Studying the U.S.-Based Portfolio Companies of U.S. Impact Investors

Recent years have seen a dramatic increase in the reliance on market-based solutions to social and environmental problems around the world (Barman 2016; Horvath and Powell 2020). The growth of impact investing is a vivid example of this trend and, although there have been efforts to understand the strategies and returns of impact investors (Gray et al. 2015; Kovner and Lerner 2015; Barber et al. 2021; Burton et al. 2021; Geczy et al. 2021), less attention has been given to systematically analyzing the companies that they fund. One important constraint has been data availability, as standard data sources do not typically identify impact portfolio companies (“IPCs”), or companies funded by impact investors. Even when identified, standard data sources contain only limited information on these companies, which are oftentimes privately held.
Our research agenda aims to fill this gap by facilitating the study of IPCs through a multi-dimensional approach. We draw upon an expansive database of 14,165 IPCs, compiled by the Project on Impact Investments (“Pii”) at Harvard Business School (“HBS”) (Burton et al. 2021). For the in-depth data collection effort on IPCs described in this paper, we screen this database for the 4,371 U.S.-based portfolio companies of 146 U.S.-based impact investors and 4 impact funds of private equity investors that have invested in at least one U.S. headquartered IPC. We then gather detailed information found in publicly filed documents for a carefully selected sample of 270 IPCs of which we interview 82. This paper describes our sampling methodology and research process. Ultimately, we hope our research will fill gaps in understanding whether and how IPCs achieve social and financial returns.