Wealth

Billionaire Lukas Walton’s family office accelerates impact-investing push

Builders Vision is the investing and charity platform of billionaire Lukas Waton. It has now shifted its $1 Billion endowment into “impact investments.” This will lead to a larger shift in family offices to link their giving and investing.

Builders Vision, a Chicago-based company, will today announce that 90% of its endowment has been transferred into “mission-related investments” — investments that are consistent with Builder’s larger goals of equity and sustainability. Most foundations invest less than 20% in ESG and impact investments. The 90% level sets a new standard for family offices as well as foundations.

“If we are going to make lasting change happen, we need our mission to show up in everything we do – especially in how we commit our resources,” said Lukas Walton, the grandson of Walmart founder Sam Walton. “That’s why our endowment is being invested in companies, organizations, and strategies that prioritise sustainable and equitable solutions.

(PRO subscribers have access to an exclusive interview with Walton regarding this news and his overall investment strategy. Here.)

Walton, 36 years old, is leading a shift in the generational structure of family offices. Entrepreneurs and inheritors in their 30s and 40s are using their fortunes to create social change. For decades, family offices split their philanthropy and investing — making money on one side and giving it away on the other. The new generation wants to see their investments as a way to give back, and their investments should be able to pursue the same solutions.

Matt Knott, BuildersVision’s President and COO, stated that profit and purpose are not in conflict. He was a former executive at PepsiCo. “Purpose-driven businesses are going to be competitively more successful in the future.” People will feel good about brands and companies.

Social change is possible with billions

Even though ESG investing is being criticized for “greenwashing” and facing backlash, the growth of impact investing within family offices is increasing. A Credit Suisse survey found that nearly half the family offices surveyed intend to increase their sustainable investing in the next 2 years. Family offices are investing billions in start-ups, stocks, and private equity to support social change as more wealth is passed down from the older generations.

“This is the next generation,” stated James Gifford, Credit Suisse’s head of Sustainable and Impact Advisory and Thought Leadership. “They are bringing out both the best of free markets as well as social innovation.”

Knott, Builders Vision president, adds: “This new generation wants to drive impact, and they want to make an impact with the wealth that they’re inheriting.”

Builders Vision, with more than $4 billion in assets includes a direct investment arm, an asset management unit, and philanthropy. All three areas of focus are food, ocean health, and energy transition. Builders Vision has assembled teams made up of experts from within the organization to fund high-impact projects and share them with investors, start-ups, and philanthropy. Builders Vision’s philanthropy arm includes the Builder’s Initiative Foundation. Each fund and pool of capital has its own targets and investing mission.

Walton believes that even with government support, philanthropy cannot solve the world’s greatest problems. Entrepreneurs will likely bring the big technological innovations in energy, agriculture, and the environment. Many impact-related start-ups can be too risky to invest in traditional venture capital firms or angel investors. Walton and his colleagues believe Builders Vision, along with other large family offices, is uniquely positioned to finance companies and non-profits at all risk levels.

NGO to IPO

Sanjeev Krishnan (chief investment officer at S2G Ventures), the Builders Vision venture capital firm, stated, “We want the capital solution from NGOs to IPO.”

The Builders Initiative’s oceans team used an LLC to invest into Matter, a U.K. company that develops tech solutions for microplastics harvesting, recycling and capture. It grew and became a popular venture capital investment. Builders’ VC arm S2G invested seven figures in it.

S2G has invested in 80 companies with capital of around $2 billion and was an early investor at SweetGreen and Beyond Meat. Its portfolio includes everything: Farmer Focus, which partners family farms to raise organic chickens, to Common Energy which funds community solar projects.

Although Krishnan declined to provide specific returns, S2G is ranked in the top quartile among VC firms, according Cambridge Associates benchmarks.

With its 90% endowment shift into mission-related investments, even the Builders Initiative Foundation endowment — which funds the philanthropy— is now focused on positive social and environmental impact. Noelle Laing, chief investment officers at Builders Initiative, stated that the real return target is still 5% net fee, which is standard for endowments.

Laing stated that “you can achieve market rates for return while integrating ESG elements and integrating a impact lens into your strategies.” It’s smarter investing, we believe.

Source: CNBC

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