New High-Profile Social Impact Fund Raising $2 Billion

A group of high-profile tech executives and investors are putting together a $2 billion social impact fund that they hope will be the first large-scale test case of the efficacy of double-bottom-line impact investing, the New York Times reports.

Rise, as the fund will be called, is being developed by William E. McGlashan, Jr., a partner at  private equity firm TPG, where he has overseen TPG Growth, a fund that was an early investor in Uber, Airbnb, Spotify, and other high-profile technology startups. The fund's board members — all of them investors in the fund — include Bono; Internet entrepreneur and Skoll Foundation founder Jeff Skoll; Emerson Collective president Laurene Powell Jobs; Virgin Unite founder Richard Branson; LinkedIn founder Reid Hoffman; Ariel Investments president Mellody Hobson; Lynne Benioff, wife of Salesforce.org founder and CEO Marc Benioff; Sudanese-British mobile communications entrepreneur Mohammed "Mo" Ibrahim; and eBay and Omidyar Network founder Pierre Omidyar. In addition, at least two large pension funds and one sovereign wealth fund have committed nine-figure sums to the fund, according to people briefed on the investments.

The fund is expected to invest about half the money it has raised in the U.S. in areas such as health care, education, and clean energy technologies, with the other half allocated to emerging market countries in sectors such as microlending and  financial services, housing, and education. McGlashan, in concert with Jeff Skoll, spent the past year working with consulting firm Bridgespan Group to develop a rigorous set of metrics with which to measure the fund's performance, and an outside auditor  has been brought in to prevent any "greenwashing" of its impact. Ultimately, McGlashan hopes to influence the fee structure of impact investing funds so that the investors in such funds are paid according to the social impact they achieve, not just the financial performance they deliver. For the first Rise fund, McGlashan's group, which will include most of TPG Growth's professional staff, will be paid based on financial performance.

"We're not in the business of charity here. We're going to make money and build profitable, successful businesses and create a top performing fund. But in the process, what we've committed to is that we will not do a deal where there's less than a two and a half times multiple of impact," said McGlashan,.referring to meaningful social impact that can be measured.

"None of this makes sense unless you can actually define what 'impact' means," he added. "It can't be religion; it has to be quantitative. It has to be something that a third-party view would validate."

Andrew Ross Sorkin. "A New Fund Seeks Both Financial and Social Returns." New York Times 12/19/2016.