Navigating the Ambiguity of Impact Investing: How Impact Venture Capitalists Access New Markets, Founders, and Capital

Abstract Despite the growing prominence of impact investing in both research and practice, the definition of social and environmental impact remains contested. Rather than resolving the elusiveness of impact, we examine how impact venture capitalists (IVCs) leverage this ambiguity in their everyday practices. Drawing on Michel de Certeau’s philosophy of everyday life, we identify three tactical ways in which IVCs navigate this ambiguity. First, IVCs use ambiguity to move sideways into new markets, distinguishing themselves from traditional investors. Second, they tactically employ ambiguity to attract limited partner (LP) capital earmarked for impact investments. Finally, they leverage ambiguity to forge connections with founders of high-growth ventures, thereby gaining a competitive edge in deal-making. We discuss the ethical dimension of these tactics, highlighting how the normative question of what constitutes social and environmental change arises from the practical use of the ambiguous term impact. In doing so, we identify an ethical tension: while the flexibility of the term impact fosters new ways of thinking about social and environmental change, it also risks being used for purely financial gain. We conclude by reflecting on the implications of this ethical tension for both the practice and research of impact investing.