Beyond traditional energy projects, there's a growing opportunity for large-scale, long-duration capital in "social infrastructure." Mature private education platforms and hospital networks in developing markets are now predictable enough to attract lower-cost capital, creating a new asset class for multi-billion dollar impact funds.
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History shows pioneers who fund massive infrastructure shifts, like railroads or the early internet, frequently lose their investment. The real profits are captured later by companies that build services on top of the now-established, de-risked platform.
Sir Ronald Cohen critiques the philanthropic model, arguing that relying on donations keeps charitable organizations small, underfunded, and perpetually begging for capital. This prevents them from achieving the scale needed to solve massive problems, a flaw that impact investing aims to correct by creating self-sustaining models.
The current movement towards impact-focused business is not just a trend but a fundamental economic succession. Just as the tech revolution reshaped global industries, the impact revolution is now establishing a new paradigm where companies are valued on their ability to create both profit and positive contributions to society and the planet.
While consumer fintech gets the hype, the most systematically important opportunities lie in building 'utility services' that connect existing institutions. These complex, non-sexy infrastructure plays—like deposit networks—enable the entire ecosystem to function more efficiently, creating a deep moat by becoming critical financial market plumbing.
The focus of billionaire philanthropy has shifted from building physical public works (like libraries) to funding NGOs and initiatives that aim to fundamentally restructure society, politics, and culture according to their ideological visions.
The fund's core belief is that an impact lens can uncover economic returns unavailable to traditional investors. The strategy is not about sacrificing returns, but demonstrating that understanding impact benefits can directly translate into long-term economic outperformance, thereby influencing broader capital allocation.
CEO Sim Shabalala argues that a bank's largest risk factor is "country risk." By promoting societal growth and inclusion, the bank creates a more stable operating environment, which directly reduces its cost of capital and debt.
A critical flaw in philanthropy is the donor's need for control, which manifests as funding specific, personal projects instead of providing unrestricted capital to build lasting institutions. Lasting impact comes from empowering capable organizations, not from micromanaging project-based grants.
Many high-potential businesses with strong social or environmental impact are underdeveloped within large corporations. An impact investing lens helps identify these "trapped" assets, creating proprietary deal flow and unlocking value that traditional investors might overlook, as TPG did with NextTracker inside Flex.
The emergence of venture capital as a major asset class was unlocked by the new ability to mathematically measure and price risk. Similarly, the current impact investing movement is being driven by our newfound technological capacity (via big data and computing) to quantify a company's social and environmental effects.