Skip to content

Demystifying impact investing: an interview with impact investor, Shishir Malhotra

By Shishir Malhotra & EFN , 11th June 2024

EFN’s Environmental Impact Investing Group (EIIG) helps those new to impact investing understand what it is and and how to go about investing in initiatives with environmental benefits through a comprehensive learning programme. But we know impact investing can still seem a little abstract or daunting to many.

That’s why we turned to Shishir Malhotra to help bring impact investing to life for members. Shishir is the Impact Investment Director for Treebeard Trust, has over a decade of experience in impact investment and is one of the steering group members of the EIIG. Below he helps demystify impact investing, shares his personal story of how he got into investing, offers some tips for beginners and explains why the free Environmental Impact Investing Group (EIIG) can help.

Note: Impact investing is defined as investments made with the intention to generate positive, measurable environmental impact alongside a financial return.

Six flowers are laid down on a grey background. From left to right, each flower slowly grows and blooms more to the sixth and final flower being fully in bloom and grown.

Shish, thanks so much for agreeing to talk with us about impact investing! Can you tell us a bit about yourself and how you got into impact investing?

I stumbled into impact investment over 10 years ago, because I met somebody that was setting up a fund in the UK and they took me on. It was all very new, but super exciting, and I’ve been working in the sector ever since. Mostly I worked for either institutional investors or foundations to make early stage investments (that means where the recipient isn’t a big or established organisation). Previously I worked at large charities in strategy and campaigning. Currently, I am the Investment Director at Treebeard, so I help the charity make impact investments in different businesses and projects. 

What is it about impact investing that you enjoy so much? 

I enjoy learning about new topics and issues. You see, before investing in a business or project, you have to learn about the problem they are addressing, and then understand whether they have a chance of succeeding or creating positive outcomes. That’s really exciting because you have to try and understand the market and the issue itself. I get a lot of energy when I see a new business and have to think through these new models and ideas.

I also like the discipline and rigour of investing. With investment, you have to structure something that makes sense for the business but also for the investor. So that means understanding the context and guessing to a certain extent whether the business is sustainable and whether that money is likely to come back.

What is the point of impact investing? Why does it matter?

For me, the obvious reason is you’re unearthing innovation. For example, if it’s early stage investing, you’re often investing in something that is new and has the potential if it grows, to have a big impact and to improve the lives of people, communities and the planet. All investments have impact, so it’s beneficial if more people and investors think about trying to improve the impact of their investments, or at least minimise the bad impacts. I want to help create a world where people care about the impact of their money. 

How does impact investment fit alongside philanthropy – what aspects are similar and what makes it different?

There’s lots of similarities between impact investing and philanthropy and grantmaking. For example, when you’re making a loan of £100k or a grant of £100k, you actually do a lot of the same work. With both, you’re exploring the problem, you’re looking into the solution and considering if the model being shown to you could make a difference. You’re also looking to understand the team and their skills, governance, cash flows and so on.

The differences are when it gets to structuring deals and the commercial nature of investing. For example, with a loan you have to work out what’s a good price for the loan, for example the terms, grace period, how you pay it back over time etc. The key difference with investing is that it’s commercial by nature.  

Often the philanthropic side and the investment side can work together – exploring what are investable solutions and which solutions require grants. The other big advantage for foundations or philanthropists is that they have a pool of assets which they already invest. So creating as much impact as possible with those investments will increase the overall positive impact of that charity or individual philanthropist.

There’s only good that can come from having an investment programme alongside a grant programme. 

Are there any limits to impact investing that readers should know about?

Yes, there are definitely some limits. On a very practical level, there are a range of interventions that investment simply isn’t suitable for, for example advocacy, lobbying, or anything where there isn’t any kind of revenue model. We know to address all aspects of a social and/or environmental problem, we need to take a systemic approach and that requires using all types of finance in different parts of the system – impact investing isn’t a panacea.

Can you share an example of a venture you’ve invested in which you’re proud of? 

At Treebeard, we invested in a business called OnHand, which is an employee volunteering platform. Since we’ve invested, it’s gone from providing volunteering opportunities only to individual customers to now providing volunteering opportunities to whole businesses and their employees as well. It’s been really successful so far. So many businesses are using it and it’s one of those really great projects with a strong purpose at the heart of it.

Screenshot of the On Hand website - on a yellow background the headline says 'corporate volunteering that employeers love' with the 'OnHand' logo and social media graphics showing different volunteering opportunities.

What advice would you give to someone new to impact investing?

For individuals I would say immerse yourself in the subject matter – really try and understand some of the problems being addressed – do some reading and speak to people. Also you learn by doing – I would try to find a way to meet as many entrepreneurs and management teams as you can and understand what they’re building and why. 

Finally, don’t be put off if you don’t have immediate success. That’s why piloting is really important – complex strategies can put roadblocks in the way and sometimes make decision making difficult. For instance you can pick some businesses, invest in them and then go on a journey with them and learn over time. 

Why did you agree to get involved with the EIIG? What do you think it offers to those who are new to impact investing?

I really liked that EIIG gives ‘deal flow’, meaning access to investment opportunities coming up  – so you get a flavour of some live opportunities. If you really spend the time to listen to what those opportunities have to offer it’s really exciting. 

The second is that EIIG provides a supportive community of investors. It can be hard to actually seek out your peers and speak to them. But in my experience, the best investment opportunities come from referrals from other investors, when you’ve had those conversations and collaborated. The EIIG is a place where you can build those relationships. 

Finally, getting advice on the practicalities of investing from the EIIG learning programme is super helpful. That stuff is just always constantly changing, so it’s good to just get a bit of free advice.

Our thanks go to Shishir Malhotra for sharing his journey into impact investing. If you’re intrigued by what you’ve read, why not join the Environmental Impact Investing Group? In this pilot year, it’s still free to join throughout 2024 and you can catch up on previous sessions at your own time and pace. Find out more and join the programme now.

Comments are closed.