Over the past decade, impact investing has gained significant momentum as both an investment strategy and an approach to address social and environmental challenges. Impact investing is defined as investments made with the intention to generate positive, measurable social, and environmental impact alongside a financial return.
Through impact investments, investors focus on companies that promote ethical and socially responsible consciousness such as environmental sustainability, social justice, and corporate ethics. Besides, it also circles around addressing social issues including poverty, education, or an environmental issue, such as clean water. According to a survey by Global Impact Investing (GIIN), the $715B (approx €612.76B) global impact investing market is maturing, driven by better measurement and strong performance.
Fintech Company Raises €12.8M
Recently, Clarity AI, a startup developing tech that analyses the social impact of companies and investments, has raised $15M (approx €12.8M) in a fresh round of funding led by Deutsche Borse AG and co-investor Mundi Ventures.
The raised capital will help Clarity AI’s sustainable expansion plans, including scaling-up investment in proprietary technology and AI, as well as integrating with financial services platforms.
Clarity AI and Deutsche Borse are also exploring potential collaboration in various Deutsche Borse business areas, such as Qontigo, an analytics product.
About Clarity AI
Founded in 2017 by Rebeca Minguela, Clarity AI empowers investors to manage the impact of their portfolios through a proprietary technology platform that leverages big data and machine learning to assess sustainability for all societal stakeholders.
Explaining the startup, Rebeca Minguela, founder and CEO of Clarity AI says, “Our purpose is simple: to measure the impact of companies on our society and planet. Investors attempting to evaluate impact have faced fragmented and unreliable data, inconsistent subjective definitions, and a lack of standards and tools for comprehensive analysis. Historically it has been too hard and resource-intensive to get accurate and transparent insights. Clarity AI provides a solution for that.”
Since its inception, the company has attracted a client network representing in excess of $3T (approx €2,570B) of assets and funding from investors, including Kibo Ventures, Founders Fund, Seaya Ventures, and Matthew Freud.
The company built its proprietary technology platform that uses machine learning and big data – data from more than 30,000 companies, 198 countries, 187 local governments, and over 200,000 funds – to assess sustainability and provide clear reports.
Clarity AI has offices in the US, UK, and Spain. It has a team of over 100 technology, sustainability, and research experts with collective experience from leading organisations, businesses, and research institutions including NASA, the World Bank, Google, Netflix, Harvard, M.I.T, and more.
Sustainable Market Growth
In the last six months, Clarity AI claims to have witnessed a significant increase in demand for its services, including signing clients with eight times the assets under management as in the preceding period.
According to the company, the “Sustainable Investment” market has grown 34% in the last two years and now represents one-third of total global assets under management (AUM) – $30.7T – approx €25,703B (of a total of $79.2T – approx €67,858B).
The company mentioned that this rapid growth shows that 81% of investors want to better understand and improve the impact performance of their investments, with millennials (in particular) demanding greater social impact transparency in their portfolios.
Minguela believes, “2020 has seen extraordinary volatility and uncertainty – from COVID-19 to social justice protests. It has never been more important for investors to have accurate insights on the true impact of the companies in which they place their trust and their money. That is why we are scaling up our business to enable investors to identify and support those companies helping to solve society’s biggest challenges.”
Clarity AI was selected as a 2020 Technology Pioneer by the World Economic Forum. It has also received awards from the Harvard Innovation Lab and funding from Horizon 2020, the European Union’s Research and Innovation program.