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  • Vela Georgiev

Impact is in our DNA: Our Theory of Change

This post was originally written for Tenacious Ventures, where I am the COO & Operating Partner, and published on the Tenacious Ventures website in May 2023.

As an impact investment manager, impact is central to our operating ethos, both in how we manage our firm and our funds. But how can we ensure that our investments are actually creating the desired impact?

One tool that we’ve found helpful to stay true to our vision is a theory of change. There are many definitions, but for us, it’s a framework outlining the steps and assumptions involved in achieving our specific impact investment goals.

Documenting our theory of change has allowed us to codify what we’ve been thinking and doing for the past three years. It has also highlighted how we’ve put intention into practice, and how each team member contributes to impact. It’s clarified who we are, what we stand for, and the lasting impact we want to catalyze as we raise our second fund.

Impact is in our DNA

In April 2022, I made a public commitment to stand up and be counted. To be vocal and unequivocal about our approach to ESG and impact. To practice impact investing and ESG leadership by sharing and publishing our impact practices and metrics and hope this inspires other firms, in and out of VC, to do the same.

We expect that our Theory of Change will evolve, informed by our thesis development, insights, best practices, and growth as impact investors. But that’s not a compelling argument for why we shouldn’t share it now. Impact is fundamental to Tenacious, it’s who we are and what we do, so we are sharing our theory of change and hope this inspires other investors to do the same.

For those of you who might be unfamiliar with the theory of change framework, we’ve provided a brief overview below. Otherwise, feel free to skip this section and dive straight into our theory of change.

What is an Investment Theory of Change?

At its core, a Theory of Change framework hypothesizes how change will be created. It is a conceptual model that describes the specific actions and interventions that will be undertaken to achieve the desired impact. The investment theory of change typically includes the following components:

Tenacious Ventures theory of change - summary
  1. Inputs: The overarching hypothesis or belief that underpins the investment decision, including the expected social or environmental impact and financial returns (Investment Thesis). The specific actions and interventions that will be undertaken to achieve the desired impact, such as providing capital, technical assistance, or strategic guidance to the investee (Investment Strategy).

  2. Activities: The actual implementation of the Investment Strategy, including the selection of investees, the provision of capital and support, and the ongoing management and monitoring of the investment.

  3. Output: The short-term and intermediate outcomes that are expected to result from the investment, such as increased access to clean energy or improved health outcomes for vulnerable populations.

  4. Impact (Outcomes): The long-term, sustainable, and transformative changes that the investment is intended to achieve, such as systemic changes in a particular industry or sector, and that follow from outputs that have been achieved.

Tenacious Ventures Theory of Change

We believe that in agriculture and food systems, alpha is in impact, and that by doing good, we can do well. In line with impact investing principles, we prioritize – on equal terms — environmental impact and returns.

At Tenacious Ventures, we screen for opportunities that actively do good and deliver impact. We invest at the intersection of food and agriculture system transformation and climate solutions, and summarize our theory of change as follows:

  1. Inputs - We believe the need to transform the global food and ag system has never been more urgent, and that a thesis-driven, deep-tech focused, impact-native approach is needed to catalyze change.

  2. Activities - Our core activity is investing in commercially viable, scalable solutions (i.e., early-stage, agri-food tech startups) that align with sector-specific pathways to impact and scale.

  3. Outputs - By using impact investing principles, we catalyze our target outputs: financial returns and climate impact.

  4. Outcomes - As impact investors, the impact outcome we strive to achieve is an ecologically sustainable, climate-resilient, and decarbonized future for our global food and agriculture system.

At the next level down, our theory of change expands on each of the above as follows:

Tenacious Ventures theory of change - expanded diagram

We invite you to delve into our full theory of change document below and encourage you to share it with others.

(Note: The presentation is best viewed full-screen. Click on the three dots on the bottom left of the slide to enter full-screen mode and scroll through the slide deck.)

Lastly, we’d love to hear from you. Please feel free to reach out with any questions, comments, or feedback you may have. A theory of change is just that: a theory, and we are eager to refine ours.

While I personally made a commitment to show leadership by sharing and publishing our impact practices and metrics, documenting the Tenacious Ventures theory of change was a firm-wide collaborative effort. I'd like to thank my teammates Komal, Sarah, and Matthew for their contributions.


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