Unpacking the Black Box of Impact Investing: The Investment Practices and Types of Impact Funds

Since the term impact investing was first coined in 2007, there has been a tremendous growth of impact investment funds. While impact investors have been considered as a new investor type, little is known about the specific investment practices of professional impact investors. We provide an in-depth analysis of the practices of impact investors, using a multiple case study analysis of thirteen impact funds. We document six ‘impact investment practices’ that are unique to impact investors. We then show that impact funds vary in their emphasis on and approach towards the identified impact investment practices, diverging into three distinct types of impact funds: “Community” vs. “Catalyst” vs. “Cherry-picker”. This study contributes to our understanding of this emerging class of investors.