Being an impact mover, what does it take?
The increasing occurrence of climate issues and the growth of social inequalities are the symptoms of a more global issue: the misalignment between economic growth and common good. To face the multiple challenges we have to deal with, companies cannot be alone. The entire ecosystem, including investors and management companies, must support this transition. We need ‘impact movers’ more than ever.
But the question is: how can we turn this transition into reality?
A few days ago, we had the great opportunity to organize a workshop to discuss this complex topic of transition at ChangeNow, the world’s largest event gathering all the innovative solutions to tackle climate change and social inequalities. The way for us (Ring Capital) to cover this topic was not only to give our testimony but also to question the whole ecosystem on this transition trend. That is why we asked Rémi Berteloot, Head of Unit Lower Mid Market France at European Investment Fund (EIF), Thibaut Chary, CEO and co-founder at Yespark, Justine Abecassis, Head of Content & CSR at LiveMentor, Nicolas Celier, co-founder and Partner at Ring Capital to come and share their experience. Here is what they had to say!
Why did you choose to transition your model to have a greater/positive impact?
Justine Abecassis : By offering the largest number of people the possibility of becoming an entrepreneur, LiveMentor is since day 1 a company that wants to turn an idea, a passion into a real project for those who do not necessarily have a high school education, do not live in a big city and do not have all the elements to take action. The impact is intrinsically linked to LiveMentor’s core business. The question we’re asking ourselves now is: how do we take it even further? What more can we do to change people’s lives and enable them to contribute more positively to society?
Thibaut Chary: We have a more recent and maybe more complex relationship with impact. Indeed, our initial mission was to help drivers find long-term parking solutions and property owners to optimize these areas. With the market opportunity brought by electric mobility, we are switching our model and now we are becoming an enabler for decarbonized mobility and greener cities. We are totally in this transition process to impact.
What about the investment role? Why do you choose to invest in impact companies and impact funds? What has led you to this transition?
Rémi Berteloot: As a EU institution, the agenda is driven by the European members in the Commission. We are now asked for a reduction of 50% of CO2 emissions within Europe. To address this new challenge, we have started deploying capitals in environmental and sustainable companies and funds. As this mission of reducing emissions is still quite new, the mission of the European Investment Funds is to fill the gap.
Nicolas Celier: First of all, I think that the first driver for this transition was our own responsibility because we are clearly committed to positively impact our society. When we started our first fund, Ring Altitude, it was both a growth and tech fund but the impact dimension was missing. Then, we launched a tech and an impact fund, Ring Mission. So, two funds, one dedicated to impact and the other one not. You can clearly see that there was something that could not work. We needed consistency in our approach. We eventually said: we have been a pioneer in the tech impact scene, let’s assume that, let’s be a full impact investor, at management company level. It really helps us be recognized by impact entrepreneurs as an ally for their business.
How much does it change your mindset? Can you illustrate it?
Justine Abecassis: At the very beginning of LiveMentor, one training course was dedicated to drop shippers. We noticed that this program was attractive for people not only for starting their business but also as a long-term and global solution. As it was not a sustainable model, we took a radical decision: stop selling this training.
Thibaut Chary: For us, impact is about helping electric vehicles charge. We are developing a whole new business which has an effect on every part of the company: recruitment for instance, as we are now looking for people dedicated to deploying this impact strategy.
Nicolas Celier: When you become a full impact investor, the search for a positive contribution starts from day 1 in the process, that means we have to adopt a double-view and analysis, which include both impact and performance KPIs. Impact starts becoming a reflex.
Rémi Berteloot: It is a bit the same for us. It’s really about extra-financial elements but also the profile of the investment team. There is a change compared to the generalist fund which is mostly driven by performance. Performance is still key but it has to be doubled with extra financial criteria. Also, we are facing an early stage market for climate driven funds with little benchmark and it represents a major shift. Impact used to be more the domain of funds dedicated to social impact. If we are still investing in these types of funds, climate funds are key for us.
In your company, do you consider this transition to be natural? How do you precisely make your impact live within the company? How do you measure it?
Justine Abecassis: It is key for us to measure the impact of our trainings. We are systematically asking our entrepreneurs what they think with impact studies sent every quarter, semester but also several months after their training. 90% are still working on their project after one year. And knowing more about the target of our trainings (women, people with low level of education, people located in the countryside, etc.) made us learn more about the impact we actually have.
According to you, what can help in the process of transition? Do you need to have a whole new brand? A new governance? A new organization? Do you consider getting a label (BCorp, Enterprise à Mission) to facilitate this transition? Do you need safeguards?
Thibaut Chary: We were particularly attentive to the values and the culture that’s why we have decided to integrate impact in our core mission because it actually fits perfectly with our values. Once we have determined that, the rest is a question of tools and process. And our mission and our values are our safeguards.
Do you think that a Chief Impact Officer can help?
Justine Abecassis: As I’m the current CSR in the company, I hope I’m useful (laughs)! Even if I’m not dedicated only to CSR (Justine is first and foremost Head of Content @LiveMentor), we are very committed to collaborative work and we are lucky to have investors who support us in this approach. Every person in the company can apply to be part of the CSR taskforce! To make sure that we follow all the topics, for instance our carbon footprint analysis, we gather every month. Our key discussions are now around the impact entrepreneurs have on the planet.
Thibaut Chary: I guess a chief Impact Officer can particularly help in aligning people on what we need to achieve. It can prevent the company from losing the track and help to go further toward impact. We haven’t really thought about it yet.
According to you, Rémi and Nicolas, what is the biggest challenge regarding the investment in “impact mover” companies? What is the risk? How can you mitigate it?
Nicolas Celier: For impact native companies, there is a track record. For impact movers, there is a risk. Risk that impact is not real, risk that the strategic decisions do not favour impact, etc. As investor, we have adopted several safeguards to be sure that impact is really at the core of the strategy, either they run an impact native or mover company. In particular, investing both on a financial BP and an impact BP is an example of such safeguard.
Rémi Berteloot: There are a lot of similarities between GPs and LPs perspectives: legal protections based on due diligence processes but also on extra-KPIs such as carried interest. Most of the money made by the GP is linked to it so we pushed the manager to follow this direction.
Nicolas Celier: That’s a very good point. We can not have an impact on a company that is claimed for just having profit, that means that something is missing or that impact is something which is not considered as a top priority. If bonus is directly related to both impact and growth, there is an alignment. In an impact company, some stock options can be given to all the employees who can participate in creating value not only indexed on performance but also on impact.
Rémi, as you have a large vision on what happened for LPs and GPs, did you see a big change in the funds that are created?
In Europe, there is a shift. If we still see generalist funds, the trends are going towards thematic strategies. We have also noticed that the European regulation regarding impact, SFDR 8 and 9, is pushing GPs to be more committed to climate but we are still in the very beginning, especially in the mid market.