NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

The rise in purpose-led investment risks diluting its impact. Once a niche pursuit of foundations and development banks, investing to promote social or environmental gains now attracts the likes of Blackstone and KKR. There’s no shortage of demand for the sector’s $500 billion of capital. But if participants focus only on market-rate returns they’ll end up favoring investments that would have happened anyway.

Impact investing started going mainstream in 2017 when TPG Capital launched the $2 billion Rise Fund with backers including U2’s Bono and LinkedIn co-founder Reid Hoffman. The fund has put a little over half that money to work in 30 companies ranging from Dreambox Learning, a U.S. provider of personalized educational materials, to Cellulant, an African mobile payments company.

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