Family offices dabble in impact investing, but few stay the course: Waterfield’s Prabhir Correa

The report shows only 64 of 316 families that entered in 2021 are still active by 2024. Beyond “experimentation,” what’s driving this churn?
We find three broad drivers. First, impact is rarely a strategic priority — families anchor wealth in listed equities, real estate, or their operating businesses, and impact tends to be opportunistic. Second, the governance and experience in deals hasn’t always been positive; and not every family has gotten what the expected out of specific investments (impact and/or returns wise) Third, capability: without in-house teams, families struggle to source, monitor or measure impact. Of course, the 2022–23 funding winter amplified this. We saw many families chose to pause their exploration of the impact investing space as a whole and focus more on conventional philanthropy and investments as two separate buckets.

Two-thirds of deals are at the seed stage, with very little mid-stage support. Why does this valley of death persist?
Families tend to lump impact into “alternatives” and apply the same return lens as they would to venture or private equity. That drives them to smaller-ticket, early-stage bets where the risk feels contained. The challenge is these don’t scale — you get stuck with enterprises that can’t bridge from proof-of-concept to commercial viability. Some families are experimenting with hybrid capital — philanthropic arms seeding enterprises, or recoverable grants cushioning commercial investors. But that’s still maybe 10–15% of the families we advise. It’s far from mainstream.

As per Waterfield and Impact Investor Council’s latest report, 66% of all deals were seed-stage, but they accounted for only ~30% of deal value. Later-stage deals (Series B/C onwards) were <10% of count but over 25% of value. For comparison, in mainstream private markets, family offices typically allocate larger cheques to Series B/C via AIFs — but in impact, they stay stuck at seed, creating a scale gap.

Climate-tech now accounts for 35% of deals and 28% of value, while agriculture lags at ~10%. What explains this skew, and where are families looking next?
Climate is the flavour of the month, driven by market signalling — renewable, EV supply chains, and decarbonization mandates. Under the radar, I’d watch for enablers of decarbonization — industrial electrification, heat pumps, battery recycling — and climate-smart supply chains like cold-chain logistics. While agriculture may not be a priority focus area. That said, we do see interest in agri-finance platforms and digital supply chains.

Your survey shows only 18% of families have made direct impact investments, with most using funds. How does this compare with conventional allocations?
It’s consistent with broader HNI behaviour. In conventional alts, too, most families prefer AIF — pooled vehicles simplify compliance and reporting with dedicated fund managers being leant on for their expertise. With impact, the tilt is even stronger, because families lack the internal capacity to diligence direct deals. But there’s also a paradox: fund managers we surveyed said 46% of families demand direct exposure, even as 53% cited information asymmetry as a major barrier. That mismatch is what Waterfield tries to solve through co-investment platforms and shared diligence.

Are families using listed markets to play impact themes, given the renewable energy IPO boom?
Not really. When families invest in listed markets — even in renewable energy stocks or ETFs — they’re almost always doing so with a purely commercial lens. These are conventional, return-focused investments, not impact-driven allocations. Yes, listed markets offer better reporting and transparency — including through BRSR and other ESG disclosures — but that isn’t what draws families in. Their choice to invest is driven by commercial viability and liquidity, not by impact intent. True impact allocation for most families shows up only in their early-stage or private market investments, which play a very different role.

Looking ahead, do you expect giving rates to rise meaningfully as India’s wealth expands?
India’s giving rate is still 0.1–0.15% of wealth, versus 1–2.5% in the US. I don’t expect a sudden doubling in the next five years. Growth will be more organic, tied to philanthropy deepening rather than a wholesale pivot to impact. Impact-linked bonds and development impact bonds do exist — Educate Girls, BAT, Catalyst — but most families haven’t even heard of them. Awareness is the real barrier.

We’ve seen a surge in IPOs and liquidity events for family-owned businesses. Are next-gen heirs earmarking part of those proceeds for impact pools?
Impact investing is less about a specific IPO or liquidity event and more about where a family is in its wealth and legacy journey. Seasoned UHNI investors who have already built a significant philanthropic track record often see impact investing as the natural next step — a way to align capital with purpose beyond traditional giving. At the same time, we’re seeing a growing cohort of newer, “first-liquidity” investors who are keen to embed impact thinking from the start and actively build an impact-linked portfolio. Liquidity events can act as a catalyst, but they are not the primary driver — it’s the family’s mindset and life stage that ultimately determine whether those proceeds are channeled into impact pools.

The report calls for national dashboards and standardised impact reporting. What metrics are missing today, and how does that deter families?
Families want IRR-style clarity — what’s the return, what’s the risk, and what’s the “impact multiple.” Today, metrics are fragmented, so families can’t benchmark against conventional PE or PMS. We believe standardized dashboards, possibly AI-driven, can reduce asymmetry and give comfort. But privacy and data governance are critical.

Globally, family offices allocate a larger slice to impact. What’s holding India back?
In the US/Europe, institutional pools and policy incentives drive it. India lacks both. Our families are still in the first or second generation of formalized wealth management. So it’s natural we’re behind the curve. But with 300 family offices today (from just 45 in 2018), the base is expanding. Impact will eventually ride that growth.