The Future of Impact Investing: Generation IM

Interview with Shalini Rao, Director of Growth Equity at Generation Investment Management

Shalini Rao is Director of Growth Equity at Generation IM, a global equity and growth equity investment firm co-founded by former US Vice President Al Gore and former Goldman Sachs Asset Management head David Blood, focused on accelerating the transition to a sustainable economy.

Based in London but investing across the globe, Shalini has helped drive Generation IM’s future of work investments, including in Asana, Gusto and Guideline.

Shalini and I discussed her path into investing and sustainability, the future of impact investing, and her advice for practitioners today.

This article has been edited for clarity.

When did you first start thinking about a career in impact?

Shalini: I’m from what many would call a “non-traditional” background. I grew up in Canada in a single-parent household. Neither of my parents attended university, and we were very reliant on the social safety net. When I came to the U.S. for university, I was struck by how many services just weren’t available to the general population or were only available on a state-by-state basis.

I knew from very early on, because of this, that I wanted to devote my career to these issues. I spent a lot of time in undergrad working for non-profits, but I felt that I was missing the training and rigor you find in the corporate sector. I knew that I wanted to pursue a career in social justice that married commercial know-how with clear and tangible impact, and which didn’t sacrifice value for values.

As a first-generation student, what was it like searching for your first impact investing role?

Shalini: There were a few bumps! When you’re first-generation, your parents want you to go to university, but you don’t know what you’re supposed to do afterwards. You’re left on your own. And when you’re a college senior, everyone tells you you’ve got four paths: consultant, banker, doctor, lawyer. And I said… I guess lawyer it is!

When I began pursuing the law route and starting working at a legal firm, however, I quickly realized it wasn’t the field for me. I was then lucky to land a job at JP Morgan in London on the sustainability side of the business. I thought it would be a perfect way to get exposed to finance and gain broader perspective of the sustainability field.

When you’re first-generation, your parents want you to go to university, but you don’t know what you’re supposed to do afterwards. You’re left on your own.

How did you break into the private capital side of sustainability?

Shalini: I’ve been very, very lucky! Remember, this was back before sustainability was sexy. Many financial institutions continue to treat sustainability as though it ought to be siloed from financial returns. But I had found this passion and knew that sustainability was where I wanted to devote myself and my career.

Generation is a one-of-a-kind institution. They took a risk on me and gave me an opportunity in investing… someone needed to take that chance on me.

I joined Generation to get more hands-on on the investing side. I started off working on the firm’s research, advocacy and content creation, and doing a Masters of Finance after-hours and on weekends to catch up on the technical pieces.

Generation is a one-of-a-kind institution. They took a risk on me and gave me an opportunity in investing on the Growth Equity team. And I was able to source Asana in my first year, which helped us develop our investment theses around how people will work more sustainably in the future (including through remote work!) and proved I could do the job. But someone needed to take that chance on me first – I feel extremely lucky that this happened.

So you’ve talked about taking a chance on people. How do you think this factors into the recruiting process?

Shalini: It’s really hard to get this right. What questions do you ask to test for scrappiness or hunger? How does this come out until you see someone operate… or until you see someone who’s never had anything handed to them before but has pushed through doors to get here?

What questions do you ask to test for scrappiness or hunger? How does this come out until you see someone operate… or until you see someone who’s never had anything handed to them before but has pushed through doors to get here?

Some VC firms talk about this as being a rationale for why they support and hire immigrants -- people who know what it’s like to fight to achieve an aspiration. For us, we use different tools like Applied to help remove unconscious bias from the recruiting process, and try to fill the top of our funnel with diverse candidates – but we still have a long way to go. And I know Impact Capital Managers is doing the same through its Mosaic Fellowship in Impact Investing as well.

What is your biggest hope for the future of impact investing?

Shalini: I would love to see sustainability investing become commonplace, and for investors to view integration of sustainability considerations as basic business sense for best-in-class investing.

What’s one advantage to being a woman in investing?

Shalini: It’s often easy to notice when you’re the only minority in the room. Whether it be around a board table or even at a meetings within your firm between colleagues, I think this represents tremendous opportunity to be especially vocal and think deeply about what your experience can bring to the table. I also think that being part of a minority group often allows you to see around corners in a different way than others… and sometimes even pick up on trends before they become commonplace.

What’s your advice for impact investing firms today?

Shalini: Take a chance on people who really want something. We as an industry tend to box people in, and fall so easily into business lingo. I remember that when I first joined JP Morgan, I had no idea what a “TAM” was, and was asked to determine the TAM for a product. I turned to Google and found the Brazilian airline!

In all seriousness, we need to be more open-minded about these barriers that we encode on people. And we as an industry should figure out how to crack the traits that matter in a skills-based assessment. That’s the question to ask: How do we identify that hunger that makes a person successful?

Take a chance on people who really want something. We as an industry tend to box people in… How do we identify that hunger that makes a person successful?

What's your favorite book of all time and why?

Shalini: One section of one book that has really stuck with me is the discussion around “paternalism versus freedom” in Poor Economics, which Esther Duflo also discussed in her Tanner Lectures in 2012. This has helped frame a lot of my thinking about the role of the state and business as we think about financial inclusion.

Any closing thoughts to share with Impact Capital Managers?

Shalini: I just want to say that I have been very lucky. Not everyone gets the opportunities I’ve had – it’s been a coincidence of things aligning in the right place. On the one hand, it’s true that if you think, “I’ll never get the career I want, it’s impossible,” then it will never happen. My route wasn’t conventional nor straight-forward. But on the other hand, I’m very lucky to have been able to get here.

I’ve been with Generation for six years now, and it’s pretty incredible – my own job would have seemed a complete dream to me when I was at university all those years ago!