In 2006, while managing an impact venture capital fund at JPMorgan Chase, Nancy Pfund decided to invest in a clean energy start-up that was developing electric vehicles. Colleagues were sceptical. Would electric cars, they asked, really transform the auto industry? No, was the consensus. But today, almost one in five cars sold globally is electric. And the name of the start-up? Tesla.

For Pfund, who in 2008 founded impact-focused venture capital firm DBL Partners (taking the venture fund with her), Tesla’s trajectory offers striking evidence that investments intended to bring about positive social or environmental impact can perform well financially. “Impact investing has the potential to catalyse systemic change,” says Pfund. “And it’s not on the margin — it’s part of the business opportunity.”

Back when Pfund was making her bet on Tesla, impact investors tended to be philanthropists deploying “catalytic capital” — investments that, in return for social impact, came with lower-than-market-rate returns or meant accepting higher risk for longer periods of time.