We looked at Hatcher's deal streams as well as third-party transaction records to evaluate the impact of Hatcher's "impact" choices on the returns of investments. We're referring to the impact of a decision as well as ESG and overt sustainability in general for this analysis. We found that multiples are significantly higher for those invested in impacts.
We conclude that impact strategies are more likely to generate greater returns than traditional early-stage plans for investment. This post will examine series A as well as earlier investments. Hatcher's focus is on this topic and it has enough transactions to support the analysis.
Our analysis compares valuation change across a time span. Values change however they don't necessarily translate into value. Many investments don't see themselves within the timeframe. Based on the period of time and the new valuations (possibly to zero), if there are no other relevant signals available.
The chart below illustrates the effect. The chart below is a summary of one perspective. The chart below includes early-stage rounds, recent investments, and a 5-year horizon. It illustrates the relative performance of all our views. But, the results are scenario-specific and materially dependent on changes to the view parameters.
Impact vs. Non-Impact Investor
This report is not exhaustive without the presence of confounding factors. We do not know the purpose of investments individually, however we approximate Impact investment performance versus the investment pool that is complementary.
There is some evidence that Impact investors may be attracted to businesses that already have popularity, thus they may be taking a risk on scalability and choosing higher-quality outcomes, however generally paying a cost that may offset portfolio gains. But the overall performance of "impact-touched" businesses is higher, on a valuation basis. This is true both in the short as well as long-term.
We looked for high-frequency investors who clearly stated impacts or similar goals on their websites, or with an apparent absence of an approach that resembles impact and classified them as impact investors. We ultimately identify a significant amount of investments in our database by tagging highfrequency investors. We flagged Website link investments as either with a "known impact investor' or a blend either.
As this isn't a snapshot of all transactions, there could be a lot of instances where investments may be incorrectly labeled. But, it's a modest sample set and investors who have incorporated the concept of impact recently tend to be more Impact-friendly in their earlier strategies.
Beyond the type of investment and stated purpose, there are other factors. The likelihood is that more focus and self-selection while aligning with your goals for impact leads to a greater focus on scaling, feasibility, team composition and other elements that may impact the direction of valuation. A majority of the impact investing topics will have a strong intrinsic return.
In summary the focused focus on impact investment and multiples of return for the investee is extremely strong. In the long and medium term, this encourages positive feedback from impact investing that may increase the impact of goals.