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elea’s FOUNDATION AND OPER ATING MODEL 95

organizations, we are not alone in this experience. Achieving profitable exits is not straightforward and typically takes longer than expected. In the early stages of elea’s development, we targeted exits after 5 to 7 years. More recently, we rather look at a time horizon of 7 to 10 years. Why is it so difficult, and what needs to happen for a more favorable exit environ- ment? One part of the explanation is the limited maturity of the sector. As impact investing is only a little over a decade old, a somewhat liquid sec- ondary market has not evolved yet, and many more recently established impact funds concentrate on making primary investments. Another part is related to elea’s close collaboration with the teams leading the compa- nies in its portfolio, which creates intense mutual bonding. Breaking such bonds through an exit is emotionally hard. New investors take comfort from such close relationships and make a continued elea stake a condition for their becoming engaged. And, after all, it is not always rational to exit just at the moment where growth, and consequently impact as well as financial return, are accelerating. Nevertheless, to remain in compliance with the additionality principle, exits are necessary at the moment when philanthropic capital is no longer required and more commercially oriented impact funds can be attracted. Therefore, as an active investment period progresses, it becomes increas- ingly important for elea to systematically develop those aspects of an invest- ment that favor its ability to exit. This includes a strong track record of both impact and financial performance, as well as a strong and resilient leader- ship team, effective corporate governance, and a transparent organization and culture. With the increasing breadth, depth, and maturity of impact investing, a secondary market will evolve exactly as it happened a decade or so earlier when secondary buyouts became a rule rather than an exception in traditional private equity investing. Consequently, we have high confi- dence that the environment for profitable exits will significantly improve in the years to come. This will make the sector more attractive, as it enhances the effectiveness of capital deployed in impact investing. 3 .2.2 Philanthropic investors’ circle When elea was created, the founding family committed CHF 20 million to finance the buildup and ongoing operation of the foundation. Given the appetite for philanthropic impact investments at the time and the