One of the reasons I love creating new ventures, is because I want to be proud. Proud about the impact we could be creating. Not about the money we are raising. Not about the financial results we are achieving. About the impact these ventures could and will have on planet earth. And yes, doing so, can be in line with the VCs ambition to make money. This blog post explains how. But first, let me share a recent event that triggered this thinking …
Last Friday I attended a start-up boot camp at one of the Belgian Big4 companies. Very interesting topics and speakers. One entrepreneur explained us how he went from nothing to M&A. It was wonderful to get his ins and outs from within the real world. To listen to his stories was very inspiring to all of us. He even allowed us to have a look ‘under his skin’, very close to his fears and to his moments of glory. That’s when he said:
I want to be proud too. That’s what drives me. So, yes, he got my attention there. Then he explained he wanted to be able to tell his kids what he accomplished – not about the money he had gained, because that is just a number in the bank account. He wanted them to be proud about him too. Yes.
Fifty shades of pride …
And then he explained what he was proud about. I immediately understood that we were not going to be partners in business – ever. He said he was proud to have grown a little seed venture from nothing into a billion euro global company. Of course, this is a great achievement. I admire the entrepreneur for this success. And no, honestly, I did not do that – yet. But I do not know whether I would really be proud about that, and talking about it to my daughters and friends. Okay, it might help me get some attention during networking events, and maybe it gets me in the business news more often. But fundamentally, it would not make my heart beat faster for more than a couple of days.
That’s because I hope to grow my pre-seed ventures into organizations that have a positive global impact. I want to say to my daughters: “your dad changed that and that aspect of planet earth”. Of course, I would like to make some money while doing so. And yes, I admit, I like some comfort and some class in my life. But that’s not about chasing money-just-for-the money. That’s about getting a basic wealthy and healthy life, so as to enjoy the little amount of time we are on this planet. And, well, such a joy in life is exactly providing me the energy needed to create impact – and change planet earth for the better.
Planet earth is much more than reducing CO2
When I talk about impact on the planet, I sometimes get cheeky little remarks like “maybe you should take a sailing boat next time, when you travel”. No, no, no. Impact on the planet can be about much more than the environment. The media might have amplified CO2 reduction as the one and only thing we should be doing to save the future of our kids, while that is just the tip of the (melting – bad joke, sorry) ice berg.
Allow me to give you some different examples
- Giving people control over their personal data, so that they feel safe in the digital world — and so that they even might be earning some extra pocket money or realizing some savings in their recurring medical costs.
- Reducing fraud in digital certificates, so that people who worked for their diploma or paid their insurance, do not pay for the ones that are faking and steeling.
- Reducing noise hinder in offices, public, and private spaces, so as to increase the mental health at work and at home, which has a direct impact on their physical condition (business people can read ‘output’ here).
Thàt is the global impact I want to have on the planet. And yes, before you ask, that is the impact of three of the ventures that I am creating now. And yes, thàt is what I want to be proud of. Thàt’s what gets me going the extra miles. Thàt’s how I explain my kids what dad is doing on his computer on a Sunday afternoon.
Planet and money – hate or love?
The biggest question, of course, is: “will such an impact pay the bills?”. Or more concretely now: “will such an impact attract funds?”. Impact and purpose are often positioned as an investment paid by taking some money from excess profit. Many big companies who gain billions of euros, are eager to mention they also spend a couple of million in so-called ‘good works’ to try and convince the public they are not only into money-making – although they are.
Don’t do that. There is nothing against being into money-making. Just be honest. It’s OK with me. It’s just not making me all that passionate about you, but please don’t lie and think I am stupid enough to believe you … I think that’s actually why I start to like the world of the VCs. Most of them are just plain honest about their role: it’s all about making money for their shareholders. Fine, that’s clear with me.
Aligning impact and money
So now let’s find out, how we can get to a win-win situation in which impact generates money. It took me a while to understand and match the two. But I am willing to disclose this little finding to you – do forward it, so more and more people start to realize that impact is not opposed to making money.
Here comes the clue. Now that I am creating the financial plans for two of my pre-Seed ventures that are now going into Seed and Series A funding, I found out it is possible to combine impact and profit. The solution is to ensure money is spend where the biggest impact is generated, and cash is coming in as part of the value of the generated impact.
These are the rough formulas I am using in my financial plans
- TO = sum (fraction (value (impact per client)) x impacted clients)
- Assets = sum (impact generating investments)
- Cost = sum (low fixed costs + KPI incentive + fraction (generated impact))
In plain English these formulas say: turn-over (hence price) should be a fraction of the value of the impact multiplied by the number of impacted clients. And, money spent should motivate the generation of more impact.
This way, all the financials are geared towards future impact, as is the financial performance and the attractiveness to attract funds. It took me while to realize this, but I do believe money should not be the enemy of impact – on the contrary.
I would love to read your thoughts on these ideas, by the way.