Around 1.25 billion of "venture capital for sustainability" has been raised by European venture capitalists as of September 2006, according to a report from the European Social Investment Forum.
The Paris-based organisation defines such investment as "a specific area within venture capital where profit objectives are supplemented by a mission which has direct impacts on sustainability". It explicitly says it is not synonymous with ‘clean-tech’ investing, which has a narrower remit.
"We are seeing an extraordinary upward growth curve in private equity/venture capital, which, in 2006, hit record levels of financing in both Europe and the US," said Matt Christensen, Eurosif executive director. "At the same time, venture capital and sustainability are increasingly being linked together as investors see that financial returns can also coincide with societal benefits."
Eurosif’s report published today is based on a survey of European VCs, and claims the sector accounts for about 6% of the European VC market.
Eurosif says that the "burgeoning sector" includes funds focusing on renewable energy, but also those "focused on bridging economic divides", such as investing in social enterprises, but it does not include micro-credit or micro-equity funds.
The report finds that the majority of investors seek traditional VC returns in the 20-25% range per annum from their investments.
It also finds that much of the interest in this sector comes from family offices and high net-worth individuals, and that there is a lack of investment from institutional investors.
Investors cited in the report include SAM Private Equity, Foursome Investors, Wheb Ventures, BankInvest, Bridges Community Ventures and Rabo Private Equity.
