By Contributor,David Prosser

Copyright forbes

BNVT Capital is targeting early-stage businesses tackling problems such as resource efficiency
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Can you do well while also doing good? It’s a debate that preoccupies many businesses, as well as investors who are considering funding them, but Rory Mounsey-Heysham, the co-founder and managing partner of BNVT Capital, believes there is only one possible answer. “In the end, every business’s customer is society, so businesses that solve society’s biggest problems are going to be the biggest winners,” he explains.

It’s this argument that underpins the launch of a new BNVT fund targeting start-up and scale-up businesses that are tackling the most pressing issues facing the world today. Mounsey-Heysham and his co-founders have raised $150 million to invest in such businesses – and now they’re on the hunt for 20 to 25 likely contenders.

BNVT is at pains to stress this is not another environmental, social and governance (ESG) or impact investment fund. Rather, the goal is to maximise investment returns – Mounsey-Heysham and his co-founders just happen to believe the best way to do that is to identify companies with convincing answers to large and seemingly intractable societal problems.

It’s a theory that is based on more than just instinct. BNVT has worked with academics including Harvard Business School’s Professor Josh Lerner and investment firm VenCap International to develop a new study based on venture capital returns from the last 40 years. The study analysed data from 500 funds making investments in around 14,000 companies and concluded that venture-backed companies tackling big problems have delivered 51% higher returns than their peers.

Past performance, as investment professionals are obliged to warn, is no guide to the future. But BNVT is convinced that early-stage businesses pursuing what it describes as “benevolent disruption” will deliver outsized returns.

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“Investors have missed a striking pattern in their own data – for too long, they have been backing fads, not needs – distracted by incremental technologies making life marginally faster, cheaper or easier,” says co-founder and managing partner Chris Corbishley. “Venture capital is about swinging for the fences – backing solutions that can reshape society for the better.”

Where are those solutions to be found? BNVT’s analysis suggests around 30% of the companies raising funding from venture capital investors can make a case that they’re in this space. The fund is focusing its search on businesses in key areas such as resource efficiency, health, improved access to financial services, societal exclusion and security, but is keen to be imaginative about how it identifies problem solvers.

In the public markets, as an example of that approach, Mounsey-Heysham points to a company such as virtual meetings giant Zoom. “It wouldn’t be an obvious holding for an ESG or impact fund, but Zoom is making a huge impact on resource efficiency with a technology that has enabled many organisations to substantially reduce carbon emissions by no longer having to travel to meetings.”

Ultimately, BNVT expects to take stakes in around 35 businesses; it has already made 11 investments. Existing portfolio companies include Swap Commerce in the UK, which is helping e-commerce companies tackle resource inefficiencies, Cloover, a German financing company in the renewable energy sector, and Dawnguard, a Dutch cyber security specialist.

The founders are drawing on their experience. Mounsey-Heysham previously worked for the Gates Foundation, the non-profit set up by Microsoft founder Bill Gates, while Corbishley worked at technology-focused private equity business Hedosophia. The companies BNVT will back are likely to be applying new technologies, including artificial intelligence, to tackle societal challengers, the founders say.

For early-stage companies looking to scale their businesses, investment support of this type can prove invaluable. At Swap Commerce, for example, founder Sam Atkinson says support from BNVT has “directly shaped our growth strategy and product evolution”. Jodok Betschart, founder of Cloover says BNVT’s investment has helped it unlock more than $100 million of funding capacity.

Indeed, while BNVT’s investment proposition is built on the hard-headed goal of optimising financial performance, Professor Lerner’s study concludes that this can create a win-win scenario. “Adopting new approaches for thinking about VC investment – for instance, by recognising that outsized financial returns can be produced while solving big issues at scale – could be integral to the next wave of innovation.”

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