RIA clients invest $18.5M in impact startup’s first private equity fund
The first private equity fund launched by impact investment startup Uplifting Capital drew $18.5 million in client assets toward sustainable infrastructure and socially responsible businesses. Clients of the advisory practices that are part of registered investment advisory firm consolidator Corient — the rebranded name of CI Private Wealth — and other initial customers invested in a mixture of private funds and direct investments through the Uplifting Capital Private Impact Fund I, according to Uplifting founder Toussaint Bailey. Uplifting closed the fund at the end of last month, and it has already attracted $20 million to its next two products. The combined $38.5 million “exceeded our own expectations” of $20 million to $25 million, Bailey said in an interview.
“We set out to prove that you could build an institutional-quality portfolio of impact investments as a wealth management solution,” he said, noting that foundations, endowments and family offices have been making similar investments for years. “Our belief has been that this is just as appropriate and just as additive in the wealth management space, but it has to be scalable and it has to be personal.” Despite the unwinding of some ESG-focused funds amid a political backlash and regulatory scrutiny, 25 more socially responsible investment products opened than were liquidated so far in 2023, according to Morningstar Direct data cited by Bloomberg News earlier this month.
Private investments toward environmental goals in particular had been growing even before BlackRock CEO Larry Fink’s comments at the COP26 climate summit in 2021 that the increasingly nonpublic financing of fossil fuels was creating “the largest capital-market arbitrage in our lifetimes.” Private equity investments in clean technology jumped 35% that year to $27 billion, according to the American Investment Council, an industry trade group. While BlackRock and other giants have shut down certain ESG funds, Fink’s company opened the Climate Transition-Oriented Private Debt Fund last week. Alternative investments tend to carry higher costs and risks than mutual funds and ETFs investing in publicly traded companies, but ESG advocates see value in private holdings for some clients. “There’s a lot of promise and potential when you’re investing in private markets because your money can make things happen that wouldn’t happen otherwise,” said financial planner Zach Teutsch, the managing partner of Values Added Financial, a Washington, D.C.-based RIA whose clients invest for social impact.
In Uplifting’s first fund, the investments include products managed by North Sky Capital, a clean energy infrastructure and multisector impact manager, and Kapor Capital, which invests in startups with “real potential to produce both significant financial returns and large-scale social impact,” according to its website. Uplifting’s first direct investment went to a company called SparkCharge that provides mobile electric vehicle charging stations and an app that shares the locations for users, Bailey noted. He started Uplifting in 2022 after leaving a billion-dollar RIA, Enso Wealth Management, where he had been the CEO for the prior three years. Bailey refers to the early investors in the firm’s products as “founding uplifters.”
With so many “pressing challenges” in the world, some financial advisors “may not know where to start” when discussing ESG and impact investing with their clients, he said.“ Advisors have a unique opportunity to start this conversation,” Bailey said. “What if you could talk to your client about this deep burning desire to make the world a better place and you could actually provide a step into that as an advisor?” Impact investments in publicly traded companies usually revolve around screening out bad actors and encouraging change through shareholder advocacy efforts. Alternative investments should play a role in some impact-driven portfolios as well, Bailey noted. “In the private markets, it’s about proactively putting dollars toward solutions for global challenges,” he said. “We need to pull every lever available to us.”