Tech-for-good VC Bethnal Green Ventures acquired by pension asset manager
One of the UK’s most active venture capital firms, social impact driven Bethnal Green Ventures, is in the process of being acquired by asset manager Connected Asset Management.
The deal is a sign of how pension funds, which are among the most conservative investors in the world, are increasingly engaging in venture capital and impact investing.
Based in London, Connected manages the assets of Smart Pension, a UK occupational pension scheme. With Smart Pension, future retirees can gain exposure to stocks and bonds through funds managed by companies like JPMorgan, and now they can also gain exposure to venture capital.
Impact investing generally refers to investing in businesses aimed at both financial returns and positive environmental or environmental impact.
“Pensions are the pinnacle of long-term thinking. If you start contributing to your first job at age 18 or 19 and are told that you are not going to get any of that money for at least 40 years, it begs the question: “What? the world going to be like in 40 years? ‘ Said Paul Miller, CEO of BGV and Managing Partner. “This is why the pension industry recognizes that it talks about long term issues and that it needs to involve its members in these issues. ”
Unlike their American counterparts, European pensions have traditionally been under-indexed to venture capital compared to other asset classes. However, interest is growing; according to Invest Europe, pension funds have committed nearly three more time in European venture capital in 2019 than their average investment over the previous four years. And although regulatory hurdles remain, these traditionally slow and conservative investors seek to impact investing as a way to engage their beneficiaries.
“We have the feeling that investing only in public stocks is limiting because there is a dynamic and mature ecosystem of startups in Europe and an investment ecosystem compared to what it was 20 years ago. It is possible for pension funds to look at it now and say, “This is a good, solid and diversified investment.”
From bangs to the general public
When BGV launched its first call for applications for its accelerator program with tech-for-good companies in 2012, Miller says they only received “dozens of applications.” “Technology for good wasn’t something people thought was a serious business,” and “there was a haircut in terms of valuations,” he says.
Since then, BGV has invested in 141 companies. One of the companies in their portfolio is Fairphone, the Dutch company that produces the world’s most sustainable smartphone. In 2020, holding company Second Nature, a ‘change of habits’ app, raised a $ 10 million Series A from Beringea and Angels, including Wise founder Taavet Hinrikus, while the DrDoctor patient booking software also lifted a Series A last year.
BGV was the first UK VC to become a certified B Corp in 2015, and Connected achieved certification last year.
Over the past few years, Miller says the industry has really taken off, as more and more impact funds have emerged and large venture capital firms have developed their own impact strategies. BGV now receives “several hundred” applications.
“From less than £ 100,000 in the summer of 2012, we will invest over £ 10million a year,” he says. “We started on the sidelines, but even this deal is a sign that technology is definitely hitting the mainstream. ”
Miller says the next step is to measure the impact of BGV’s portfolio in a way that resonates with ordinary people who are pension recipients.
“If we manage to tie the impact of the startups we back up to the pound someone puts into their pension fund, I think that will be a real step forward in terms of impact investing and show people what is the impact of the money they save for retirement.