by Marina Hadjipateras
How Purpose-Driven Investing is Taking a Front Row Seat Amidst the Pandemic. Finally.
From family foundations to institutional investors, triple bottom line investing is finally breaking through to the mainstream. The visibility and durability of purpose-driven companies has been on the rise for years, but recent global uncertainty has earned these socially-conscious businesses the attention of big investors. As they increasingly eye triple bottom line companies and private equity, that attention trickles down into the world I know best: early-stage startup investing with an eye on purpose.
That’s a sweeping change — and it’s long overdue.
Once written off as niche “do-gooder” companies destined to struggle under the self-imposed restrictions of sustainable supply chains, transparent risk assessment, and socially-conscious governance policies, triple bottom line companies captured headlines after they significantly outperformed traditional firms at the outset of the Coronavirus pandemic. In fact, it wasn’t only socially-driven companies that outperformed: a recent report from Reuters found that funds heavy in socially-responsible, purpose-driven companies are outperforming traditional funds during these unprecedented time. Perhaps because this differs from other times of distress in that a global pandemic has people second guessing lifestyles not only from an economic perspective but from a social and environmental perspective.
“It is not enough to be industrious; so are the ants. What are you industrious about?”― Henry David Thoreau
Along with the energy that many institutional investors are feeling in this financial landscape about the value proposition of mission-driven companies comes the new-age family office investor group: Next Gens. Often speaking at family office events, it’s become clear that the next generation of family leaders are especially interested in purpose-driven investing, and more so than any prior generation.
In 2015 while having a front row seat in a generational maritime shipping business, I felt a keen mission to modernize the industry through improving environmental and social footprints and soon began to recognize other industries that could use this push.
I began Trail Mix Ventures (TMV) in 2016 with my partner Soraya Darabi in order to invest in founders with ideas that would reshape industries and inspire new ones with a focus on sustainability, the future of work, and the care economy. We believed that purpose-driven went hand in hand with profit-driven. We were not, however, part of the mainstream at this time.
One of our first investments, Nautilus Labs, saw an opportunity to bring a commitment to environmental stewardship into the maritime shipping industry. The team at Nautilus faced a two-pronged crisis: fragmented data aboard vessels is not just inefficient but also unsustainable.
When Nautilus unveiled a groundbreaking artificial intelligence technology that optimized shipping itineraries to minimize fuel waste and reduce emissions, major industry players were skeptical. Nevertheless, large firms have now seen up to 30% reductions in emissions and fuel consumption when transitioning from manual to AI route optimization. Now over 200 ships and counting have adopted the Nautilus software.
Breaking into an age-old culture and mind-set and trying to change the way an industry has done business can take time but it can be ‘worth’ it in both senses of the word. It has proven so with Nautilus and while we didn’t want it to take a Pandemic for the idea of purpose-driven investing to become mainstream — it has opened the eyes of other skeptics who are more willing than ever to advance into a triple bottom line approach.
In April 2019, bolstered by its innovative and mission-driven new product, Nautilus announced an $11 million Series A financing round led by Microsoft’s venture arm, M12. Alas, having strong corporate values doesn’t need to harm shareholder value.
Along with Nautilus, other companies in TMV’s portfolio like Goodr, which works to address hunger in communities as well as reduce food waste and carbon footprints, and Ridwell, a privatized recycling company which makes it easy to sustainably reuse and recycle your stuff are growing exponentially in customer-base.
Ironically triple bottom line companies are now providing a roadmap for traditional businesses to rediscover their foundational values. As was the case with the maritime world, it’s evident that even the oldest, most conservative business can break down their corporate verticals and examine their environmental and social impact — and smart businesses are already shifting how they operate on the local, national, and global scale.
Moving forward, I believe companies without a triple bottom line will not only be doing a disservice to the environment but they will lose out on a competitive advantage with consumers, clients, and customers.
Creating a purpose-driven business isn’t something founders do halfway. We, at TMV, see this first-hand and while tough, the reward is a durable, scalable and sustainable business. That’s good news for investors and the world.