Howard Warren Buffett, age 32 and grandson of Berkshire Hathaway founder and CEO Warren E. Buffett, is looking towards sustainable companies with a social conscience as viable investment (which of course is easy if your grandfather is one of the richest men in the world, and your father for only G-d knows why sits on the board of Coke).
An operating company styled after Berkshire Hathaway
Mr. Buffett is teaming up with fellow co-founder Trevor Neilson to create a forward looking holding company that focuses on early-stage and undervalued companies. The new company is called i(x) Investments and has yet to make its first investment.
Both gentleman have an interesting background. Buffett’s career has included a teaching job at Columbia University while running a farm in Nebraska. Prior to that, he once headed the Buffett family’s foundation as well as working on economic redevelopment for the Pentagon in Afghanistan.
Neilson, who is the chief executive of i(x) Investments, has also held various positions in his young career. His last job was as president of G2 Investment Group. Early in his career, he worked on President Bill Clinton’s advance team before being named director of public affairs for the Bill & Melinda Gates Foundation.
The two believe that they can make sound investments while working towards social change in such fields as water scarcity, sustainable agriculture and clean energy.
“I’m looking for that sweet spot,” Mr. Buffett said. “How do we improve society through these investments? How can we be creative with capital to address some of the greatest human needs?”
Neilson echoed that sentiment with a question recently, “How do you harness the power of business to create social change?”
Neilson has been calling on Google and other tech companies as well as venture capital firms in recent months in a quest to raise money. The chief executive says that between friends and partners the holding company is expecting to raise $2 to $5 million this year, but hopes that the company will begin growing rapidly with hopes to make upwards of $100 million in investments annually within the next few years.
The New York Times Reports that “i(x) will accept $200 million from family offices, institutional investors and big companies.”
Warren Buffett – Neilson hints that i(x) Investments is close to taking first positions
The two believe that investors are ready to put their capital to work on sustainable companies that are looking to do good.
“Investors in the past haven’t seen their investments as an expression of their values,” Mr. Neilson said. “There is an evolving consciousness in the world which presents an historic opportunity for both social change, and profit.”
They may not be wrong, the last decade(s) has seen numerous investment groups divesting from fossil fuel producers, big tobacco, gun manufacturers and others.
The two companies that the co-founders are eyeing a stake in show the aims of the holding company. One is Skywater which manufactures a machine that pulls humidity out of the air and processes it into drinking water. Another company they are eyeing breeds crickets as food for fish and chickens rather than feedstocks like corn.
Starting the company without Warren Buffett’s money
Mr. Buffett maintains that he has asked neither his father, Howard G. Buffett, or his grandfather, The Oracle of Omaha, for money or advice for that matter.
“I’m very careful about what I bring in front of each of them, and even more careful about how I portray that publicly,” Mr. Buffett said.
Regardless of having not asked for family money or advice, the two have mimicked Berkshire’s model and will be structure their new company as a permanently capitalized operating company.
“A fund structure, with its finite life cycle and investors wanting to see returns, is not the right model for impact investing,” Mr. Neilson said. “The world’s biggest problems have to be addressed through sustained investment.”
“We’re looking at the long-term horizon and investments that are doing more than avoiding bad, but are actually trying to improve the world,” Mr. Buffett said. “It’s about taking the potential for capitalism to the next level.”
So will Warren Buffett Jr be investing in Coke, Oreos, or over-priced- derma products? The jury is still out on that one
Readers can view the i(X) investments website here
THe story was first reported by the New York Times