Venture Philanthropy Has Lessons for GPs


February 19, 2015

The way that private equity reports returns and an increasingly tense relationship between the limited partner and fund manager could improve if buyout houses learned some lessons from impact investors, says a report in unquote”.


GPs would not only be able to measure and report returns more accurately, they would also have a greater awareness of the wider implications of how portfolio company profits are generated, which is important as LPs move towards more socially responsible investing.


The article provides a case study of a social impact fund, highlighting the techniques it uses, for reporting , which is based on both qualitative and quantitative feedback (measurements are frequent , some are real time), management professionalization (fund manager provides workshops, strategic support and encourages development of business skills) and origination (very deep and long term partnership principles applied).


When it comes to due diligence, the impact fund actually uses best practices from PE, acquiring pro bono services from large and successful buyout houses, but with one small difference, both investment director and chief executive are held accountable for championing the deal.

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