Fabio Sofia, Zebra Impact Ventures

Raising a first time venture capital fund in the current market is no easy feat, even if it benefits from impact tailwinds. For Zebra Impact Ventures co-founder Fabio Sofia, the key lies in reaching investors less courted by impact managers.

Sofia founded the firm (also known as Z Impact Ventures) in 2022 alongside Lionel Artusio-Payot. It partnered with Mirabaud Asset Management – the fund management arm of the Swiss private bank – last year to launch Regenerative Growth 1, an EU SFDR Article 9 fund which aims to to deliver a target return of 25 percent IRR over a five to six year investment horizon with capital deployed across 20-25 companies, primarily at series B stage. The fund will invest 70 percent of its capital into the agtech sector, with the rest split between circularity and waste and alternative nutrition. It is set to reach a first close next month.

Mirabaud is providing “access and knowledge” of the European markets, Sofia told New Private Markets, as well as access to their private wealth clients. Zebra’s team manages the fund. He declined to disclose the amount raised so far.

Sofia has been on a fundraising expedition across Europe. During this process, he was “positively surprised to see in Italy, France, Spain, once you go off track, not the usual suspects, [but] all the others that have a €1 billion [to invest] like a small pension fund, a rural pension fund somewhere in France, they love what we do and nobody goes to approach them”.

Larger institutional investors are often “overloaded” with GPs pitching Article 9 funds, Sofia says. They also often expect managers to show an extensive track record, causing a “mismatch” between their expectations and what a first time fund such as Sofia’s can provide (although he does single out Scandinavian institutions for special mention as being “probably the most sophisticated in considering private assets”).

As a result, he is clear on his firm’s best course of action: “Be a bit bold and go out, because it’s not within the big names that you will find, especially for a first fund, the money.”

This approach is not without its challenges: “I’ve been in a conference in Deauville, north of France. Only French guys – if you don’t speak French, forget it. You have to behave like a French [person] and even for me as a Swiss, it was tough!”

Carry concerns

On paper, Zebra and Mirabaud’s strategy seems a good fit for large global institutional investors. Ontario Teachers’ Pension Plan, for example, argued that it is critical that investors introduce sustainability improvements to their agricultural assets in a report released this week.

In practice, Zebra has found bigger investors’ requirements hard to accommodate. Sofia explains that he approached one large European investor two or three years ago, but found that it was insisting their GPs tied their carried interest to impact performance at the time. This was a deal breaker.

Impact-linked carry is “absurd” for a strategy such as Zebra and Mirabaud’s, Sofia says. “The question… in terms of how impactful we will be… it’s not with the carry, it’s about the selection.”