Episode summary
Episode 345: Thomas Knowles of Gratitude Railroad: on Impact and Abundance
The Fiftyfaces Podcast
· · Hosts: Aoifinn Devitt · Guests: Thomas Knowles
Summary
Thomas Knowles says Gratitude Railroad is trying to prove that impact investing can be both commercially competitive and genuinely solution-oriented. The firm invests across the US, with about half of capital in climate themes such as energy transition, energy efficiency, and waste to value, and the other half in social impact areas including education, healthcare, and financial services. Its approach is to look for businesses where the impact is part of the competitive edge, not an afterthought.
He contrasts Gratitude Railroad with Builder Fund, which he describes as a sister organization focused on lower middle market private equity and growth companies with roughly 20 to 100 million in revenue. There, the aim is to partner with mission-aligned owners who want growth capital and operational support without losing the values of the business. Across both platforms, he argues that long-term thinking matters more than short-term financial engineering.
Knowles also says the impact investing market has gone through a rough cycle, hit by macro pressure, low liquidity, and political headwinds. But he remains optimistic because family offices, individual investors, and younger talent still show strong interest in values-aligned and mission-driven investing. For him, the path forward is patience, trust, and showing real exits and measurable results.
Key takeaways
- Thomas Knowles says Gratitude Railroad deploys about half its capital into climate and half into social impact sectors, all within the US.
- Knowles argues the firm measures impact deal by deal, using a theory of change and two or three KPIs tied to both impact and business performance.
- Knowles says Builder Fund targets companies with roughly 20 to 100 million in revenue and tries to preserve mission while adding growth capital and operational support.
- Knowles believes the impact investing market has been through a transition year because of macro conditions, liquidity constraints, and political headwinds.
- Knowles says continued demand from families and rising interest from younger talent keep him optimistic about the category’s long-term future.
Notable quotes
“So, we really do want to avoid more band-aid type solutions. Really getting at things that we think are solving the root cause problem”
“Our view is that the impact should be the competitive edge for the business as well”
“we come up with a couple key performance indicators with the owner of the business, the founder that aren't necessarily just about impact”
“The other way I I think about our mission is we become very short-term oriented in the way that we think about investing”
How the episode opens
This podcast series is kindly sponsored by Evston Capital. For over 20 years, Evston Capital has had a key focus in identifying early stage investment managers it believes are capable of generating long-term value added returns in complex innovative strategy areas. This series is also sponsored by Alvine Capital.
Alvine Capital is a specialist investment manager and placement boutique with a particular focus on alternative assets, a significant presence in London and Stockholm. Fortunately, in traditional finance, we've created very clear ways of measuring performance. For us, the way that we do it is on an investment byinvestment basis.
So, when we're investing in a company throughout our diligence process, we're trying to underwrite what is the potential impact of this business from really a systems level. So, we really do want to avoid more band-aid type solutions. Really getting at things that we think are solving the root cause problem.
We come up with what we call a theory of change, which is a bit more typical in the nonprofit sector, but I think is a great framework for thinking about, you know, inputs to driving outputs and outcomes. And then we come up with a couple key performance indicators with the owner of the business, the founder that aren't necessarily just about impact. They are also business drivers as well.
Our view is that the impact should be the competitive edge for the business as well. So we come up with two or three measurements that we can clearly look at on an annual basis and see if we're making progress towards that impact goal. I'm Ethan Devit and welcome to the 50 Faces podcast.
a podcast committed to revealing the richness and diversity of the world of investment by focusing on its people and their stories. I'm joined today by Thomas Nolles who is managing partner of Gratitude Railroad.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- impact investing
- abundance and purpose
- climate investing
- social impact
- venture and funds
Companies and tickers mentioned
- Gratitude Railroad
- Builders Fund
- SVB Capital
Watch the episode
Watch “Episode 345: Thomas Knowles of Gratitude Railroad: on Impact and Abundance” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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The Fiftyfaces Podcast, this episode and its artwork belong to Aoifinn Devitt. Octagon is not affiliated with the show; this page is an independent summary.
