Nancy created the venture capital firm DBL Partners with the goal to combine top-tier financial returns with meaningful social, environmental and economic returns in the regions and sectors in which it invests. She initiated the ‘impact investing’ movement that is growing every year and ready for a revolution.
Hello Nancy, and thank you so much for taking the time to answer our questions! First and before we go deeper into the topic, I was wondering: what first got you into the ‘impact investing’ field? And where does your inspiration come from?
I have always had a passion for entrepreneurship, and for policy, because both shape our world in important ways. This probably came from my parents: my father was an engineer, then a patent attorney, and my mother was very active in politics. So, the thread running throughout my career is one of innovation and working across sectors to enact positive change. Impact investing embodies this shared purpose, and this realisation led to me becoming one of the impact pioneers.
For me, impact investing is a way to marry my dual interests and work toward significant social and environmental change at the regional, national and global level. I am inspired on a daily basis by the entrepreneurs, policy makers, politicians, finance professionals, NGOs, universities and others we are fortunate enough to work with — all of those helping create change within society at large. Together, it is an unstoppable combination!
What is the most challenging thing you’ve had to overcome in your career?
The most challenging thing that I have had to overcome in my career is my own sense of what I can accomplish. My career evolved into one focused on impact investing — I wasn’t always going to do this — so when it began to take shape, I was both excited and certain that this would work, but equally full of self-doubt as to whether I had the skills to make it happen. No one seemed to really know what ‘it’ was, myself included!
Fortunately, I had tremendous support from teammates I identified early on, and together we squashed the doubts and flung ourselves into the field, no matter how inchoate it seemed at the time.
Women represent only 11% of investment partners or equivalent on venture investment teams. We are far from gender equity in the VC world. How would you explain this and what would be your word of advice to young women who would like to enter this field?
The venture field is relatively small and niche, hence its club-like moniker, and so it has taken quite some time to grow beyond its storied roots on Sand Hill Road. And yet, progress for women in our field is happening, and happening faster now than I have ever seen before. My advice to young women — and men for that matter — who want to jump into this field is to do a little self-assessment first: are you comfortable with risk? Do you thrive in David versus Goliath situations? For young women in particular, I would add that investing time in building your networks is absolutely critical. That old adage is true: there is strength in numbers!
How would you explain to my grandparents what ‘impact investing’ means?
Impact investing is pretty easy for grandparents to understand because its tenets harken back to a time when relationships trumped transactions, and commitment to community was the norm. Essentially we invest in companies that create a social benefit, broadly defined, while they deliver attractive financial returns. These companies can be obvious in their benefit (like solar energy or electric vehicles), or not so obvious (like tech companies that are run by women or people of colour, and are committed to multi-dimensional workforce development and community improvement). They don’t do this simply because it is intrinsically the right thing to do, but because it makes their business more competitive, better differentiated, and ultimately more successful. In short, there is no sacrifice: impact investing allows you to blend profit and purpose!
What are your main arguments to convince entrepreneurs that a healthy financial performance is very much linked to positive social change?
The good news is that now more than ever, entrepreneurs don’t need much convincing! Entrepreneurs understand that to achieve positive social change at scale they need a sound financial underpinning and performance in order to hire more people, sell more products and services, and reshape whatever industry they are in to address 21st century needs.
Why is it so important that companies hire local women and build positive relations with the local community?
It is important to hire local women and to build positive relationships with the local community because this is how you build authenticity with your customers, suppliers, and various stakeholders, all of whom have roots in communities including yours. By investing in underrepresented groups and in helping to make your local community better, you build loyalty and you create goodwill so that when things go sideways or worse, you can rely on these groups to help you because you have helped them. It’s got to be a two-way street. The days of ‘my way or the highway’ are long gone, thank goodness!
What would you say are the main challenges that come with investing in companies that deliver top-tier returns while also yielding environmental and social benefits?
The main challenges for double bottom line companies, as we like to call them, is that they are often taking on entrenched incumbents with decades or even a century of social and political capital backing them up. To unwind an electricity system or transportation system, for example, from the carbon-heavy 20th century model to a carbon-light 21st century one, involves not only enormous business and technical acumen, but literally means re-writing regulations, laws and customs that had grown up around these industries to make them successful. This mega-reach of impact companies is exhilarating, because you really are reshaping the future, but it is not for the faint-hearted. You will get bruised along the way and have adversaries you may never have heard of when you started out!
How optimistic are you about the development of impact investing in the near future?
In my business, it’s important to be an optimist because you are taking on some pretty tough odds. So when I say I am very optimistic about the future of impact investing, it is grounded in both the highs and lows that any investor encounters. At the same time, what I have had the privilege of witnessing as an impact investor is the enthusiasm and commitment of a whole new generation, the creation of a whole new calculus for what entrepreneurship can accomplish, new alliances across sectors, new expectations from both established and up-and-coming asset managers about what their capital can accomplish, and on and on. Instead of the original bias that was once widely held that tampering with financial returns by infusing a social dimension would diminish those returns, now growing numbers of people believe just the opposite — that the two goals enhance each other. They see it all around them. And there is no turning back. Because really, why wouldn’t you want to do both, if you could?
What would you say will be the biggest transformation that will happen in the energy world in the next decade?
I think we are well on our way toward the electrification of basically everything. Over the next decade, we will increasingly replace fossil fuel-based systems with electricity powered by clean sources like wind and solar, strengthened by batteries and other forms of energy storage. This will not only be the clean thing to do, it will be the cheap thing to do. And it will be the cool thing, too!
What is the role of innovations, for instance in the cleantech field, in transforming business models that address 21st century challenges and opportunities?
Technological innovation is at the core of this clean tech transformation to address 21st century needs and make things better, cheaper, faster and cleaner. We need more competitive distributed markets with consumer choice, not just centralised monopolies that historically tended to create distance between themselves and their customers. It’s political innovation, too: no longer can we leave important decisions to the status quo political system where large incumbent donors often shape political dialogue, and some regulatory agencies operate behind opaque and insufficiently inclusive doors. And it’s social innovation: we need to hold everyone accountable to the impact of their actions — large and small — on the future of our planet and on the quality of life for everyone and everything living here.
DBL Partners has been investing in companies operating in Africa for a couple of years. Why Africa and why now?
Africa represents an unparalleled investment opportunity: the scope and size of the market is vast. It is just entering its transformational stage. Sub-Saharan Africa will need some US$81 billion of investment in off-grid solar to provide electricity to all by 2030, which would create US$1.2 trillion of incremental GDP.
At the same time, it is also one of the most important impact opportunities of our age. To take 600 million people from having dirty electricity, or none at all, to enabling them to enjoy the benefits of clean, affordable electricity, will change the health equation, the quality of life equation, the economic development and GDP equation. It will completely rewrite the future of a continent toward empowerment, prosperity and purpose. The health benefits of switching from fossil fuels are particularly compelling — switching from kerosene gas to solar has been shown to lead to an 18% reduction in frequency of general illness, and a 37% improvement in respiratory health.
You recently released Think Outside the Grid — Africa’s Trillion Dollar Energy Opportunity, a white paper on the development of clean energy access in the developing world. What was the most surprising fact you learned researching for this paper?
What surprised me the most was just how much solar there is already in Africa compared to the United States. While of course the systems are smaller than we have here, right now, for example, there are about
1.6 million solar PV home systems in the U.S. compared with 30 million units in Sub-Saharan Africa. Tanzania alone has nearly as much total solar capacity as 14 U.S. states combined!
What would you say are the main barriers for the development of clean energy in the developing world? And how can we overcome these barriers?
The barriers to growing clean energy in the developing world are just clinging to the past and its outdated models and policies. In Africa, as in most places, we’ve got to stop subsidising dirty energy and start incentivising clean energy more. We’ve got to stop thinking about Africa energy as not ‘investment ready’ and recognise that the early impact investors have been paving the way for a bold and big new market to emerge that has the benefit of less incumbent friction due to the fact that electricity is not as widespread as it is in other markets. And we’ve got to work together, marrying technology know-how and innovation from all over the world with African entrepreneurs and workers to allow the continent to come of age on its own terms and with the most modern of technical solutions. The barriers will melt away in the face of this uplifting and potent collective will.
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