January 31, 2020
Vish Srivastava talks to Rachel Bridge at Drax about the mission and drive behind his new impact private equity firm
One of the biggest difficulties in persuading people to invest in ethical or sustainable businesses is overcoming their perception that they will receive inferior returns.
Vish Srivastava is addressing this concern head-on in his new impact private equity firm, the Future Business Partnership, which he has set up to invest in consumer goods businesses – B2C and B2B – which are making a positive difference to the world. He aims to put sustainability right at the heart of his value creation strategy, as well as his firm itself, and show that rather than there being a compromise, investing for positive impact can actually drive superior investment returns. Or as the tagline on his website puts it, ‘Sustainability without sacrifice. Growth without Compromise.’
Vish says: “We believe that you should not have to sacrifice financial returns in order to create a positive impact. We are showing the world that we can make money and deliver impact without sacrificing either goal. That is important to us. We are in a global emergency and the biggest thing stopping the solution is people assuming that there is a trade-off between making money and doing good. The quicker we can show them that you can make money by doing good, the quicker the world will start to shift considerable resources into positive change.”
The way he plans to run his private equity firm is designed to allay fears too. He says: “We are focused on creating a positive social and environmental impact but we operate in exactly the same way as you would expect from a traditional private equity firm, with the same types of resources, human capital and network to deliver operational and commercial expertise.”
Vish spent ten years working for a consumer sector-focused private equity firm, BlueGem Capital Partners, before deciding to take the plunge and start a PE firm of his own.
He says: “Our entire purpose and mission is to show the world that there is money to be made in sustainability. We believe that is the way we can have the greatest influence on business across the globe.”
He has assembled an experienced team who have significant commercial track record of either running or investing in consumer businesses, including Chair Richard Bishop, a founder of BGF, formerly known as the Business Growth Fund. Vish plans to raise a fund of £120 million over the next year, which will be invested in between six and eight consumer businesses, with an equity cheque size of between £5 million and £25 million per investment.
He plans to invest in businesses that are already profitable and is flexible about taking either a minority or majority stake.
He says: “We are able to sit in front of entrepreneurs of really good businesses and offer them something that they can’t get elsewhere, which is reputationally compatible, mission-aligned capital and true partnership. We have privileged access to a growing market and then can add more value along the way because we are upgrading the sustainability of these businesses as well as the commercial capability, both of which help to boost the financial performance of the brands. Our investments have to tick the boxes in terms of making money but at every step of the way we are doing it by doing good, socially and environmentally.”
The fund will measure sustainability by using the B Corp methodology which has been developed by B Lab, a global non-profit organisation backed by the Rockefeller Foundation and others that helps to quantifiably measure and certify the ethics and sustainability of a business. This methodology covers five areas of impact: governance, workers, community, environment and customers. It assesses things like product composition, how fairly the business treats its suppliers, how they treat their own employees, their environmental footprint and how they help the communities in which they operate.
Vish has chosen to focus on the consumer industry because it already has plenty of case studies of brands who are driving financial performance through a focus on people and planet.
He says: “Businesses like Patagonia, Lush and Innocent have all been proving for decades that if you offer the consumer an authentic motivation to enjoy their products, to stay loyal and to tell their friends, because the business is respectful to the planet and the people on it, then you can drive sustainable commercial growth.”
Drax sector lead: Mark Sherman
Partner, Consumer & Leisure
Tel: 0203 949 9556