How this investment style is having an impact (and the companies we're most excited about)

As the market narrative evolves, with less fear of a recession, more interest in the next opportunity, and a growing recognition of the need to accelerate the adoption of sustainable innovations across industries, there is reason to be optimistic about the financial returns associated with impact investing.

In an era where every financial decision can be both an investment in the future and a statement of one's values, impact investing stands out as a powerful intersection between finance and social good.

How we define Impact

At Dragonfly Enviro Capital we define an impact company as services, products or solutions that are positively impacting the planet and its people and in their very DNA addressing a minimum of one of the UN Sustainable Development Goals (SDG’s).

We are focused on growth capital, which is a lot more risk-adjusted than earlier stage venture capital. Growth funds like ours, focus on investing in companies that have product to market and are well on their way to profitability, if not already there. They’re all solid businesses to which we’re providing funding for expansion.

This isn’t just our process either, according to the Global Impact Investing Network (GIIN), nearly 90% of impact investors report that their investments meet or exceed their expectations for both impact and financial performance.

A study from the Wharton School of the University of Pennsylvania found that companies with a strong commitment to ESG criteria showed better operational performance and were less risky. In-depth due diligence that incorporates ESG metrics is more than a feel-good exercise—it's a means to identify companies that are likely to be resilient and profitable in the long run.

What we look for in a portfolio company

What we look for in a company is that they are having a significant and innovative disruption to their respective markets, creating positive, profitable and proven results.

They must have already proven markets, that are growing, that provide solutions to the challenges the environment and people are facing, and just as importantly, that are profitable or have a clear path to profitability.

It’s important to note, impact investing doesn't end once the investment is made. Ongoing monitoring and reporting ensure that the investment continues to deliver on its promised impact and financial return. We are regularly reviewing both financial and impact metrics, which helps us make informed decisions in real time.

Portfolio companies to watch

We are in an exciting time in history in that those companies genuinely tackling environmental challenges, if they reduce carbon emissions, tackle waste and pollution, and or repair and rehabilitate biodiversity and the planet, they first and foremost stand to offer significant economic returns, with the added benefit of offering positive social and environmental outcomes. As such, these are some of our portfolio companies that are getting us excited right now.

• Downforce, a UK-based, female-led company that uses satellite technology to measure soil health, soil carbon levels and biodiversity;
• The Water and Carbon Group, a Brisbane-based company that extracts cancer-causing PFAS toxins out of waste water;
• Pacific Bio, a company that uses macroalgae to strip wastewater of environmentally harmful pollutants;
• Our Trace, a carbon accounting software-as-a-service platform;
• Red Earth Energy Storage, a fast-growing Australian manufacturer of energy storage systems.

What next?

Impact investing is more than just a trend. It represents a shift in how we think about the role of capital in society. For those who seek both a financial return and a meaningful, positive change in the world, impact investing provides a compelling avenue.

By setting clear objectives, conducting thorough due diligence, and committing to regular monitoring and reporting, investors can tap into the transformative power of their capital. As the proof points highlight, this is not only good for the world but also good for the wallet.