Impact investing is a term that generally describes the lofty goal of making money on investments in companies whose stated purpose is to benefit the community in some way—or, to put it a simpler way, to make money while doing good.
I usually think of impact investing as something that occurs in emerging markets, where even something as basic (in a developed market sense) as providing mobile phone service can be viewed as an amazing investment opportunity.
However, impact investing apparently is not confined to far-flung areas of the world.
Two private equity executives, Jim Kelley, co-founder of Vestar Capital Partners, and former Excellere Partners senior executive Ryan Heckman have formed the Colorado Impact Fund to target investments in Colorado-based companies that have “some defined impact on the community,” Kelley told peHUB in an interview Wednesday. Heckman left Excellere earlier this year, peHUB reported.
The Colorado Impact Fund was unveiled Tuesday during an event hosted by Colorado Governor John Hickenlooper, along with Kelley and Heckman at the governor’s mansion, according to a statement from the firm. The impetus for the effort came from Hickenlooper’s call to the Colorado investment community to find ways to use their skills to benefit the state, Kelley said.
“In this state, we have a real depth of intellectual capital and entrepreneurial talent, but…insufficient…capital as well as advice and mentoring and network of relationships we all need for young businesses,” Kelley said.
The Colorado Impact Fund raised $62 million, beating its $50 million target, Kelley said. The fund had a $75 million hard cap, according to a filing with the U.S. Securities and Exchange Commission in April.
The fund raised capital strictly from investors in Colorado—and not the usual private equity limited partners—the investor group includes private investors including family offices, executives and private foundations from around the state, Kelley said.
The fund will target investments of $2 million to $6 million in community health, natural resource conservation, education and workforce development and economic development throughout Colorado, according to the statement.
The Colorado Impact Fund will invest in companies that are beyond the startup stage, that have “proof of concept” and provide some benefit to the community. For example, the fund is considering an investment in a company that reduces the mercury emissions from coal-fired power plants, Kelley said. The fund has not yet made an investment.
“The more we’re able to bring market-based solutions to the challenges we face, those are likely to be more durable solutions than government programs,” Kelley said.
The Colorado Impact Fund is being managed pro bono by an affiliate of Vestar Capital Management, according to Kelley, who will continue his daily responsibilities with Vestar while overseeing the new vehicle. The impact fund has no management fee or carried interest, he said.
To keep the lights on, Vestar is providing the basic infrastructure for the business, including office space out of Vestar’s Denver office, HR and SEC compliance services, while direct operating expenses, such as compensation, will be picked up by investors, Kelley said. “This was a way for Vestar to contribute back to the community,” he said.
The Colorado Impact Fund has a team of four professionals – partner Ryan Kirkpatrick, a former principal at Ferrer Freeman & Company; principal and general counsel Carly Abrahamson, who formerly worked in the business and finance group at Ballard Spahr LLP in Denver; associate Kyle Klopcic, who formerly worked in investment banking at Lehman Brothers and the Walt Disney Co in corporate strategy and business development; and Grace Oliva, a research analyst who previously worked in the oil and gas industry as a data analyst.
Photo courtesy of Shutterstock.DON'T MISS IT! Now in its 10th year, PartnerConnect Midwest is bringing you 300 attendees, over 400 private ExecConnect meetings between LPs and GPs, and three insightful tracks including Buyouts Funds, Buyouts Deals and Co-Investments. REGISTER TODAY!