In a recent fireside chat hosted by Giovanni Amodeo for ION Influencers, Sumeet Gulati, the founder and managing partner of GENUI GmbH, delved into the evolution of impact investing. The discussion covered a range of topics, providing valuable insights into the strategies and philosophies driving modern impact investments, particularly in the German-speaking markets.

Background and Foundation of GENUI: Gulati shared his journey, starting from his early days at EQT in the 2000s, leading to the founding of GENUI in 2014. The firm was established with a unique approach, partnering with successful entrepreneurs to leverage both entrepreneurial culture and first-hand development experience from scaling companies to multi-billion entities.

Investment Strategy and Focus: GENUI focuses on mid-market buyout investments that positively impact people or the planet. Investments range from 30 million EUR to 80 million EUR. The firm primarily operates in Germany, Switzerland, and Austria, focusing on sectors like health, digitalization, and environmental transformation, benefiting from the energy transition.

Impact Investment Criteria and Process: Gulati emphasized the dual focus on traditional buyout metrics and intentional positive impact. The firm collaborates with external consultancies to assess potential deals for their impact using established frameworks. This rigorous approach ensures that investments not only promise top financial returns but also contribute positively to society.

Role of External Agencies: Discussing the reliance on third-party consultancies for impact assessment, Gulati compared it to traditional due diligence processes in private equity, highlighting the importance of external validation to avoid biases like greenwashing.

Cultural and Incentive Structures: A significant part of the chat was dedicated to discussing how GENUI fosters a culture of growth and impact within portfolio companies. Gulati shared an example of a psychiatry day clinic that serves underprivileged patients, illustrating how specific KPIs aligned with impact goals can drive both business success and societal benefits.

Transparency and Industry Standards: Gulati acknowledged the challenges in balancing transparency with the risk of public scrutiny but was optimistic about the industry moving towards greater openness as methodologies and verifications improve.

Global Perspective on Impact Investing: He noted that while Europe is vocally committed to impact investing, the U.S. shows pragmatic engagement with substantial groundwork. Asia is gradually catching up, influenced by its cultural and developmental trajectory in private equity.

Future of Impact Funds: Gulati predicted that impact considerations would increasingly integrate into the core strategies of asset management, not necessarily confined to specialized impact funds.

Key timestamps:

00:08: Introduction
00:36: Background and Founding of GENUI Partners
01:36: Investment Strategy and Focus
02:21: Addressable Market and Investment Size
02:51: Focus on Impact Themes
03:40: Shift to Impact Investments
04:48: Identifying Investable Impact Companies
05:10: Balancing Financial and Impact Returns
05:33: Due Diligence and Impact Measurement
06:59: Engaging with Third Parties for Impact Measurement
08:55: Competitive Advantage of Working with Third Parties
10:05: Incentivizing Management and Company Culture
14:37: Transparency and Accountability
16:27: Transparency in the Impact Industry
17:48: Comparison of Impact Initiatives Across Regions
19:31: The Impact of Impact Fund on Asset Managers
20:42: Considerations for Different Stages of Investment
21:54: Conviction and Players in the Impact Industry
23:13: Transition from Large Firm to Starting a New Business
24:20: Challenges and Advantages of Starting a New Business
25:51: Hiring