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Impact Engine closes its accelerator and a $10 million impact fund

TechCrunch TechCrunch 29/06/2016 Lora Kolodny

An accelerator that backed for-profit, for-good ventures, Impact Engine, is abandoning the bootcamp approach and shifting its focus to investing in these startups as a seed fund, according to CEO and Partner Jessica Droste Yagan.

Based in Chicago’s 1871 startup hub, Impact Engine also closed a $10 million fund to support this pivot. The fund is its fourth, but now Impact Engine will operate without the accelerator model.

The firm will invest $25,000 to $250,000 into startups that tie their financial performance to social and environmental impact, rather than treating do-good initiatives as a standalone, philanthropic arm or side project. The companies can be based in North America, and involved in almost any industry, Yagan said.

For example, an educational tech company in Impact Engine’s portfolio, ThinkCERCA, has a goal of improving the reading and writing skills of students from elementary school through high school. If the company really improves literacy, Yagan explained, it tends to sell its content and software in to more schools.

Impact Engine generally will not invest in fundraising platforms or businesses that use a buy-one-to-give-one model, as they still rely on charity to make a positive social or environmental impact, Yagan explained.

The decision to ditch the accelerator model and become a pure impact fund will allow Impact Engine to be more opportunistic and proactive in deal making, Yagan said.

“The accelerator required teams to be in Chicago for four months, and had a once-a-year application process,” she said. That meant the accelerator had to pass on backing entrepreneurs it would have liked to simply due to timing and location.

Limited partners in Impact Engine IV included OpenTable founder and food-tech investor Chuck Templeton; OKCupid CEO Sam Yagan (who is married to Droste Yagan), Irene Pritzker, Trunk Club CEO Brian Spaly and others.Templeton also serves as the Chairman and on the investment committee at Impact Engine.

Prior to shutting down its accelerator, Impact Engine invested about $700,000 in 23 for-profit, for-good companies. Alumni from the program have attracted $32.4 million in follow-on investments and $2.6 million in philanthropic funding.

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