Growth Areas in the Green Economy

Below are some potential investment opportunities in the “green economy” according to Jigar Shah, who has been recently appointed by President Joe Bidden as head of the US Department of Energy’s Loan Programs Office.

These sections of the green economy have not yet reached Wall Street size (e.g., Next Era Energy) and there are no mature business models that have already proven to be as scalable as solar, i.e. they are not yet the ”rinse and repeat’ type of projects. Consequently, these types of opportunities may be attractive for early investors.

For each category mentioned below, I have added some examples of startups that have caught my eye either because they are representative of the category or simply promising.

Buildings / Weatherization

Buildings and their construction together account for 36 percent of global energy use and 39 percent of energy-related carbon dioxide emissions annually, according to the United Nations Environment Program. Globally, building operations (powering lighting, heating, and cooling) account for about 28 percent of emissions annually.

Retrofiting buildings for energy efficiency: Blocpower – has retrofitted more than 1,000 buildings in disadvantaged communities in New York City, with projects underway in 24 cities. BlocPower uses proprietary software for analysis, leasing, project management, and monitoring of clean energy projects that save customers between 20-70 percent on annual energy costs.

Designable (*) retrofits buildings and offers its clients the opportunity to buy (after personalization), apartments in sustainable buildings.

NEIF provides financing for energy & resiliency home improvements. You can invest in their climate action investment notes via the green crowdlending platform Raise Green

LED lighting accounts for approx. 15% of the lightning sales. It is expected that the transition to energy-efficient lighting would reduce the global electricity demand for lighting by 30-40% in 2030. Amsterdam Edge building is an example of digital technologies at the service of energy efficiency.

HVAC (heating ventilation air conditioner) retrofits.

Green Procurement

Regenerative Farming

Regenerative agriculture enhances and sustains the health of the soil by restoring its carbon content, which in turn improves productivity—just the opposite of conventional agriculture.

Regenerative agricultural practices include:

  • no tillage,
  • diverse cover crops,
  • in-farm fertility (no external nutrients),
  • no pesticides or synthetic fertilizers, and
  • multiple crop rotations.

Stemple Creek Ranch

Food waste prevention

Avoidance – An estimated 1.3 billion tonnes of food, or roughly 30 percent of global production, is lost or wasted annually, according to the UN Food and Agricultural Organization (FAO).

Imperfect Foods, Too Good to Go, Happy Hours Market (*)

Biodigesters process farm waste (animal manure & green waste) into free biogas for clean cooking and organic fertiliser for better crops and healthier soil.

Atec Biodigesters

Not mentioned by Jigar Shah, these two categories deserve to be added since they have an immense potential to contribute to climate change mitigation and wealth creation, in emerging markets:

Cooling as a Service

Freshbox (*)


Solar Pumps

Future Pump (*)

If you are interested in learning more about technologies related to combating climate change, please visit the Project Drawdown or the accelerators mentioned here.

“I am always optimistic.  I am not sure how one could not be.  We have the technology today to solve major problems around the world on food production, clean water, electricity access, waste, sewage, and other basic dilemmas.  I am excited that my generation will be the one that sees the successful deployment of this technology to truly make the world a more sustainable place”

Jigar Shah

(*) I am an investor

The Taobao Village next to you

Innovation sits at the crossroads of different trends. Just think about the possibilities of combining nascent ‘small cities’ in emerging countries with community group buying.

The migration from rural communities to urban locations seems to be a global and irreversible phenomenon. If there is one country in which this is evident, it is China. Today China has 13 cities with over a 10 million population. There are literally scores of over 5 million. Every emerging market is following a similar pattern. Go check it for yourself here.

Community group buying is nothing new. I remember circa 2000 group buying a pram at for my daughter, who is now in university. For different reasons linked to competitors, consumers and suppliers, most of the group buying startups, did not survive the dot. com boom and bust cycle. The revival is probably linked to the exponential growth of social media (particularly group chat) and to the pervasiveness of smart phones.

Most of us are well familiar with the large Chinese e-marketplaces. Taobao,, Pinduoduo are successfully bringing the best of community group buying, ecommerce and marketplaces to large and smaller cities in China and will eventually will expand their business model to the rest of the world.

What we are normally not so familiar with, are the startups that are focusing on serving small cities. Some time ago, I was listening to a podcast about the challenges faced by Chen Ying, the founder and CEO of Shihuituan, a community group buy site that operates mainly in third tier cities and below in China, and I realized that most of the emerging markets could have their own Shihuituan even if Amazon, Jumia, Mercadolibre and the likes seem to monopolize all e-commerce.

This prompted my curiosity to search for startups in emerging markets that could support the following investment thesis, that I labeled as “The future of rural e-commerce“.

The criteria that I considered for selection were the following:

  • Not an NGO but a #socent
  • Not Alibaba, Shopify, Amazon, Flipkart, FB Marketplace, Mercadolibre, JIO, Jumia.
  • Not basing its revenues on ads (OLX, Gumtree).
  • Not Etsy, or handcraft sales equivalent. Sorry Gaatha and Someone Somewhere
  • Targeting small towns and/or rural communities
  • Focused on local clusters or just different business products and services being sold online.
  • Secret sauce: aggregator (economies of scale, logistics) + localization (community leaders)
  • Low risk of commoditization and competition on price only.
  • Managed to overcome challenges such as illiteracy, lack of infrastructure (internet access).
  • Operating in countries without hindrance from government. Government could help, but at minimum should not block (e.g. avoid possibility of being taxed to death).

After some research I came across Apperto (*). Apperto is a Latam app that I could characterize as a mix of Yelp and Groupon for relatively small cities. They are currently operating in small cities in Argentina and Mexico and have been inspired by Shihuituan.

Are you aware about any other startup creating “The future of rural e-commerce“? (please leave a comment).

(*) I am an investor in Apperto.

Charm Impact – Driving positive change

Solar Mini Grid in Nigeria

Interview with Gavriel Landau, CEO of Charm Impact (*)

What prompted you to launch Charm Impact?

Back in university, when I was in business school, I took an operations strategy course, in which, Michael Porter’s essay on the creation of shared values was presented. I strongly agreed with his view about different levels of corporate social responsibility (CSR) ranging from generic (not aligned with the business), to CSR focused on the value chain (e.g. UPS improving its methods for the delivery of parcels), to strategic CSR (e.g. Toms Shoes one for one business model: buy one, give one). I felt inspired by that lecture that taught me that you can create businesses that are sustainable, and are fully focused on doing good. It is possible to create a business model in which the bottom line is 100% aligned with the mission of doing good.

After graduating I went as an English teacher to Cambodia for 3 months. Upon my return, I joined Accenture where I worked for their financial and energy clients for 5 years. I left to work in two areas for which I am passionate> renewables, and high tech. I joined, as a project manager, a UK startup focused on solar peer to peer power for the UK market. Around that time, I met the founders of Solshare, which rekindled my interest in emerging markets and access to energy.

I then decided to devote myself to promoting a meaningful step-change to the efforts to bring energy to those without access to it in emerging markets. The key question that concerned me was – why doesn’t everyone have access to electricity? I soon corroborated that access to finance was one of the critical missing pieces. It was then that I decided to focus on helping the entrepreneurs and SMEs, that are promoting access to energy, who are building companies that are commercially viable but not yet of a scale large enough to be bankable.  In addition, our preference is for helping those SMEs that are locally owned and operated and even better if they empower women either as part of the founding team or within their business operations.

What problem are you solving?

I could summarize the problem statement as “access to finance for early-stage clean energy entrepreneurs in developing economies”. This echoes well with the flavor of the decade, which is climate change. We have corroborated that people want to help fight climate change, but most of them do not know how to help. Furthermore, they do not acknowledge that their contribution (no matter how big or small), always makes a difference. We are at the frontline of this change. We have an invaluable opportunity to show people the power of their money. This can be done in two ways. First by showing them how they are financing and indirectly contributing to projects. Secondly, by helping channel people’s money into transparent companies focused on doing good, i.e., sustainable and conscious companies.

Offgrid community in Nigeria
Offgrid community in Nigeria – Charm Impact

What is next for Charm Impact?

After our successful recent crowdfunding campaign, we are ready to scale. We will devote the next months to curating a community. We will continue to work on finding the right investors that want to contribute to a meaningful and impact-focused business. Once we have a large group of impact investors, the size and reputation of our investor community will attract similarly minded investors. Our current challenge is to keep the momentum, continuing to scale, and to grow and deepen the investor community. We will be hiring early next year. Our immediate need is to recruit investment associates (to help us with building pipeline, managing borrowers, credit scoring). Then we will have to redouble our efforts on marketing and branding. This may require bringing inhouse some of the tasks that we have currently outsourced. For the next year, our goal is to focus on better serving our investors, creating a vibrant community, fostering communication and engagement.

Which are your products?

Our core service is enabling crowdlending. One side of this service is looking for clean energy entrepreneurs in developing economies. We conduct due diligence and retain the most promising projects. The other side is selling this as an investment opportunity (i.e., for impact investment) for investors mainly located in developed markets.

We act as facilitators ensuring full transparency and traceability, diversification, and giving investors an opportunity to choose who they back with their money. We focus on business loans that help companies in emerging markets grow. The method is quite simple: we find interesting opportunities, then make a first loan to those SMEs. After they have repaid the loan, provided that their business and financials continue to improve, we offer additional fundings. We help these SMEs scale until they have reached a size when they can attract more capital than what we can currently provide. Besides loans, we are helping such SMEs create a credit history and a credit score that eventually make them bankable. In the future, we envision being able to connect them with business opportunities and to offer technical assistance beyond finance.

What is your business model?

We provide small scale loans to clean energy startups in emerging markets. The loans are high-risk due to a lack of credit scores, financial history, and the fact that the SME’s that we support are testing new business models in new markets. Addressing these challenges requires new business models and new ways of thinking. Most people think about the customers near the base of the pyramid as inherently risky. Some people think entire countries are too risky to invest in. We are challenging core paradigms of how we measure the success of our investments by facilitating a discussion on balancing risk, return and impact. 

Our crowdlending model is based on a blended finance approach: we combine for-profit impact investments with grants and/or philanthropic capital. By embedding a blended finance model into our loans, we create a buffer for the investment capital, it becomes the senior tranche, and thus less risky for the impact investor. We also derisk by hedging the exchange risk for borrowers. In parallel, we help grow the available philanthropic capital. Once repaid, this capital is reused in future projects. By becoming reusable capital, its impact is leveraged, i.e. instead of being consumed, it is redeployed. Furthermore, this virtuous circle is fostered by the fact that the borrower is pushed to become profitable rather than depend on grants. In sum, our flywheel is based on the multiplier effect on capital. 

Basically, it catalyzes private investment and at the same time, it creates an incentive for the recipient companies to be more financially sustainable. We contribute to making the connections among the stakeholders. At the core, we are in the business of creating a community willing to support energy entrepreneurs in emerging markets. This requires us to focus on encouraging and nourishing impact investors and finding grants and philanthropic to derisk the loans. We are fully concentrated on making this business model easy, repeatable, and overall scalable.

Gavriel Landau
Gavriel Landau – Founder and CEO Charm Impact

What is Charm Impact’s current greatest challenge?

Our thesis and prima facie findings are that people do not think about themselves as investors. Our minimum investment is 250 pounds to make the opportunity more available to people who may not usually invest in startups. In exchange, we create a lot of value for your money both economic and in terms of impact. We have embarked on a customer journey whose goal is to help them perceive themselves as investors. 

There is also a gap between the perception of risk vs. actual risk on the ground. There are a lot of reputational factors that influence this perception. For example, people fail to distinguish between the risk of real borrowers vs. country risk. This holds back some investors from backing companies and these companies from being able to grow. 

Are you satisfied with your rate of progress?

If we measure ourselves, based on the frame of the 17 global sustainable development goals, we are still quite far from where I would like the industry to be in terms of achieving universal energy access by 2030. Nevertheless, we have a role to play. Covid-19 increased global inequality and created a significant number of new poor people. We need to contribute to lowering uncertainty. We can solve energy poverty and help entrepreneurs. COVID has only made these problems more evident and acute. There is less money flowing from traditional financiers to the emerging market entrepreneurs that could help us meet the goal of bringing energy to everyone. COVID has just made evident that now there is even more need for alternative finance. We will strive to continue to be at the frontline of “building back better“.

“Real people, real business, that is what we focus on”

Gavriel Landau – CEO Charm Impact

(*) I am a shareholder of Charm Impact

Circular Economy and Data Partnerships in smart cities

I have been reading some of the classic literature on the circular economy, starting with Cradle to Cradle by Michael Braungart and William McDonough and Donut Economics by Kate Raworth. Also, I am taking “From Linear to Circular,” a course by the Ellen McArthur Foundation, which is excellent, and thus I encourage you to check.

I have learned that some cities, such as Amsterdam are already implementing a circular economy strategy with the ambitious goal of halving ‘the use of new raw materials by 2030 and to achieve a fully circular city by 2050’. As part of their strategy, Amsterdam has identified the need to create ‘circular data platforms‘, i.e. targeting the development of a (geographically explicit) digital raw material platform. Such a platform will provide an insight into how various design strategies can help improve the flows as a whole and which policy strategies can create more efficient production and consumption chains.

One of the startups I have recently invested in, Carmachain, is deploying a technology that contributes to fully enabling data partnering among the different stakeholders in a circular supply chain. One of the main concerns of putting your materials’ flow information in the public domain is that competitors may profit from the availability of such data to reverse engineer your products or gain knowledge about commercial secrets. Consequently, some material flow information remains as restricted data, diminishing access possibilities that could have otherwise met certain stakeholders’ needs, i.e. resulting in data gaps. Carmachain has developed a technological platform that allows the exchange, peer to peer (p2p), of data in a secure and encrypted manner. With Carmachain’s platform, the owner of the data can control the type and extent of the information that it is willing to share and with whom, which will encourage the sharing of material flow information.

Eurostat methodology for material flow analysis is a subset of urban metabolism and is still a young discipline that hasn’t been fully exploited for urban planning and design. Part of the reason for this is that urban metabolism analyses have failed to provide detailed spatial and temporally explicit data on the scale at which planners and designers work. Increasing reliance on smart grids will only exacerbate the need for highly detailed data. Particularly data will be needed about when and where energy will be generated and when and where it will be required. This data is currently not openly shared due to its commercial value in a competitive open energy market. As identified in the paper ‘Space-time information analysis for resource-conscious urban planning and design: A stakeholder-based identification of urban metabolism data gaps,’ technological advances in the fields of sensors technology (such as smart meters) and modeling may contribute to overcoming such data gaps; nevertheless, privacy-friendly data processing techniques will still be required.

Cradle to Cradle is like good gardening; it is not about “saving” the planet but about learning to thrive on it

 Michael Braungart, Willian McDonoughCradle to Cradle: Remaking the Way We Make Things

Data will improve the lives of the unbanked

Interview with Ted Martynov – CEO and Founder of Carmachain (*)

Why did you create Carmachain?

CARMA is a natural extension of my background which is consumer lending. I spent many years building different lending companies in Ukraine before moving to Myanmar in 2016 to start SolarHome. SolarHome is a pay-as-you-go solar company that is essentially a mix of lending and distribution. Running lending facilities in an unbanked country was very new for me. The biggest pain point was the lack of credit data for proper credit assessment what is a horrible situation for every lender. Solving this issue become my passion and I left the company in 2019 leaving its status the biggest PAYGO solar in SE Asia to start CARMA the world’s first credit data marketplace.

Who is in your team?

Lina who also worked for SolarHome joined CARMA as CTO six months later. She is extremely talented software engineer with enormous experience in data intelligence. I parachuted myself in Kenya in the midst of 2019 for a ground survey and we were lucky to deliver MVP closer to Jan 2020. We are still in search of CSMO and I hope this highly valuable team member will join us in the next weeks to start building distribution channels.

Which are your products? Clients/Target Clients? BAHG?

CARMA aims to fill in the gap for credit reference services in underserved markets. There are 85 countries across the globe experience this problem mostly from Africa and SE Asia. The demand is coming from lending organizations that would like to have better manageability of default rates through overindebtedness control and fraud prevention. Over Indebtedness became a huge issue even in the western countries after the pandemic outbreak as it affected income sustainability nearly everybody what caused withhold granting new loans. 

CARMA is fundamentally different from traditional credit and designed to be a really quick fix of the problem. We withdrew from aggregating data into a centralized silo. Centralized data silos are vulnerable to hacking and what is more important it requires organizations to give away their entire databases. Our ground survey revealed many cases when even a good working credit bureaus environment able to collect only negative credit histories because positive information is not contributed by organizations. This approach is simply lack of transparency. We organized data sharing in a fully distributed and decentralized way. Data contributors transfer only query-related data leaving the whole database behind company’s firewall. This also created an advantage of access to real-time data that is critically important for fraud prevention among digital lenders who are the new trend of unbanked economies after mobile money introduced itself a few years ago.

Dealing with unbanked economies also brought us to an interesting takeaway. A lot of data sits with non-financial industries. Unbanked customers actually made a lot of digital footprint up to date. CARMA‘s credit data marketplace is totally inclusive for data of any b2c industry. Data contributors receive a reward every time lenders hit their information what made a quite unique revenue stream that was never introduced before.

Access to credit data is only the tip of an iceberg. At the end of the day, we see CARMA Protocol could make a secure connection between enterprises across the globe. Companies could securely leverage personalized or personalized data for the benefits of HR, R&D, marketing from each other. This might be another internet. Internet for corporate data.

Ted Martynov – CEO and Founder – Carmachain

Faster, less riskier and cheaper credit?

We were fortunate to sign an umbrella agreement with a huge association in Zambia where the situation with credit data is quite average with 9% (vs 11% average across Africa) rate of collected credit histories. The members of the accusation presume to share credit data within their group and acquire information from other local organizations as telecoms, PAYGO solar etc. CARMA facilitates transferring raw data what is a perfect feed for any scorecards. Accessible credit data helps lenders to reduce the time for credit decisions and improve the predictability of default rates which improves the quality of loan books hence lenders can give more money to creditworthy customers and mitigate losses of fraud and low-quality transactions.

The future for Carma?

CARMA‘s beauty is in its global context. The data goes directly peer-to-peer and CARMA works as a post office. We deliver “parcels” with data with no idea what is within the “parcels”. This liberates us from obtaining local licenses or putting IT infrastructure what means we can available everywhere where it is necessary right today. We made our baby steps in Zambia and making a close look at Nigeria. Some talks are coming from Bangladesh and Vietnam. We are going to be flexible in building the presence following signals of early adopters. We are happy to be in Benin, Senegal, or Uganda tomorrow after signing up for three or four customers.

We are strongly convinced that pay-as-you-go model works the best for our customers. It reflects with zero sign-up or subscription fees. Lenders pay only in case of hitting data, it entails processing reward to a contributing side. CARMA might be a smart alternative to credit bureaus. The credit bureaus usually charge per request.

Challenges, competitors and growth opportunities?

Starting up any marketplace is challenging and doing it for enterprise data even harder. Companies like the technology advantage of CARMA addresses the vast majority of their concerns in terms of data security but nevertheless the sales cycle is quite long what requires from the team and me to have enough durability. Global lockdown did not make it faster but exposed overindebtedness issue what made credit reference services critical.

We see a lot of startups trying to help lenders with credit assessment built around alternative credit data or fetching data from borrowers. We are fundamentally different, we give visibility to recorded data that sits deeply in enterprises. This makes us optimistic to improve credit risk for 530 million loan deals made annually in underserved markets.

What could CARMA do with a $1m investment?

This is going to help a lot. We are at the very beginning of building distribution channels. The technology requires more capacities to keep data security, applicability, compatibility elements on the highest level. Such investment injection would bring us to serving over 5 mln data requests bundled with access to 19 mln of credit histories. This is roughly $1 mln ARR for CARMA.

The interesting thing is unbanked left massive digital footprint since smartphones became available. This data is a real driver for many industries to find and deliver critical products and solutions for this financially underserved layer. I strongly believe CARMA is one of the missing puzzles in the equation of financial inclusion and building data-driven economics for Africa and SE Asia

Ted Martynov – CEO Carmachain

(*) I am an investor in Carmachain – check my portfolio

Superfluid Labs – Intelligent Pan-African Consumer Scoring Enterprise AI Platform

Interview with Timothy Kotin (CEO) Superfluid Labs (*)

Why did you create Superfluid Labs?

Prior to founding Superfluid Labs, I was a Research Scientist at IBM in Kenya where my team supported enterprise clients to develop new products and innovations to drive access to financial services and inclusion building on the foundation of existing innovations like M-Pesa and IBM’s technology innovations. I was fortunate to both support and witness first-hand how a regional bank at the time with only about 50,000 retail customers launched and rapidly scaled a digital banking offering for the underbanked which has now reached over 25+ million customers with credit and saving products on basic mobile phones. That product is called M-Shwari, and this innovation was possible by leveraging the power of data analytics to reach, score, and service the previously underserved. The motivation for founding Superfluid was thus the desire to develop affordable platforms which democratize access to similar advanced analytics and artificial intelligence capabilities for many more businesses, large or small, in order to expand economic opportunities by better serving the essential needs of hundreds of millions of underserved consumers, starting in Africa. 

Could you please describe your products?

Superfluid has developed an enterprise analytics and intelligence platform called SuperML ( as well as a consumer insights and credit scoring platform called SuperScore ( Together these platforms enable businesses in any mass retail (or B2C) vertical to i) to understand consumer transactional behaviour, ii) score customers to establish an accurate risk exposure, iii) offer personalised and relevant products, iv) increase customer lifetime value and v) reduce revenue churn in a scalable and accessible manner.

Behind the scenes, our platforms harness advanced analytics and artificial intelligence technologies to process both traditional and alternative data, structured and unstructured data sources, in order to predict valuable business events or outcomes and reveal relevant strategic insights for stakeholders. The company serves clients in Financial Services, PAYG Solar, Agriculture, Technology, and Retail industries across several African countries. 

What is the business driver for your clients?

Historically, high credit risk is one of the factors cited by lenders for either not serving millions of potential consumers or charging high-interest rates and fees to their current customers. With Superfluid’s credit risk scoring models which more accurately predict risk at the individual customer level, lenders can i) save working capital (sometimes up to 20%) that would have otherwise been lent to the wrong customers, yet still, generate more profits from a higher quality of good customers (sometimes up to 50-75% higher total profits). With these significant gains, lenders can therefore confidently lend to more customers previously declined or not considered or further can also reduce the interest rates charged to their current customers with lower risk profiles.

What is your marketing strategy?

Having validated our offering and proven the return on investments for our customers, we are now looking to expand our offerings to empower more businesses providing solutions for consumer lifestyle needs. The strategies we are looking to leverage for growth are two-fold: 1) establishing partnerships with aggregators which serve other specialized industries/verticals, like Solar PayGO, retail/commerce, fintech, and 2) providing white-label versions of products which can be branded by our business customers or embedded in their own systems. 

What is your ‘magic formula’?

Based on our proprietary automated machine learning platforms and other deliberate process improvements over the years, we are now able to provide our value offering at a significantly reduced initial setup cost and time to support our clients as their businesses scale efficiently. We have successfully served the clients at varying growth stages –  from those serving just a few hundred customers to multinational companies serving almost millions of customers. 

Our objective is to have both low barriers to adoption through a pay-as-you-go or volume-based pricing model based on the scale of a business as well as clearly demonstrate the ROI link between investment in our solutions and specific business outcomes. 

Challenges, competitors and growth opportunities

Data analytics and artificial intelligence are still an emerging industry in many markets so our major challenges usually come from getting clients to understand the transformative power analytics can provide for growth for them. To help mitigate this, we occasionally provide training and capacity building to enable key stakeholders to understand and adopt the requisite analytics capabilities needed to scale strategic growth and optimize current business opportunities.

Our immediate competition really comes from some businesses who will rather employ internal data scientists to deliver their needs. However, our comparative advantage lies in the broader diversity of our team’s combined depth of expertise, experiences across multiple use cases, and focus which provides much more valuable returns when we engage with clients. Even where some customization is necessary for complex use-cases, the maturity of our platforms and in-built automation means that we can deliver value in weeks rather than several months or years. 

As digitization explodes globally and especially in emerging markets, we see more business understanding and desiring the power advanced analytics and machine learning provides for scale, efficiency, and growth. We are already preparing in multiple ways to provide the needed offerings for serving these anticipated needs profitably and at scale.

What would you do today if you knew exactly what will happen in the future?

Superfluid Labs

(*) I am a shareholder – check my portfolio

Average “ticket size”

I could start with, “it depends”, but I will try to give you a more straightforward answer.

If you are a founder and have landed on this page, why are you even asking this?. Beyond your need to ensure that you will have onboard a few anchor/marquee/strategic investors, you are signaling that you are trying to raise money in as few conversations as possible. Alex Danco perfectly describes this game theory behavior in his post ‘VCs should play bridge‘.

A business angel perspective:

My investments are constrained by a series of considerations. They have more to do with myself and my investment philosophy than with your startup, such as:

  • Staying within my investment rules. As described in previous posts, I fancy an initial allocation that allows me to be comfortable if the investment sours and goes to zero. I am also looking to have some reserve cash to follow up with additional investments, in the case of the best performing startups.
  • I could commit to convertible notes with a cap (read more about this in Brad Feld and Jason Meldenson’s book on Venture Deals), but my preference is to invest in equity (SAFEs being second best)
  • The Added Value that I can bring to your startup.

Let me expand on this last point. I like to view myself as something more than an ATM. As a founder, you should be conscious that “Piles of Money” come in different shapes and sizes-

Some of us favor patient capital vs. quick returns. Others don’t. I don’t have any LPs behind me and no mandate to achieve any specific profits within a defined period. I only invest ‘betting/gambling’ money that could be put 100% at risk of loss, patient capital (again, I have no accountability to anybody for the way I invest other than myself and wife)

In terms of other value, I bring my ‘other skills to the table’. I generally work pro bono on legal issues for the startups in which I invest. I have also helped them with business development, recruitment, and fundraising. Furthermore, provided that we are a good fit, I am willing to work for advisor equity, vesting over time. 

Finally, I belong to some business angel networks. I could either facilitate introductions or arrange for the syndication of specific investment opportunities.

Some more interesting discussions

I think of investing as placing bets. In a few startups, it is worth doubling down. For the founders, investors are the bank. Founders exploit investor biases such as the sunk costs fallacy, FOMO, etc. Sometimes some founders have no issues telling investors that the next big client or exit opportunity is just around the corner, even thought they know it it not true.

I don’t know and have no way of knowing the future. When I place my bets, I am looking for companies with optionality (multiple futures). Nevertheless, I prefer founders focused on the next leg, i.e., following just one strategy.

Cash flow is king. Companies that can generate cash recurrently, should be preferred over long-shots. I appreciate frugal innovation, bootstrapping, and founders that have demonstrated some resilience and creativity. I haven’t yet reinvested in any founders whose startups have failed, but I could be willing to do in the right circumstances.

I don’t appreciate founders that are always pivoting, but I do look for founders with a growth mentality. I see startups as a growth experiment for product/market fit, which implies the capacity to adapt and change. By the way, I also look for these characteristics in public companies – ‘Amazon Day’ mentality as opposed to the ‘Kodak way.’

I believe that trying to identify potential winners in an industry is trying to hit the jackpot without knowing your chances at the game (blissful ignorance, known unknowns). We don’t have a clue because we can not foresee how the tech/market i.e., demand/options, will turn out. It seems as futile as trying to find the black swan, not knowing the potential payout or the probability of success. I prefer to build a resilient portfolio based on the antifragile method, to diversify, be agile and flexible.

I need to plan. Founders, please keep me informed so that I can plan ahead how to allocate my own cash flow. Founders should try to avoid surprising shareholders, whether to the upside or downside.

I believe in letting your winners run – that is why I insist on pro-rata rights, having the option to decide to follow up or double down on an investment.

In my experience, founders usually find ways to be made hold by newcomer investors or acquirers. In opposition to this situation, I am a minority investor. I have to place my trust and look for protection against the founders’ bad behaviors on the aggressiveness/greediness of the lead investors or more significant shareholders.

I am not afraid of frontier technology, but do not have the funds or knowledge to invest in deep tech.

I believe in the remix design philosophy, aka ‘nothing is 100% original’.

I have found that some of the best bets are on techs that sit at the crossroads of two different industries/problems, and offer multiple reinforcing solutions to complex problems. Rather than thinking vertical, horizontal, or chain – I prefer startups that try to identify where value is easiest captured (low hanging fruit). These founders are continuously thinking about locking in the whole ecosystem while starting with the simplest solution.

“The outside world can push you into Day 2 if you won’t or can’t embrace powerful trends quickly. If you fight them, you’re probably fighting the future. Embrace them, and you have a tailwind”.

Jeff Bezos

Positive Impact Exits

Positive Impact at Exit

I recently became aware for the first time about the concept of positive impact at exit time, when Andrew Kuper with Leapfrog Investments discussed how his company combines profit with purpose, even at the exit stage. This principle, which makes part of the Operating Principles for Impact Management, posits that the investor should ‘conduct exits considering the effect on sustained impact’.

The Operating Principles for Impact Management are the following:

Impact Investing

My exits so far …

So far, there are two ways in which I have exited the startups in which I had invested:

1.- Bankruptcy and Reorganization (SSL Europa, Fidzup, Alg & You),

We all know that startups are experiments and that many fail due to different reasons (albeit always the same). I will post another day the reasons why the startups mentioned above failed. Here, I want to bring your attention to the fact that even in exits due to bankruptcy and reorganization, there are conflicts and tensions between the different stakeholders, particularly the creditors.Different legal systems provide for different arrangements, but in general, equity holders lose all of their investments at this point.

The bankruptcy system’s role is to provide for an upfront, known, fair, and foreseeable arrangement among creditors. The legal systems that prevent a company from going bankrupt or reorganizing result in perverse incentives and moral hazard. Even in the case of large financial institutions, ‘too big to fail,’ bailouts, and the like are out of favor. There is an increasing tendency to avoid asking the taxpayers to pay. The new trend is the bail-in in which debt creditors have their claims written down or converted into equity.

In the case of startups looming with bankruptcy, despite the pleads of the founders, there is almost no sense in throwing good money on to a dead body. The best thing to do is to learn and move on.

2.- Acqui-hires (Level V, Weezic).

Even though there is a signed shareholders agreement in place that supposedly rules the relationship among shareholders, receiving an offer to be acquired usually triggers some tensions. There are generally explicit and hidden conflicts between the stakeholders, namely, employees, founders, shareholders, and VCs. In acquihires, founders can find many ways to be compensated by the potential acquirer without any obligation to share such gains with the other shareholders. As Mike Brown stated in What Everyone Should Know About How Talent is Bought and Sold, this is the time for founders to be honest and transparent. As he says, “Your investors had the courage to take a risk in backing you, so don’t hide things from them — be clear about what the deal says. They’ll figure it out,”

As a business angel, if the exit price is fair, you should not fight with the founders. You can get the proceeds from the sale and fund your next future unicorn. The founders are the lucky horse that you had been riding, and you should be happy that someone with larger pockets has identified and validated your investment thesis. It is not worth being sour; instead, we should accept this outcome as one of the regular possibilities when investing at the seed stage.


I hope to be able to see one of my startups be acquired, as part of a transaction where the purchaser is interested in more than the founders’ team, or exit via an IPO. When this day arrives, I will ensure to remember to decide what is best for me, considering the effect on sustained impact.

When conducting an exit, the Manager shall, in good faith and consistent with its fiduciary
concerns, consider the effect which the timing, structure, and process of its exit will have on the
sustainability of the impact.

Impact Principle No. 7

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