Investment firm aims $100 million fund at trends in a post-pandemic world
  • The pandemic will accelerate an emphasis on social impact investing, Partech’s Lavault says
  • Post-pandemic funds being announced are focusing on areas that align with ESG principles
  • Impact investing may become the norm after people in lockdown have time to consider what is important in their lives and to commit to investing with purpose.

Impact investing will become more common because the deadly coronavirus pandemic has everyone re-evaluating what is really important in their lives, an executive at global investment firm Partech predicts.

“They want to do investments with a purpose,” Partech General Partner Romain Lavault told Karma in a telephone interview from Paris. “Every VC will be a social impact investor eventually. That’s a bold statement but it’s what I believe. That will be the new normal.”

The VC firm announced last week the closing of the $100 million Partech Entrepreneur III fund aimed at investing in startups focused on health, workplace, retail commerce, finance, mobility and computing in a post-COVID world. Lavault said the sectors were chosen 18 months ago, when the fund was first being formed, based on the interests of people under 25, who are more socially conscious than older generations and who will make up the bulk of investors in the future.

Partech is one of several new funds that aim to capitalize on trends that will emerge as the global lockdown ends and countries begin to rebuild economies. Flagship Pioneering closed a $1.1 billion capital raise for its seventh Origination Fund that will be used in part for providers of products and services for public health preparedness. American Ventures Group said it was launching a Post-COVID Fund next month with one target being companies that “provide solutions caused by society-disrupting diseases.”

The new funds are simply the latest to tap into the concerns of impact investors, who have become an increasingly large source of cash. U.S. funds with a focus on sustainability attracted $20.6 billion of new assets in 2019, according to Morningstar data. This was almost four times more than the previous record flow reached the prior year.

The pandemic will accelerate the emphasis on social impact, Lavault said. “The crisis makes you think, ‘What is important in your life?’” he said. People are going to come through this with more commitment to their values, he predicted.

“Every VC will be a social impact investor eventually. That’s a bold statement but it’s what I believe.”

Lavault also expects that some areas of our lives will be changed permanently. The pandemic will accelerate the rise of telehealth and companies serving that field, for instance. Now that it’s obvious many people can work from home, there will be an increase in remote services, he said.

One other area that is likely to get a boost is micromobility — which has struggled in the U.S. — as people avoid public transit, Lavault said. Many young people don’t even want to own a car, preferring a scooter or a ride-share service, he said. “That is very different from older generations.”

Partech provides seed money — usually in the range of $300,000 to $500,000, but sometimes going as low as $150,000 or as high as $1.5 million — depending on whether it is part of a syndicate, Lavault said.

Unfortunately, the pandemic will make it harder for entrepreneurs to tap venture-capital funds at least in the short term, he said. The VC world is based on relationships and because of the lockdown it’s simply harder for founders and investors to meet in person right now. “It’s all about trust,” Lavault said.

Moreover, investment firms likely will want to keep more cash in reserves, so there will be less money for new deals, he said. Depending on how the economy rebounds, things may not get back to normal at all this year.