Impact investing can pay dividends

Amplify Capital’s Kathryn Wortsman wants every dollar to make a difference. The firm invests in promising startups working in education, healthcare and the environment.

Kathryn Wortsman honed her skills as a venture capitalist in New York, but it has been back home in Toronto where she’s found an opportunity to align her talents and her values.

In 2016, she founded MaRS Catalyst Fund to invest in social impact businesses. Three years later, it evolved into Amplify Capital. Wortsman has set ambitious goals for the firm, which exclusively focuses on investing in startups working in education, healthcare and the environment.

Amplify aims to help 25 million students and adult learners, improve outcomes for 25 million patients, and reduce carbon dioxide emissions by 88 megatonnes. Those are big numbers, but supporting promising startups with early funding can make a huge difference. For instance, Amplify’s investment in Carbon Upcycling is helping scale its climate solution. The company, which is piloting its method of sequestering carbon dioxide in concrete at the Ash Grove cement plant in Mississauga, has the potential to greatly reduce emissions in the concrete and cement industry. “The impact potential of our portfolio,” says Wortsman, “is incredibly satisfying and humbling.”

Here, she talks about her journey from traditional banking to social impact investment and shares the challenges and satisfactions that come with that shift.

What do you find most satisfying as an investor?

Prior to Amplify, my investing career was all about money. The more money an investment made — that was the win. Early on that was exciting, but then it wore off; making money for the sake of making money became less alluring. What I find most satisfying at Amplify is that every single one of our investments has a strong social or environmental impact. Our companies have the potential to change the way you receive healthcare and get better, transform the way your children get educated and shift the trajectory of climate change. It is incredibly exciting and satisfying — and humbling.

How do you define social impact investing?

There is a technical definition (from The Global Impact Investing Network) that we abide by, which is “investments made with the intention to generate positive measurable social and environmental impact alongside a financial return.” That’s exactly what it means to us. The business must be financially sustainable, and ideally growing, so it can serve more people and have more impact and revenue and profit. There is no impact without sustainable profits, and the impact grows alongside revenue and profits.

What are the challenges with this kind of investment?

Six years ago, when we started, people didn’t understand what we were doing. They thought we were investing in charities. Now, most investors understand impact investing, but there’s still a bias and questions about whether the company can raise money or be profitable.

The biggest challenge is measurement and appropriate labelling. At Amplify Capital, we can authentically and accurately call ourselves an impact fund, because we measure and report on our impact. There’s a lot of greenwashing. One of the things that’s coming in the U.S. is specific regulation of asset managers; if they label themselves as an impact fund or social impact investor, then they need to adhere to certain guidelines and reporting. I’m hopeful that this will come to Canada as well.

What are some of the endeavours you’re especially excited to be supporting?

Things like Early Bird, an assessment tool that improves a child’s ability to get literacy intervention earlier than they would have otherwise. And [that will help] not just one kid, but thousands of kids. Lucid is a digital form of therapy, specifically providing music therapy — and because it’s an app, you plug it into your ears and tell it how you’re feeling literally anytime, anywhere, and it’ll support you.

Future Fields out of Edmonton, which is using fruit flies as bioreactors to create growth hormones to be used in health and cellular agriculture, has an opportunity to change the industrial landscape of bioreactors, to change these behemoth industrial sites and scale them back to fruit fly manufacturing. The outcome of that shift in manufacturing — to reduce costs and to produce a better-quality growth hormone for health innovation and synthetic meat — will have a huge impact.

What drew you to invest in carbon solutions like Carbon Upcycling?

I’ve been thinking about the idea of circularity and turning waste resources into value for a long time. In the ’90s, when I was at CIBC, I worked on a project financing waste energy plants. Then in 2010, I was an owner and president of a company called Kelso Coatings that cleaned and waterproofed concrete. So when I came across Carbon Upcycling in Alberta, I realized what a strong opportunity it was — and how using different waste materials in the mix allowed for an improved cement outcome. But I also always look at the potential impact a technology can have. How much carbon dioxide can it reduce? Has the technology been validated? Are there customers lining up for this product? That’s the formula. If it’s only at lab scale, it’s not going to work.

What is the role of an advisor, in your opinion — does it go beyond just writing a cheque?

We give founders support to help co-create value. It’s complicated and it’s why a trusted relationship is so important. I offer my perspective and guidance and listen to their goals and concerns. I was just advising Carbon Upcycling on HR matters; the other week I was helping them find new investors. I also ask people about how they are doing and how their families are doing — founders get so stressed, and if they are not mentally and physically well, they aren’t going to deliver.

As an impact investment fund, we screen companies for the impact they can have. We share values with the founders and work with them to help maximize that impact. Whereas other investors might align on a business model or revenue opportunity, we align on a shared goal of making a difference.

How has the Canadian innovation landscape changed over the last 10 years?

More and more research is getting funded and commercialized, and there’s been a lot of government support to fund that research and help commercialize it. I’d like to see more of the same. And we need more funding and focus on climate innovation. I’d like to see us quadruple down on that.

 
MaRS commissioned photographer Jenna Marie Wakani to photograph the thinkers, entrepreneurs and investors behind some of Canada’s most exciting companies. See the full portrait series here.

 
Photo credit: Jenna Marie Wakani