Earthworm founder Ben Prior
As the world pivots to a more sustainable and environmentally-responsible way of living – and doing business – it seems logical that the financial sector would follow suit.
Although there are a number of fund managers investing in environmental projects, such as Foresight Group, Octopus Investors, Downing, and so on, there are few exclusively investing in the sector.
And that’s where Earthworm’s founder saw a gap in the market. Ten years ago, the environmental fund manager was launched, specializing in ethical investments.
The company develops environmental projects in the food, energy and waste sectors, led by CEO Ben Prior.
The 44-year-old says the business has only taken off in the past two years, thanks to an uptick in investors recognizing environmental businesses can give them good returns.
“What we’ve noticed recently is that investor appetite has shifted away from companies whose sole purpose is the pursuit of profit at any cost,” he explains. “A growing number of investors are no longer accepting of this strategy and are starting to demand change.
Prior, who founded the company, had spent years working in corporate finance and “understood how it all worked, but didn’t like it”.
“I saw greed trumping responsibility and saw exactly why people had lost trust in the sector. So I created an investment model to be the antithesis of that.
“It absolutely aims to make money for investors, but only when a force for environmental or social good.”
Prior says Earthworm is set apart by being the “only fund manager focused on equity based environmental investments in our sector”.
But despite the company’s unique selling point – or perhaps because of it – Earthworm had a rocky start.
“Let’s face it, Greta Thunberg was about five when I started to think about building a business in the environmental space,” Prior quips.
“Where on earth do you start?,” he recalls thinking. “The money? The opportunity? Convincing people that you are an expert?
“I needed to convince people that I was not off my rocker and was deadly serious about what I planned to do.”
But, the entrepreneur says, the beauty of getting a million people saying you’ll fail “it teaches you a resilience that never leaves you”.
“When I have moments of doubt (and there are many of those even now) I go back to those early days where you meet lots of armchair experts (particularly in the fund management space) who talk a huge game but never walk the walk. There is a very large part of me that likes to prove people wrong.”
Even now the business is off the ground, and turning over £3.07 million ($3.8m) annually and £311,000 ($386,000) profit, Prior still has the challenge of finding the right businesses to invest in, and the right people to fund them.
Some of the companies Earthworm has funded include TW Composting, which turns food and green waste into quality soil improver that can be put back onto gardens. It currently manages the processing of more than 90,000 tonnes of food and green waste per year that could otherwise have ended up in landfill.
Last year, Prior launched a sister company called Groundworks, aimed at helping new ventures to grow. It’s set up to support early and mid-stage businesses with the skills gaps they have and the functions they need; anything from site finding, and planning and permitting, to project management, marketing or specialized accounting.
“We want to prove that smart investment doesn’t mean leaving your ethics at the door, by investing in companies that balance social and environmental responsibility with commercial opportunity,” Prior adds.