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Today, Salesforce Ventures announced its second Impact Fund. Building on the success of the first $50 million Salesforce Ventures Impact Fund in 2017, the new $100 million fund will accelerate the growth of cloud companies addressing some of today’s most pressing needs including access to education and reskilling, climate action, and diversity, equity and inclusion.
In this interview, Claudine Emeott, Director of Impact Investing, discusses her experience leading the first successful fund, which, to date, has invested in more than 25 companies to help accelerate their impact around the world; what she sees as the opportunity in corporate impact investing; and what makes the Salesforce Ventures Impact Fund unique.
Q. Please tell us about your background. How did you start working in impact investing and what brought you to Salesforce?
In 2011 I left a consulting job in Chicago to move to Kathmandu as a Kiva Fellow, and this experience with Kiva opened my eyes to the power of technology to address some of the world’s most pressing challenges. After spending a year in Nepal, I moved back to the U.S. for a full-time role with Kiva, working on a new impact investing initiative for social enterprises.
In my five years at Kiva, I loved working at the intersection of investing, impact, and technology, and I knew that I wanted to commit my career to the field. When Salesforce announced a new impact investing initiative, I was really excited about the opportunity to work for a much larger, but still mission-driven platform. I joined Salesforce in 2017 to lead the first Impact Fund.
Q. Why do you think Impact Investing is experiencing such significant growth? How can CVCs play a role?
The term “impact investing” was coined in 2007 by the Rockefeller Foundation, officially naming the practice of investing with dual goals: generating financial return and achieving social or environmental impact. Many investors had operated with these principals long before this name came to be, but the field has exploded in years since and now includes some of the world’s largest asset managers.
The growth of the industry has been tremendous; a 2020 report by the Global Impact Investing Network sizes the current market at over $700 billion. The reasons for this growth are numerous:
- While the world has made progress across many development indicators, we still face a climate crisis, extreme poverty in many parts of the world, growing inequality, and other challenges spanning education, health, and civil society. The U.N.’s Sustainable Development Goals (SDGs) represent a $12 trillion economic opportunity. Investors have awoken to these massive problems and the concurrent market opportunity to solve them.
- Younger investors, particularly Millennials and Gen-Z, are motivated by conscious consumerism and investing in line with their personal values, and these investors are making their mark in public equities markets as well. A report by U.S. SIF shows that investments which consider environmental, social and governance (ESG) factors now stand at $12 trillion, representing 38% growth since 2016.
- Studies show that impact investments can perform in line with—and sometimes better than—relevant benchmarks. We see this evidence in both private equity and public markets.
Q. What do you think makes Salesforce Ventures’ Impact Fund unique in the VC world?
Since its founding Salesforce has believed that business can be a powerful platform for change. This principle is therefore part of our company DNA. In addition to our mission and values, we are the only strategic investor that is exclusively focused on backing enterprise cloud startups. With more than 400 investments globally, we have unique insight on how to build a successful SaaS business.
Importantly, the close relationship between Salesforce Ventures and Salesforce allows us to provide our portfolio with differentiated access to one of the fastest-growing enterprise software companies in the world, offering value beyond just capital, including go-to-market advice and customer introductions.
Q. How did you settle on these four focus areas—education & workforce development, sustainability, and diversity & inclusion, and social sector technology?
Salesforce’s values show up in many of our own products, such as Education Cloud, Health Cloud, Nonprofit Cloud, Philanthropy Cloud, Sustainability Cloud, and Trailhead, which deploy our best-in-class cloud software to create meaningful impact. We thoughtfully chose our investment verticals with strategic integration in mind, so you will see that these themes connect directly to our products and values.
Q. I know you can’t play favorites. But can you share some examples of the most impactful companies you’ve invested in?
There are so many! Guild Education achieved a $1B valuation while helping working adults gain an education; Unite Us was named as the 2020 start-up to watch at the JP Morgan Health Conference; Ellevest launched a membership model to reach more customers and address the gender wealth gap; and both AdmitHub and Samasource published compelling impact evidence from randomized control trials.
Q. How do you measure impact?
First and foremost, we leverage our own platform to measure and manage the impact of our portfolio, thanks to an integration with AmpImpact.
During our diligence process we incorporate the Impact Management Project’s five dimensions of impact to test and create an impact thesis for a given company. In this exercise we seek to understand the size and scope of the problem they are solving, the population impacted, and the depth and breadth of the solution’s impact, among other things.
Post investment, we collect impact metrics from every portfolio company on an annual basis and publish those in the Salesforce Stakeholder Impact report.
Q. What are you doing differently with this newly launched fund based on learnings from the first Impact Fund?
The core thesis of our first Impact Fund extends to this new one: we are investing in best in class enterprise cloud companies that are solving the world’s most pressing social and environmental challenges and have a strategic tie to our platform. We are also still investing in the same four core verticals.
What is different now is this unprecedented moment in time: we are facing a health crisis, economic crisis, inequality crisis, and climate crisis. Thus, never before has this work been more important.
We need to take this moment to invest in a new, more resilient and inclusive economy — one that ensures the long-term health and wellness of citizens, drives job creation and protects against future shocks coming from climate change.
Efforts must also recognize existing inequalities, along the lines of race, gender, socioeconomic status and more, in order to support all people and prevent deepening social and economic divides.
Therefore, with Fund II we are focusing particular attention on solutions that address today’s urgent and interwoven crises:
- Workforce development initiatives that help an increasingly dislocated workforce access high-quality training and jobs
- Climate change technology that halt our rapidly warming planet
- Solutions that focus on the needs of historically underserved communities because of their race, gender, or socioeconomic status
Q. If you picture yourself a year from now – a year from when the fund launches – what do you hope to accomplish?
I hope that we have made numerous investments in companies that are addressing today’s concurrent crises, and I hope that we can point to their measurable impact on those crises. I hope that we can point to exciting new integrations between our portfolio companies and Salesforce to tackle these challenges together.
I hope that we can look at our portfolio founders and CEOs and see people who reflect the diversity of this country, and who bring their lived experiences to the problems that they are solving.Claudine Emeott, Director of Impact Investing
I hope that we can look at our portfolio founders and CEOs and see people who reflect the diversity of this country, and who bring their lived experiences to the problems that they are solving. I hope that we continue to see more corporates launch impact investing initiatives, bringing more capital to bear in a time when it is so urgently needed.