S2G Ventures debuted in 41st place on New Private Markets’ Impact 50 list this year, but it is hardly a débutant in the impact investing market.
The Chicago-based investment firm was formed in 2014 and spun off from impact platform Builders Vision in May last year. It now manages $2.5 billion in committed capital with a focus on venture and growth-stage businesses in food and agriculture, energy and oceans, according to Aaron Rudberg, managing partner and co-leader of S2G.
“As we’ve developed over the last 11 years, we’ve extended beyond just food and agriculture to energy and then oceans,” Rudberg said in an interview with NPM. “We actually see quite a bit of overlap between those sectors.”
As Rudberg explained, the three sectors combined account for around 90 percent of emissions and, thus, the potential for carbon sequestration.
“We focus on investing at the seams of these sectors between venture and buyout and where we think there is a critical inflection point in a company’s stage,” he said.
A number of S2G’s investments, for example, straddle the line between food and energy, pairing more efficient food production with low-carbon transport, he added.
Some of S2G’s multi-sector portfolio companies include Sojo Industries, which uses robots to make efficient packaging for the food and beverage industry, and Enthos Circular Feed Technologies, which uses insect fly larvae to turn organic waste into protein meal for the animal feed industry.
Filling the capital gap
As S2G held meetings with international investors over the past three or four years, including firms in Asia, Australia, Europe, South America and the US, it found that limited partners had significant exposure to venture capital funds and infrastructure funds.
Where these LPs did not have much exposure, however, was where S2G targets its investments – companies with $30 million to $100 million in revenue that need capital to fuel the next stages of growth.
But it is not just a matter of providing capital to fledgling companies that offer more sustainable products. S2G believes that innovative companies need to be “better, faster and cheaper” than their more conventional counterparts if they want to win market share and exert a meaningful impact, Rudberg said.
“Our investments are really backing entrepreneurs who have, in our view, created great companies that offer their customers a better product that just happens to be more sustainable,” he said.
In recent deals, S2G was in a group of investors that provided $16 million for healthy meal delivery service Mealogic and and in another that supplied $62 million for Latvian robotic wind turbine services company Aerones.
S2G has more than 100 companies in its portfolio, and it has made a number of exits over the years, including plant-based meat substitute producer Beyond Meat and fast casual restaurant chain Sweetgreen.
According to the NPM database, the firm started raising the S2G Special Opportunities fund in April 2023 with a target of $300 million. S2G previously closed its Oceans and Seafood Fund with $100 million in August 2020 and the S2G Builders Food & Agriculture Fund III with $550 million in January 2020.
In a regulatory filing in May, S2G said it had raised $600 million from just one investor for S2G Solutions Fund I.
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