Builders Vision, billionaire Lukas Walton’s investment and philanthropy platform, has switched its $1 billion endowment to what it calls “impact investing,” leading a broader shift in family offices to connect their investments and donations. .
Chicago-based Builders Vision will announce today that its Builders Initiative foundation has moved 90% of its endowment into “mission-related” investments, investments in line with Builder’s broader goals of sustainability and equity. Most foundations have 20% or less of their endowments in ESG or impact investing, so the 90% level sets a new benchmark for family offices and foundations.
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“If we’re going to make lasting change, we need our mission to show in everything we do, especially how we invest our resources,” said Lukas Walton, grandson of Walmart founder Sam Walton. “That is why we are investing our endowment in companies, organizations and strategies that prioritize sustainable and equitable solutions.”
(PRO subscribers can watch an exclusive interview with Walton about this news and his overall investment strategy here.)
Walton, 36, is at the forefront of a rapid generational shift in family offices, as heirs and entrepreneurs in their 30s and 40s use their fortunes to drive social change. For decades, family offices have divided their philanthropy and investment: making money on one side and giving it away on the other. The new generation wants their investments to seek the same solutions as their donations, merging “profits with purpose”.
“We believe that profit and purpose are not at odds, quite the opposite,” said Matt Knott, president and chief operating officer of Builders Vision and a former PepsiCo executive. “Purpose-driven companies will have a competitive advantage in the future. Brands and companies that people feel good about will have a competitive advantage.”
Despite ESG investing facing backlash and “greenwashing” criticism, the rise of impact investing among family offices is accelerating. A Credit Suisse survey of family offices found that almost half of the family offices surveyed plan to increase their sustainable investing in the next 2-3 years. As more family wealth passes to younger generations, and young founders create more tech wealth, family offices are pouring billions into startups, stocks, and private equity aimed at social change.
“This next generation is unstoppable,” said James Gifford, director of Thought Leadership and Sustainable Impact Advisory at Credit Suisse. “They are making the best of free markets and social innovation.”
Adds Knott, president of Builders Vision: “This new generation of family offices wants to drive impact, wants to make a difference with the wealth they inherit.”
Builders Vision, which has more than $4 billion in assets, includes a direct investment arm, an asset management unit and philanthropy. They are all aimed at three main themes: food, ocean health and energy transition. Builders Vision has assembled teams of in-house experts to fund the most impactful ideas and share them across the worlds of philanthropy, startups, and investing. The Builder’s Initiative Foundation is part of the philanthropic arm of Builders Vision, which has multiple funds and capital groups, each with their own investment goals and missions.
Philanthropy, Walton says, can’t solve the world’s biggest problems, even with government help. The big technological innovations needed in energy, agriculture, and the environment are likely to come from entrepreneurs. At the same time, many impact-related start-ups are too risky for traditional venture capital firms and angel investors. Walton and his team say Builders Vision and other large family offices are uniquely positioned to fund businesses and nonprofits across the risk spectrum.
“We want to provide the NGO capital solution to the IPO,” said Sanjeev Krishnan, chief investment officer at S2G Ventures, Builders Vision’s venture capital fund.
For example, the Builders Initiative oceans team used an LLC to invest in a small startup called Matter, a UK-based company that develops technology solutions to capture, collect and recycle microplastics. As it grew, it became an attractive venture capital investment, prompting Builders’ venture capital arm S2G to recently invest seven figures.
S2G, with capital of around $2 billion, has financed 80 companies and was an early investor in SweetGreen and Beyond Meat. His portfolio includes everything from Farmer Focus, which partners with family farms to raise organic chicken, to Common Energy, which funds community solar projects.
While Krishnan declined to give specific returns, S2G ranks in the top quartile of venture capital firms, according to Cambridge Associates benchmarks.
With the 90% endowment shifting to mission-related investments, including the Builders Initiative Foundation endowment, which funds philanthropy, is now focused on positive social and environmental impact. Noelle Laing, chief investment officer at the Builders Initiative, said the actual return target remains 5% net of fees, which is the standard for endowments.
“We believe you can achieve market rates of return by integrating ESG factors and integrating an impact lens into our strategies,” Laing said. “We think it’s just a smarter investment.”