Sarah Kearney Discusses the Future of Impact Investing in a Q&A with Crain Currency

Tell me about the start of your journey

In hindsight, it sounds like one long story arc. In 2006, I was hired by a high-net-worth family to set up their foundation. They basically gave me a blank sheet of paper, and it was an unbelievable learning opportunity for me at 22. I got to know an incredible community of scientists and engineers, and when they wanted to carry forward their research and make an impact in the real world, they came to us looking for equity investment in early-stage climate tech companies. And it left me with so many questions — is that appropriate for a foundation, and is there a more efficient way for this family to drive capital to these types of activities, projects and funds that might struggle to raise sufficient financial support but could someday help us achieve scale on some of the most important social and environmental causes of our time?

And that inspired you to start Prime Coalition?

I started Prime Coalition from 2013 to 2014 to try to bring down the very high barriers that were preventing all different types of philanthropists and foundations from driving capital to early-stage technologies combating climate change. In our case, over the first 10 years, we focused on the earliest stages of company formation and the types of companies that are particularly tricky to raise sufficient financial support for. But the same mechanism — traditional grants or program-related investment loans or program-related equity into for-profit startups — can be used for any capital gaps that when filled could significantly advance the charitable purpose. As long as the primary purpose is charitable and you can make the case that the investment would not be paid, but for the charitable purpose.

With July the hottest month on record, climate change grows ever more urgent. What are the most scalable solutions right now?

Humanity needs to reinvent our entire economy so that it is less active and does not continue to emit greenhouse-gas emissions even as the global population grows, and we need to remove the greenhouse gasses from our atmosphere that are already there. So I think your question is looking for a list of technology areas or companies, projects and funds that might be poised for investment to scale right now, which is important work.

But I'm gonna turn your question around because Prime Coalition is in the business of looking for gaps. So those are the solutions that society needs that are not yet ready to scale. For our first 10 years, Prime has focused on the neglected areas of early-stage-company formation. And we continue to do that through our venture capital practice, which is called Azolla Ventures. But because we've now completed impact-first investment transactions with over 250 philanthropic partners, we now have the confidence to start building our second investment practice, which is focused on early climate infrastructure. So that includes kind of late-stage demonstration projects and first-of-a-kind projects that would be difficult to raise traditional project financing to advance without our support.

What types of projects are you focusing on?

Our early climate infrastructure team does both a top-down and a bottom-up pipeline analysis. So what are the most important sectors to shift greenhouse gasses globally? That's top-down. And what are the projects that are shovel-ready and could make a huge impact but need catalytic support today to bridge to large-scale deployment? That's bottom-up.

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