Get to Know: Adam Rein
And how his team helps people invest for good
As I’ve reported many times in this newsletter, one of the best parts of my work is that I get to meet very cool people who do a lot to make the world a better place.
One of these people is Adam Rein, Co-Founder and CEO of CapShift. CapShift is an early-stage company that helps impact capital investors—both individuals and institutions—support for-profit and nonprofit enterprises in their efforts to drive positive outcomes.
Let me note that I’m a big fan of Adam and his team, and therefore I’m both an investor in CapShift and a client. I’ll also note that this newsletter should not be read as investment advice—that’s not what we do. Get yourself good professional advice if you’re inclined to pursue these opportunities.
When I first met Adam and his team, I told them that I was looking for investment opportunities that would address climate and biodiversity challenges. I also said I was willing to accept more risk and/or lower returns versus the usual market-based offerings because my top priority for these investments would be to achieve impact. The CapShift team got to work and brought me a number of very interesting investment opportunities that seek to do exactly that. This category of “impact first” investing—kind of in between philanthropic and return-maximizing—is very promising in my view and can likely unlock a lot of progress.
I’m very happy to introduce you to Adam and team. We always like to profile how people can build positive and rewarding careers. And we also want to highlight ideas on how impact investing can be scaled.
Meet Adam.
Adam, we like to show how individuals can build positive careers in the environmental field. Please tell us about how you got to where you are today.
I got inspired in college learning about Newman’s Own salad dressing and how they donated 100% of their profits to charity. This opened my eyes to the concept of social enterprises that used the power of business for positive change. After a summer working on nuclear waste in England, I decided to focus on climate and helped launch a tech startup, Altaeros, and a climate-tech incubator, Greentown Labs.
That brought me to the world of climate investing, and I joined the pioneering team at MissionPoint to work with impact-focused families to invest in food & ag and water for scalable impact. We took note of the trillion dollars of charitable assets mostly sitting on the sidelines, as well as growing unmet demand for impact from wealthy families, and launched CapShift to offer a better impact investing platform for the market.
As I made clear above, I’m a big fan of CapShift. How do you describe CapShift’s mission? And please tell us which parts of your work get you most excited.
CapShift seeks to mobilize hundreds of billions of dollars for positive change by making it easier to integrate impact investing solutions into your portfolio. We focus on the institutions that serve high-net-worth families, such as wealth advisors, family offices, donor-advised fund providers, and family foundations. We had learned that roughly half of high-net-worth families want to invest their money intentionally to achieve social or environmental outcomes around issues they care about—whether that’s climate change, racial justice, access to education, or community lending. But of the people who are interested, less than half of them have actually made an investment. We formed CapShift to tackle the barriers head on.
We cover the full spectrum of the impact market: public funds, private market-rate funds, impact first PRIs and recoverable grants, and direct investments.
I am particularly excited that of the $650 million we have catalyzed to date, roughly half has been in “impact-first” investments that are transformational for communities that are often starved for capital, as they do not have the risk-return profile to attract traditional finance. And I’m excited that we now partner with half of major donor-advised fund providers, a part of the market where impact traditionally has been hard to access.
Who are some of the other organizations in your field that you admire?
There are too many to count! We have a partnership model, so we work with dozens of leading impact firms as domain partners to source investments as our clients or as investors in CapShift. Examples in the environmental world that we work with include the Grantham Foundation, PRIME Coalition, and yes, even your old team at The Nature Conservancy. About half of the capital we have catalyzed to date is focused on climate.
From your perspective, what are some of the important opportunities for impact investing right now? Where is capital most urgently needed?
Capital flows most quickly to parts of the market with proven track records of delivering consistent, market-rate, risk-adjusted returns. We support investing in these areas—such as renewable energy infrastructure—but we also help clients identify areas where their capital can be more catalytic. Examples include neglected sectors such as biodiversity or regenerative agriculture, first-of-a-kind infrastructure such as new types of energy storage, underserved geographies, and first-time fund managers with approaches such as revenue-based financing or a climate justice focus.
How does CapShift source and vet its opportunities?
As an investment platform, we take a data-driven approach backed by our software. We have sourced over 3,000 impact investments to date, and qualified over 1,000 as of possible interest to our clients. We have over 100 domain partners who are sharing qualified opportunities with our team, in addition to tracking major databases of impact opportunities. We have a research & advisory team that conducts financial, impact, and operational due diligence on investments that we share with our clients.
The environmental challenges we face are enormous. How do you think we are doing overall in addressing these emergencies? What gives you reason for feeling encouraged?
It can be daunting when we see numbers like a $2.5 trillion annual funding gap to get to net zero. Not one of us is going to “solve” climate change with our investments, just like we are unlikely to win an election with our one vote. However, we uncover ways where your investments can have a vastly outsized impact on the issues you care about by proving out new solutions or models and then rallying large sums of additional capital into new spaces.
I got started in climate innovation and investing in 2008-2009, right as capital was drying up after several failures from the wave of “cleantech 1.0” investing. It has been invigorating to see capital flows double and triple and quadruple into a new wave of climate solutions that were never funded before—whether it is hard-to-abate manufacturing sectors, aviation biofuels, green chemistry, or carbon sequestration. This is because corporate commitments, government policy, lower-cost solutions, and consumer demand are all aligning as strong market drivers. That gives me hope that we are quickly shrinking the capital gap on the innovation and early scaling side, to get solutions ready to scale through mainstream capital markets.
We’ve written in this newsletter about the urgent need for capital to flow in huge amounts from the developed world to low- and middle-income countries to help them achieve things like transitioning to clean energy, boosting resilience to adapt to climate change, and protecting biodiversity. But the money doesn’t seem to be flowing fast enough. How do you think this gets fixed?
Traditionally, the focus has been on government financing for development pools of capital to support climate mitigation and resiliency in developing countries. Since we launched CapShift, we have seen growing interest in the worlds we support—private wealth and charitable institutions—to increase their focus on investing in climate solutions in developing countries. Often, these investors are focused on the outsized abatement potential you can achieve in high-emissions emerging markets, such as Southeast Asia, or the ability to combine climate solutions while lifting low-income communities out of poverty. This still represents a smaller portion of where our clients are looking to invest, but it is growing over time. Some areas, such as off-grid solar in Africa, have captured particular interest and you can see larger flows of capital.
In recent times, we’ve seen some pushback on institutional impact investing and ESG efforts writ large, while others assert this is overblown. Where do you come down on this and, what do you predict for the future?
A lot of this discussion seems to confuse terminology and purpose.
My personal view is that there is a legitimate concern among conservative states about whether their public investments should be allocated to funds that have progressive activist agendas that go beyond financial returns goals. However, this only addresses a small portion of both capital allocators and funds.
The vast majority of ESG or impact funds don’t have this controversy. They are either focused on social and environmental factors that are drivers of minimizing risk or stronger risk-adjusted returns, or they are impact-first funds targeting charitable institutions where the fund’s mission is aligned with that of the charity. Hopefully we can move beyond this confusion and get back to the bigger problem—how to help asset owners invest in portfolios that best meet their overall goals.
Adam, thank you for sharing your inspiring work!
If you want to read more about CapShift’s work around climate change, see below:
Climate primer: The-ABCs-of-Climate-Investing-Primer.pdf (capshift.com)
Climate podcast episode:
Carbon markets deep dive: Deep Dive: Unpacking Carbon Markets - CapShift
Onward,
Disclosure: Advisory services provided by CapShift Advisors, an SEC-registered investment adviser. Investments in securities are not FDIC insured, not bank guaranteed, and may lose value. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Before investing, consider your investment objectives and CapShift Advisors' charges and expenses. CapShift Advisors’ advisory services are designed to assist clients in achieving discrete financial goals. They are not intended to provide financial planning with respect to every aspect of a client’s financial situation, they do not incorporate investments that clients hold elsewhere, and they do not provide tax advice. For more details, see our Form ADV (https://adviserinfo.sec.gov/). Past performance does not guarantee future results, and the likelihood of investment outcomes are hypothetical in nature. Nothing in this email constitutes an offer, solicitation of an offer, or advice to buy or sell securities in jurisdictions where CapShift Advisors is not registered.