June 1, 2020

By Michelle Pelletier Marshall, Global AgInvesting Media

“What really motivates me is making a difference… that’s how I am wired,” said Bill Murphy, who after decades of working with great innovators and companies in successfully attracting investment capital, came across impact investing. “I was looking to drive a different kind of difference when I came across impact investing, which was in its infancy in New Zealand two years ago,” he explained during a recent presentation.

An increasing flow of startups coming his way led him to found Enterprise Angels in 2007, which is a unique fund management/early-stage business investment model that is the largest of its kind in New Zealand. Enterprise Angels went on to establish EA Fund 1, which closed in 2014 with a total raise of $2.4 million; EA Fund 2, which closed in 2016 with a total raise of $2.6 million; and the company is currently raising EA Fund 3.

But just last year, Murphy and Enterprise Angels launched the Purpose Capital Impact Investment Fund (PCIF) to support the growth of social enterprise and impact investing in New Zealand. This represents the first time that high-net-worth individuals, family offices, and corporate backers have joined forces with community trusts and philanthropists on such a scale to make capital investments that will have a positive impact and create systemic change in the country’s social and environmental issues. Key investors include K1W1, the Tindall Foundation, WEL Energy Trust, and BayTrust, among other family trusts and private individuals.

In December 2019, PCIF announced an initial close of $20 million (the fund is still open as the target is $30 million) and its intention to start making investments in companies that drive systemic social and environmental change and financial return in New Zealand.

GAI News caught up with Murphy in Bay of Plenty, New Zealand, where he spends most of his days, to get a better vision for what investment opportunities lie ahead for this trail-blazing impact investing fund.

1). Your mission to help New Zealand live up to its “clean, green” image is wholehearted. What is the driving force behind this?

I think we all need to have a place or places in the world that we regard as an untouched, beautiful paradise. For many people around the world, that place is New Zealand. New Zealanders are justifiably proud of their country but also aware that the much of New Zealand’s economic and cultural well being depends upon it walking the ‘clean, green walk’.

2). PCIF will focus on four main challenge areas: affordable housing, environmental degradation, climate change, and inequality. Please speak to the upcoming potential projects related to agriculture that the fund will support.

I often think impact funds focused on the U.S. or European market would find New Zealand impact deals unusual or maybe just particularly ‘kiwi’! Current investment opportunities include a kiwifruit nursery providing quality training and employment opportunities in a deprived Maori community, the conversion of conventional dairy farms to organic, and the support of deep sea mussel aquaculture to avoid the environmental problems of onshore farming.

3). Why an impact fund when these are things that could be invested in directly? How do you convince investors to prolong their ROI to say 12 years rather than 11, in order to take that year’s worth of returns to make the project something that is really transformative?

There’s no question that there are still many investors focused on financial return only. But there are a large number of investors who would like their investments to take externalities into account (ESG, negative screening), and a growing group wanting to use their wealth to drive positive change. It’s this later group that is leading the way by investing in impact funds and projects.

4). With your primary focus on the social and environmental outcome, how does financial return fit into the equation? 

Financial return is imperative, otherwise we add nothing new because we’d essentially be doing philanthropy. Financial return will enable impact investing to scale – bringing in money from the largest source on the planet – individuals and business.

5). PCIF is unique in the relationships it builds with trusts and high-net-worth individuals. How do these partnerships give the fund more leverage and incite bolder investments/initiatives?

 The Trusts play a vital role – grant funders for preparing impact opportunities and co-investment. High-net-worth individuals bring their expertise and contacts.

ABOUT BILL MURPHY

Bill Murphy is a qualified accountant from Boston, Mass., with over 30 years’ commercial business experience. In 2008 Murphy founded Enterprise Angels – New Zealand’s largest angel group – helping raise over $40 million for start-up businesses. He is now helping establish ‘impact’ investing. Murphy founded New Zealand’s largest impact investing fund to date, Purpose Capital, which is a collaboration between the New Zealand commercial and philanthropic sectors investing to drive social and environmental change in New Zealand.

~ Michelle Pelletier Marshall is managing editor for HighQuest Group’s Global AgInvesting’s GAI Gazette magazine and its WIA Today blog, as well as a contributor to GAI News and the Oilseed & Grain News. She can be reached at mmarshall@highquestgroup.com.