19 mei 2021
With the primary motivation of doing more than just ‘deals’ – as I had done previously in my M&A career – I joined StartGreen Capital seven years ago. The goal: to tackle the challenges on the path to successfully scaling their businesses and achieving maximum impact together with startup founders. After a rollercoaster of no fewer than seven parallel follow-on investments, the dust of which is still settling, I finally have a moment for reflection. Normally, I would have seven closing dinners for that, with just as many forward-looking and retrospective speeches, but during the lockdown, things have to be different. Those “Zoom closing calls,” even with a bottle of champagne, don’t come close to the real thing.
That gave me time for reflection: to look back on my entire time at StartGreen so far and consider the lessons learned during this fantastic period. My very first blog series seems like the perfect opportunity for this: In blog #1, I take stock of the switch from M&A to impact investing. Blog #2 reveals my results from 7 years of impact investing, and blog #3 focuses on the lessons learned in scaling up startups.
1: Van fusies & overnames naar impact investing
This first blog in the series is aimed at all investment bankers, consultants, and others considering the step into the world of impact investing. If you are already a corporate refugee or started directly as an impact investor or entrepreneur, well done! Feel free to skip this part and wait for Blog #2: The results of 7 years of impact investing, or Blog #3: From startup to scale-up: lessons for entrepreneurs and investors. But if you are still active on ‘the dark side’ and want to find out if it’s worth taking off those golden handcuffs? Then this is the right starting point for you.
Work hard, play hard
Joking aside, I had a fantastic time at ING Corporate Finance, where I started in 2007 in the midst of the private equity bubble and shortly thereafter saw the credit crisis erupt from the inside. With a great team of 40 – yes, all men – I was able to scrutinize many offshore energy and TMT companies over a 4-year period, learned the intricacies of valuation and structuring, enjoyed the thrill of ‘dealmaking’ in small (<€50m) and large (>€200m) mergers and acquisitions, witnessed the rise of INGCF in the Dutch M&A market, and above all, had a lot of fun with colleagues. Almost every Friday night, at least a handful could be found in the dive bars of the Lange Leidsedwarsstraat. The well-known ‘work hard, play hard, learn hard.’ This is also StartGreen Capital’s credo, by the way, but with the engine shifted up a few gears.
Building and being involved
So why the switch after just over 4 years of M&A? Besides the desire for a slightly healthier work-life balance to make room for a starting family, it was primarily the urge not to move on to the next deal after an investment, but to actually build on the scaling of the companies. Not just acting as an advisor to brainstorm financial strategy, but creating lasting value and realizing impact as an entrepreneurial and involved shareholder. And especially wanting to work with young companies where the drive for innovation is truly central. Disrupting the old and unsustainable economy with driven entrepreneurs by developing smart technologies and business models. Where risks are taken, dreams are big, and where stumbling is allowed, as long as lessons are learned.
Fail forward
Incidentally, I was able to experience a brief ‘fail forward’ startup experience myself after INGCF before I started combining investing and entrepreneurship at StartGreen. For two years, I experimented with a so-called social travel startup in the style of ‘The Lean Startup,’ achieving a significant number of milestones and reaching a nice audience. But in a competitive and rapidly changing market, I decided not to invest further after two pivots. So, not that ‘dream exit,’ but certainly one of the most valuable experiences that I still draw from daily in the venture capital profession. Thus: ‘failed forward, into my dream job.’
The switch: passion, challenge, and fun with driven people
There you have the answer to the question of this blog: Yes, it is 100% worth making the switch from M&A to impact investing. Certainly, the switch means taking off the golden handcuffs and taking two steps down the salary ladder (the more so the ‘earlier stage’ you go), but you get a lot in return immediately. I found everything I was looking for at StartGreen, and more: so much passion in studying innovations and new technologies that the line between work and hobby can no longer be drawn. The challenge of selecting startups and overcoming hurdles on the way to growth. Varied work where no two days are the same. And above all, the same fun with driven and diverse people ‘who give a damn.’ Okay, I’ve hardly seen the Lange Leidse in the last 7 years, but that’s mainly due to that ‘other phase’: I spend my Friday nights with diapers etc., and therefore no longer belong to the ‘TGIF WhatsApp group’ of the StartGreen analysts and associates, or whatever that chat may be called. Fair’s fair.
There are also trade-offs
Are there no trade-offs then? Certainly. Even more than in M&A, you have to be able to take a hit, in two ways: First, there is a greater chance that your investment in a young startup (with unproven product-market fit) could go bankrupt or at least go to the edge of the abyss a few times. Resilience is therefore a requirement. Second, you have to be able to handle seeing an average of 100 companies before you invest in one. Either because the bar is high with both financial and social return requirements, and many entrepreneurs must therefore be disappointed. Or because the best startups, conversely, enjoy a lot of interest from investors. ‘Saying no’ and disappointment are therefore part of the job. Finally, especially for ‘VPs and up,’ there is the aforementioned step back in terms of salaries and bonuses, and the ‘carried’ is a reward that can only be utilized in the event of great success after a long haul until the exit of an entire portfolio. You do impact investing primarily because of your passion.
The sustainable finance sector needs you
Before I wrap up this first blog: You can, by the way, perfectly build on your established M&A or consultancy skill set: financial modeling, valuation theories, PowerPoint and Excel skills, negotiation experience, business acumen to effectively analyze markets and companies—it all remains relevant and valuable. So, are you that analytically strong investment banker or consultant who wants to push forward with finance but follow an entrepreneurial and green heart? The sustainable finance sector needs you, so the invitation for a cup of coffee stands.
Next up: The results of 7 years of impact investing
In a next blog, I will share the results of my ten or so VC investments over 7 years. Read this blog here. Want to know more about Impact Investing via StartGreen? Feel free to connect on LinkedIn.
