Builders Vision, billionaire Lukas Walton’s investment and philanthropy platform, has shifted its $1 billion endowment to what it calls “impact investing,” driving a broader shift in family offices to connect their investments and their donations.
Chicago-based Builders Vision will announce today that its Builders Initiative Foundation has shifted 90% of its endowment into “mission-related” investments, investments aligned with Builder’s broader sustainability and equity goals. . Most foundations have 20% or less of their endowments in ESG or impact investments, so the 90% level sets a new benchmark for family offices and foundations.
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“If we’re going to make lasting change, we need our mission to show in everything we do, especially how we commit our resources,” said Lukas Walton, grandson of Walmart founder Sam Walton. “That’s why we invest our endowment in companies, organizations and strategies that prioritize sustainable and equitable solutions.”
(PRO subscribers can see an exclusive interview with Walton on this news and his overall investment strategy here.)
Walton, 36, is at the forefront of rapid generational change in family offices, as heirs and entrepreneurs in their 30s and 40s use their wealth to drive social change. For decades, family offices have divided their philanthropy and investments – earning money on one side and giving it away on the other. The new generation wants their investments to pursue the same solutions as their giving, merging “profits with purpose”.
“We believe that profit and purpose are not in contradiction, quite the contrary,” said Matt Knott, president and COO of Builders Vision and former PepsiCo executive. “Goal-driven companies will have a competitive advantage in the future. Brands and companies that people feel good about will have a competitive advantage.”
Billions for social change
Even as ESG investing faces backlash and criticism of “greenwashing,” the rise of impact investing among family offices is accelerating. A Credit Suisse survey of family offices found that almost half of the family offices surveyed plan to increase their sustainable investments over the next 2-3 years. As more and more family wealth is passed on to younger generations and more and more technological wealth is created by young founders, family offices are pumping billions into start-ups, stocks and private equity aimed at social change.
“This next generation is unstoppable,” said James Gifford, head of sustainability and impact and thought leadership consulting at Credit Suisse. “They bring out the best in free markets and social innovation.”
Knott, president of Builders Vision, adds, “This new generation of family offices want to make an impact, they want to make a difference with the wealth they inherit.”
Builders Vision, which has over $4 billion in assets, includes a direct investment arm, an asset management unit and a philanthropy. They all target three main issues: food, the health of the oceans and the energy transition. Builders Vision has brought together teams of in-house experts to fund high-impact ideas and share them across the worlds of philanthropy, start-ups and investing. The Builder’s Initiative Foundation is part of the philanthropic arm of Builders Vision, which has several funds and capital pools, each with their own investment goals and missions.
Philanthropy, says Walton, cannot solve the world’s biggest problems, even with government help. The big technological innovations needed in energy, agriculture and the environment are likely to come from entrepreneurs. At the same time, many impact-related start-ups are too risky for traditional venture capitalists and angel investors. Walton and his team say Builders Vision and other large family offices are uniquely positioned to fund businesses and nonprofits across the risk spectrum.
NGO to IPO
“We want to provide the NGO capital solution to the IPO,” said Sanjeev Krishnan, chief investment officer of S2G Ventures, the Builders Vision venture capital fund.
For example, Builders Initiative’s oceans team used an LLC to invest in a small start-up called Matter, a UK-based company developing technology solutions to capture, harvest and recycle microplastics. As it has grown, it has become an attractive venture capital investment, leading Builders’ VC arm, S2G, to invest seven figures recently.
S2G, with approximately $2 billion in capital, has funded 80 companies and was an early investor in SweetGreen and Beyond Meat. Its portfolio includes everything from Farmer Focus, which partners with family farms to raise organic chicken, to Common Energy, which funds community solar projects.
While Krishnan declined to give specific returns, S2G ranks in the top quartile of venture capital firms, according to Cambridge Associates benchmarks.
With its 90% endowment shifting to mission-related investments, even the Builders Initiative Foundation’s endowment — which funds philanthropy — now focuses on positive social and environmental impact. Noelle Laing, chief investment officer of Builders Initiative, said the real return target is still 5% net of fees, which is standard for endowments.
“We believe you can achieve market rates of return while integrating ESG factors and incorporating an impact lens into our strategies,” Laing said. “We think it’s just about investing smarter.”