Are you an Impact Investor or Unicorn Hunter?

Thank you to Annie Spratt for this photo.

Have you noticed how many investment funds have been created in last 5-10 years all claiming to have Impact Investing focus. It is overwhelming to see so many investment professionals raise money, govt. institutions allocate money , or asset owners invest their own to fix or improve society. Admirable and noble. Billions have been raised to help fix societal and environmental challenges. This is inspiring at first glance, until you actually look under the hood.

Take a look at the mission statements or ambitions of several of the funds created recently.

  • “investment platform focused on generating superior returns aligned with sustainable principles”
  • “Assist great entrepreneurs developing products and services for the three billion people in the bottom half of the world’s economic pyramid.”
  • “We invest to build more inclusive and equitable societies.”
  • “We back founders on a mission to build a better world”
  • “dedicated to startups leveraging exponentially accelerating technologies to address humanity’s grand challenges.”
  • “investing into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return.”
  • “seeking deeper positive net impact across the spectrum of capital”
  • “We believe that investment capital can help meet large-scale global challenges”
  • “enables private sector investment in projects aimed at climate adaptation and mitigation in developing countries.”
  • “We back entrepreneurs building climate tech for a regenerative world.”
  • “Our ambition is to identify and invest in high-impact solutions for climate mitigation, as well as to catalyse and multiply capital to scale them.”
  • “family office investing in regenerative food systems”
  • “vision to invest in entrepreneurs building sustainable enterprises that can catalyze development impact for excluded communities and remote geographies across the globe.”
  • “support promising entrepreneurs, with growth capital and proven business tools to reach their full potential and enable them to achieve systemic change.”
  • “backs technology businesses committed to having a positive impact that answers the most pressing social and ecological challenges of our time, in a way that is both scalable and sustainable.”
  • “invests in companies driving measurable social impact alongside business performance and strong returns.”
  • “we believe that we can address and alleviate some of the world’s challenges by investing with purpose. “

These are all fine and important aspirations but are these investment funds or investors really purpose driven or do they revert to traditional investment mind set of “hunting unicorns”. Those companies that will have a 1 billion dollar valuation. Isn’t that the purpose of investments to maximise returns for the investor. I don’t have a problem with that. I have a problem with the false packaging. If you are just hunting unicorns, just say so, so the entrepreneur won’t lose any time who’s mission is not to be a unicorn, but a zebra (focussed on improving society and environment, not exponential growth) . Most investments will never be unicorns.

It is hard to start and run a company and do the continuous capital raise. They should not be wasting their time with investors that want to be entertained, informed or are pretending to be interested when they are just researching competitive investments. Perhaps the most important question to ask an investor “are you a unicorn hunter?”. If they are and your ambition is to drawdown carbon by improving the soil and livelihoods of small holder farmers, without any apps, then the fit is wrong. If you want to create meaningful jobs for unemployed youth by doing vocational hospitality training then unicorn hunters are not going to help or invest. If you are a long term developer to de-commoditise the food system then don’t bother with unicorn hunters. If the mission or purpose is your raison d’être, then you are not helped and won’t get money from unicorn hunters. They are looking for an app, few employees, super fast scaling, warp speed growth and monopoly. It is a win-lose approach mindset.

Many investors and most vc’s are fund managers driven by achieving the carry, asap. Few ever ran a company. Growth, Market share, IPO’s are the mantra. They are looking for that big payoff asap. Zebras won’t do that, unicorns will. Maybe they will. At least in the eyes of unicorn hunters they will.

If you are looking to fundamentally restore the social and environmental balance first and foremost, as well as make a profit to fund all your activities and growth, avoid unicorn hunters; especially those pretending to be impact Investors. Those are the worst. They wrap themselves in something that is important to you, but has no value at all to them. Be discerning. Ask them are you a UH (unicorn hunter) or II (Impact Investor) .

The secret of life is honesty and fair dealing. If you can fake that, you’ve got it made.

Groucho Marx

Who dominates the impact investing space?

No one! Why?

That is a fact, although in a time of fake facts it doesn’t matter.

Why is there not a single bank, wealth manager, or major financial institution the leader in the “race for values investors”. We keep hearing how ESG and Impact is booming and trillions are pouring into the space. If that was true, then why is it that not a single bank is perceived as the leader, the champion, THE IMPACT BANK for UHNW(Ultra High Net Worth) or HNW (High Net Worth) Investors.

One only needs to engage with the Private Banks, Wealth Managers, or Mega Banks to understand the issue here. These institutions are spending nothing on ESG and Impact Investing capacity building. Spending is going to the following:

  • ICT
  • Cybersecurity
  • Compliance
  • Capital Buffers
  • Traditional marketing
  • Bonuses

With this lack of commitment financially, psychologically and emotionally, ESG and Impact are just new products to add to the list of offerings to clients. It is not an important strategy!

It seems that the financial institutions are schizophrenic. All of them don’t want to be seen as a Sustainable, Impact or Values Bank, because they are afraid that clients or staff might leave . However, they also don’t want to be seen as a Bank not embracing ESG, Impact and Values Investing. Make up your mind. You can’t be partially pregnant. To paraphrase Danny Ocean asking Linus Caldwell in Ocean’s 11. “Your either in our out.”

I have met with many Private Banks and Wealth Managers. Nearly all seem to be really out of touch with clients wishes, particularly nextgen clients. The lack of commitment to see the opportunity for clients and the bank is beyond belief. Most of the time it is lip service and most of the time the banks just want to learn some tricks to convince their clients that they understand enough. However, when we (TBLI Group) speak to clients, they are keen, looking and open to a Values Investing strategy. When we ask “do you want a financial return with a social and environmental added values”, they all say, “absolutely. Can you do that?” If you want to you can. No one ever said to me “No I want all my money to make life miserable for everyone and I am working at that 24 hours a day.”

I have heard for years that the problem is the client. They are not interested. I don’t believe that anymore. Sure there are some clients that don’t believe or are not convinced. That is an educational exercise. Do the work to convince. When TBLI started, nearly 25 years ago, educating asset owners and managers, there was no PRI, CDP, EVPA, AVPN, Eurosif. No infrastructure at all. However, TBLI was still able to make inroads, and help build that infrastructure, because we were committed.

Recently, I was at FT seminar on ESG and Japan. The entire day was taken up with complaints by asset managers complaining that ESG date is not good enough. Over and over and over. They kept repeating “ESG is not Good Enough”. I have heard this for 25 years. The moderator asked are there any questions from the audience. I raised my hand and said that “I have heard for 25 years this complaint that ESG Data is not good enough. Why don’t you ever say that the financial data is not good enough? We have gone through a financial meltdown, Maddoff, Worldcom, Parmelat, Enron, etc. The financial sector has lost trillions of dollars and there has never been a single company that went bankrupt on questionable esg data.” I was told that my comment was not a question and we moved on.

Perhaps no one will take a leadership role to own the Values Investing space. That’s fine, but the market or clients are there. Particularly when we dispel the myth that there are no deals. There is no shortage of deals. There is a lack of infrastructure to find illiquid opportunities, at scale. They exist but they are not to be found in traditional places. Different neighbourhood. Doesn’t mean they don’t exists.

TBLI has spent 25 years educating asset owners and managers about ESG and Impact Investing. Convincing has never been a challenge, particularly when you speak to wealth holders. Banks need to allocate the resources needed to dominate the space and grow the industry. They need to approach this as they would if it was an M&A. Until that time, the only big story will be the press releases coming out about how such and such a bank is committed to Values Investing .

To paraphrase Yoda “Do or do not, there is no try”.

A pig and a chicken were walking down the road. As they passed a church, they notice that a potluck charity breakfast was under way. Caught up in the spirit, the pig suggested to the chicken that they each make a contribution.

“Great Idea!” the chicken cried. “Let’s offer them ham and eggs!”

“Not so fast.” said the pig. “For you, that’s just a contribution, but for me, it’s a total commitment.”

Overnight Success after 25 years!

In March, I did an extensive road show in Asia, visiting Singapore, Hong Kong and Bangkok. It was quite intense. Some days I had nearly 8 meetings, but definitely worth it.

What struck me the most is that Asia has gotten the Values Investing bug, big time. Nearly all the presentations that I gave, and the people I met, and executive briefings I had, were not about why, but all about how. It seems a tipping point had been reached, at least by the people I was meeting. They all were curious as to why there was so much interest and what had happened to spark this interest. What were the drivers?

The presentations I made were about how Values (ESG and Impact) Investing had become mainstream and what has happened in the last 25 years to change the mindset of investors. The list below were very influential , as well as the efforts of many building the ecosystem of ESG and Impact, including TBLi.

25 year Milestones

  • Carbon Tracker
  • Freshfields I & II
  • UNPRI
  • Equator Principles-50m – 10m
  • Carbon Disclosure Project
  • Montreal Pledge

The Asians all felt that the Europeans were way ahead of the curve and very keen on Values Investing, from the beginning. I had to correct that perception. When TBLI started, there was little to no infrastructure to lay the ground work for ESG and Impact. The notion that the entire financial sector jumped up and gave TBLI a big hug, and embraced us, is a myth. It was a long hard slog.

I remember this experience vividly.

When I started (late 1990’s), I was invited to speak to the Dutch Insurance Association about Climate Risk and Sustainability. I started my talk explaining that a country below sea level should start to be concerned about the risks that rising sea levels would cause. The response from the large insurance Companies present was, “It’s not a problem for us if sea level rises, we don’t cover salt water damage.”. One could be come angry at the low level of understanding of that response, or translate in their language. I chose the later, by saying, “That is true, but you sell mortgages, and if 200.000 homes are submerged in water due to seal level rise, which become worthless, you have a big problem.”

Speaking in the language of the person who you are trying to convince has always been key to TBLI’s approach. The moral imperative doesn’t work unless you show the financial risk and opportunity. Don’t shout loudly in German to someone who speaks Chinese.

“Never underestimate the power of stupid people in large groups.”

George Carlin

We are all an overnight success after 25 years

TBLI CONFERENCES 2019

Meet the thought leaders and Investors in Values Investing. Join us for one of our TBLI Conference. All Asian Events are free for Investment Decision Makers.  

TBLI 20th Anniversary-What Now?

As you can see TBLI made it big on Times Square, thanks to Nasdaq.

Our 20th Anniversary, last week, was a great success. I want to thank all those who attended and supported us. It was a joy engaging with so many thoughtful, passionate, committed, generous, thought leaders. I was particularly touched by this testimonial.

“I admit that slavefreetrade did not attend with high hopes of making impact, as the 1% crowd is very different from the people we usually mingle with. But it was overwhelming to find that our work delivered what seemed to be clear emotional touchpoints for many investors. The ESG investment community is not one we had before the chance to mix with. Being able to bridge social impact work with ESG investing was breathtakingly interesting, refreshing and, frankly, very reassuring about the quality of people in general.”

Brian Iselin-President, slavefreetrade.org

For those that want to get an impression of the event. We have posted photos of the event, and will be updating our website with presentations made, and reports, shortly.

Going forward we have been working on several innovative ideas that will allow us to scale our capacity building work and mobilising more assets towards Value(s) Investing. Stay tuned.

Tribute Robert Rubinstein

During the last TBLI Conference in Stockholm, last week, my wife, Rieki Crins, gave me a beautiful surprise. In secret, which is not easy, she had been colleting testimonials from various friends and thought leaders. I was totally surprised and overwhelmed with such a beautiful gesture. Thank you to all who participated.

For those interested, you can find the book here. We have received several more testimonials since publishing the book, so we will update it.


Robert Rubinstein Speaking at Upcoming events:

ZUG IMPACT SUMMIT INVITATION- FAITH IN FINANCE- 30 & 31 October 2017
 
Prestel & Partner- Family Office Forum Zurich, 14 – 15 November
Program

Principals or Family Offices have free admission whilst solution providers must reserve a limited pass
Contact: office@prestelandpartner.com

I would like to be speaker/and or sponsor

 TBLI Impact Dinners

TBLI Foundation is organising 6 Value(s) Investing private dinners as fund raisers for its work in building a global community of Values Investors. The 6 dinners will be held in various European locations from Oct.-Dec,  for a small group of thought leaders (25 max.). The goal is to support each other in our ambition of scaling up Value(s) Investing.
You will enjoy the food, company and conversation. The location will always be warm, comfortable,refreshing with delicious food and wine.
Come meet your peers, in a trusted environment,  who share a passion of using investment to improve society and the environment, as well as making money.
The costs for attending the dinner are Euros 295,— (equivalent amount in Pounds, CHF, or SEK) Just click on the register button for the event that you would like to attend and fill in registration form.
Locations are:
October 11, Amsterdam-The Dylan Amsterdam
October 30, Zurich Haus zum Rüden
Nov. 9, Geneva Cercle de la Terrasse
Nov. 23, Milan Giacomo Arengario 
Dec. 5, London, House of St. Barnabus
Dec. 13, Paris, Cercle de L’Union Interalliée
If you would like to join us, please send email