition, among other aspects that could affect the direction of valuation. A lot of impacts investment concepts are likely to yield high intrinsic returns.
Summary: There is a strong connection between investors' return multiples, as well as the purpose of impact investing. This allows for positive feedback in investment which can help further enhance impact goals.