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Working Paper
| 2020
Anchors Aweigh: Analysis of Anchor Limited Partner Investors in Impact Investment Funds
by
Shawn A. Cole, Rob T. Zochowski, Fanele Mashwama and Heather McPherson
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Abstract
This note describes results from a survey of “anchor investors” in impact funds. Anchor investors
are described as “generally the first investor to make a substantial capital commitment to a fund,”
(according to the Global Impact Investing Network, “GIIN”) and their role is often thought to be an
important determinant of the fund’s ultimate ability to raise meaningful amounts of investable
capital. We survey 13 fund managers, who collectively provide information for 28 funds. We also
conduct qualitative interviews with six anchor investors. We find the following: the average
number of anchor investors per fund is one; however, 16 out of 28 funds report having no anchor
investor; anchor investors invest $8 million into funds on average whereas non-anchors invest
$4.5 million. We also note that reinvestment rates seem relatively low: anchor investors reinvest
in subsequent funds in 8% of cases, while non-anchors reinvest 17% of the time. We show that
the type of investors who are anchor investors is similar to that of non-anchor investors. Our
results suggest that anchor investors can play a valuable market-building role for impact fund
managers. The large investments anchors make may be particularly helpful to new fund
managers who might have limited distribution and sales capacities. Interviews with anchor
investors also suggest a catalytic “halo” effect for funds receiving anchor investments, as funds
benefit from an early endorsement by a respected investor.
A limitation of this study is its relatively small sample size, which precludes us from investigating
potentially interesting relationships. We nevertheless believe this note has value, as this is
perhaps the first and only investigation of the role of anchor investors in the formation of new
funds. Many larger investors have articulated a desire not just to invest for impact, but to seed
and support the industry.
Keywords: impact investment funds;
anchor investors;
Investment;
Surveys;
Analysis;
