In a foundation, integrating all elements – grantmaking and investment management – can help to achieve the maximum potential for change. When sustainability acts a guiding principle of investing, instead of being an “add on”, foundations have the opportunity to support ventures that benefit society and the natural environment, all while maximizing their risk-adjusted portfolio returns. The success of this approach very much lies in the collaboration between a foundation’s program staff, investment team, and outside managers.
Ecosystem Integrity Fund (EIF), a sustainability-focused venture capital firm based in San Francisco, identifies and promotes environmentally sustainable, profitable businesses . EIF takes a systems approach to sustainability problems, targets niches which have not received sufficient investor attention, and looks for capital-efficient investment opportunities. blue moon’s 2010 investment helped EIF get off the ground, and enabled their lead investment in Zep Solar.
Zep Solar was a groundbreaking solar mounting systems company that provided dramatic reductions in labor and material costs to residential solar installers. Zep grew very rapidly, and was acquired by US residential solar leader Solar City (SCTY) in 2013 for $158M, delivering an outstanding financial return to EIF investors, including blue moon. EIF now has two venture funds totaling just under $75M in capital.
As global resources shift from abundance to scarcity, value will increase in areas such as technologies for using resources more efficiently or mitigating climate change. Markets for clean technologies and other green products are generally growing at rates much faster than the growth rates of the industries in which they operate, which creates abundant investment opportunities related to sustainability. These opportunities provide foundations, such as blue moon, the chance to create the greatest impact with its capital while also furthering its philanthropic mission.
Ecosystem Integrity Fund
Addressing social and economic causes and effects
—James Everett, EIF Partner
“[blue moon fund] believed our investment approach had merit, and were willing to back us in a difficult financial climate. blue moon had a significant impact on our ability to pursue our mission.”