Interview with Uli Grabenwarter, Head of Strategic Development-Equity at the European Investment Fund

By Marta Maretich

How did you get interested in impact investing?

I was responsible for the Venture Capital investment business line of the European Investment Fund up until 2010. While I was doing that, I started to see impact investing as a natural extension to the venture capital activity we were doing. At the same time I felt impact offered an opportunity to do more value creation.  I thought we were too focused on creating “unrealizable” financial value—profit—and that we needed to focus more on creating real, tangible value for the stakeholders in the market.

What do you mean by real, tangible value?

If you look at the economic model we were all running up until 2008, you have to admit that the value we were creating in the private equity market was borrowed from the future. In the crash of 2008, we “lost” $28 trillion in market capitalization on the US stock markets. At the time I asked myself, were did all that money go? If it was “lost”, why isn’t anybody out looking for it? The answer was that this so-called “value” was never really there in the first place. It was virtual value, not real or tangible.

What are you doing with impact investing today?

In 2010 I had an offer from the IESE University of Navarra in Barcelona and The Family Office Circle Foundation based in Switzerland to participate in a two-year research project on impact investing. We studied seventy-five of the largest single family offices worldwide to learn about their approach to impact investing and consider whether it’s possible to have societal value with financial return.

I completed this research and returned to the European Investment Fund in 2012. In 2013 we launched the Social Impact Accelerator, which is the first pan-European fund-of-funds structure in impact investing. This quarter we’ve gone mainstream with €350 million under management for social investing in Europe.

What do you think is impact investing’s greatest challenge?

Our biggest challenge is our mindset. Despite the growth in the sector, we still have the idea in our heads that societal and financial returns are opposed to one another, that there will always be a tradeoff between them. Our entire financial system is based on this type of faulty reasoning. Look at corporate legal structures, for example. There are hardly any that allow the coexistence of societal and financial value creation. Most of the legal forms for social enterprise actually prohibit for-profit investment.

I consider this the most significant challenge to impact investing. It’s not just that we need to redefine the cutoff point between philanthropy and investment. We need to get into our heads that both social benefits and financial return are necessary for creating value.

Unconsciously we make choices about risks, financial return and also social impact in every investment we undertake. The fact that impact investing makes our choices transparent doesn’t make the dilemma of investment choices any better or worse. So why is it that in making impact-conscious investments we feel like we have to choose between opposing values? Are we just uncomfortable with it because introducing this level of transparency makes evident the extent to which financial values are virtual ones, not real or tangible at all?

Finding a method for pricing social value will be key to solving this problem because it will allow us to integrate societal values into economic decision-making at every level.

What is your vision for the future?

A world where social impact is seen as an opportunity rather than a constraint to business development. A world with a totally new concept of innovation, one in which enterprises aim to solve societal issues permanently so that for them being “successful” means that the social issue disappears—along with the need for their business model. Successful social enterprises will be obsessed with working to put themselves out of business and constantly re-inventing themselves to meet new and changing needs.

If the non-impact investment world thought about business that way, our economic system could function in a very different way. We would derive financial value from ensuring the sustainability of our socio-economic system rather than from the concept of linear growth and consumerism that rely on resources we will run out of within the time horizon of less than a generation. Actually, in a way we would end up paying for consuming less—and find that great!

About Ulrich Grabenwarter

Uli Grabenwarter is Head of Strategic Development-Equity at the European Investment Fund and the president of European Impact Investing Luxembourg, a think-tank and network promoting concepts and proposals for regulatory and policy action in support of a prospering market environment for impact investing in Luxembourg ( From 2010 he conducted a 20-month research project on impact investing in collaboration with IESE University of Navarra in Barcelona and the Family Office Circle Foundation. Previously, Uli was Head of Equity Fund Investments at EIF after having worked at the European Investment Bank and at Price Waterhouse Coopers in corporate finance, project finance, finance consulting and auditing. Uli is a visiting Professor for Private Equity and Venture Capital at IESE University and teaches the module on Alternative Investments for the Post Graduate Programme of Sacred Heart University.

Further reading:
Exposed to the J-curve: Understanding and Managing Private Equity Fund Investments (Euromoney Books, 2005)

In Search of Gamma: An Unconventional Perspective on Impact Investing” (IESE Publishing, 2011).

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