Patient capital creates a safe environment for early-stage companies to focus on building their businesses the way their founders envisioned them. In short, investors are willing to forego immediate returns to gain more substantial, long-term returns. Instead of a get rich quick objective, impact investing aims to make the world a better place.
In this episode, Lizette Peña discusses how Kachuwa Impact Fund made it possible not to put pressure and not require excessive growth to its partners. She also discusses how the Kachuwa Impact fund is different from traditional venture capital firms. With impact investing and a patient capital approach, their investors become partners in achieving common financial and non-financial goals and extensive networks for marketing and distribution, strategic advice and mentorship, and later-stage financing.
If you're thinking of starting a business or taking an interest in impact investing, then this episode is for you!
Here are three reasons why you should continue reading:
Learn how an investment cooperative helps start-ups grow while staying true to their mission and vision.
Understand what patient capital and impact investing are.
Lizette Peña shares methods to become a mission-driven founder and a successful woman in business.
Resources:
Visit Christina Sjahli's website for more insights on designing an ownership structure that aligns with your company vision, and check out the Her CEO Journey™ podcast series!
Get your 90-Day Financial Strategic Planning with Christina! Set up a time here!
Want to start investing or want to pitch your business? Visit Kachuwa Impact Fund’s website to know more about them.
Episode Highlights
[05:34] Becoming A Director of Kachuwa Impact Fund
Lizette was a Director of Accounting in Namasté Solar.
The founder of Namasté Solar was putting together a team of boards and advisors for the Kachuwa Impact Fund.
Lizette is passionate about responsible business and investing. She is also known for doing things differently.
"There's no pressure for the founder investment company to have excessive growth, or to have large growth in sales or revenue targets. We don't put that pressure on the companies. Rather, we prefer that the founder is able to focus on their mission and that their companies are doing something good for the environment, or a social impact."
She joined Kachuwa Impact Fund as a board member and treasurer.
Lizette wants to provide an investment opportunity for others that want something different than venture capitalists.
[07:22] Impact Investing: Making Pressureless Partnership Possible
Kachuwa Impact Fund sees itself as an impact-first fund.
They are looking for companies that have an impact on their mission.
Kachuwa Impact Fund empowers founders to make their own choices on their timelines.
"We really want that to be their own choice and on their own timeline because we feel that as long as they're having a positive impact, and pursuing their mission, we're happy to invest in them, and it's going to be over the long-term."
Kachuwa Impact Fund is happy to invest in businesses as long as they have positive impacts and pursue their mission.
Listen to the full episode to learn more about how Kachuwa Impact Fund makes a pressureless partnership possible.
[10:26] Finding Investors Who Will Accept Long-Term Return
People are looking for a different way to invest their money. You need to provide options for them.
Kachuwa Impact Fund has included these three things in their investment portfolio: impact real estate, impact companies, and private companies.
They also lowered the investment amount and opened its doors to non-accredited investors.
Investors of any amount will become members of the Fund and be entitled to a vote.
"Once you're an owner, you're an owner. Just because maybe you're the founder, doesn't mean that you get 10 votes per your one share of stock. It's just one for one — it's always the same."
[15:16] What Sets Kachuwa Impact Fund Apart
Kachuwa Impact Fund does not want to see unrealistic projections that show unsubstantiated growth with no plan to fund it or simply being in a perpetual fundraising mode.
"We're always going to be impact theme first. If it doesn't pass that filter first, that it meets one of our impact themes, we don't even look at the financials, we don't even talk to them."
They do not look at businesses that don't have impact themes regardless of its profitability.
"Hey, we're going to take the backseat. This is your show, this is your business, this is your baby. We're here to provide you the capital that you need to make this a success, and we trust in you knowing what is going to make your business succeed."
Its mission is to operate for the benefit of the stakeholders and the members, not profit maximization.
"Our mission is to operate for the benefit of the stakeholder and for the members. It's not for profit maximization. It's so that they can move forward in their missions. They can really execute without having that sort of pressure."
They help and propel people that do not usually get funded by venture capitalists like women founders and people of colour to have their businesses be a success.
[21:32] What Kachuwa Impact Fund Looks For
Kachuwa Impact Fund likes to invest in private impact companies of different stages of growth and age.
"'Does this make sense? Is this a sustainable growth?' Then, 'What's involved with that? Are they going to be able to attract a diverse workforce? Where are the products coming from? What effect does this have on the environment? Are they going to be able to pay the price or the charge for recycling or using a better type of material?'"
They will invest in the full spectrum from pre-revenue to profitable start-ups. They will also invest in organizations.
"Thankfully, we have other folks on the team, so that's what makes a good team. You each bring something different and look at it from a different lens."
[25:38] Profitability And Revenue
Revenue growth doesn’t mean profitability, and focussing on revenue is too one-sided.
Everyone gets caught up in high valuations and new technology, hoping that it will be the next thing that makes them rich.
Unfortunately, profitability and revenue create pressures that take focus away from a company’s mission.
Kachuwa looks at what a company is giving back, not just what it’s taking.
[32:39] Defining Success
Kachuwa funds founders that want to solve a problem.
Success means a profitable organization that continues to function, deliver its services, and serve its mission.
"I think a success is an organization that is profitable and can continue to function and deliver its services or serve its mission."
Kachuwa stays on top of the financial health of its investees and meets with them regularly to assess if they need help.
Success doesn't have to be immediate. Patient capital and impact investing mean an investor is in it for the long term.
"Patient capital is investments that are in it for the long-term. It provides breathing room for the founder to patiently fulfill their mission without having undue pressure from investors on growth that may not be in line with what they had planned in their projections and their execution of the mission."
[40:26] Lizette’s Recommendations on Investing
She encourages people to look into impact investing as it becomes more and more popular.
"I encourage people to look into impact investing. I think it's becoming more and more popular. It's just really an amazing way to help mission-driven companies succeed and be able to compete with other companies that are not mission-aligned. I think together, by having more money in the pot from everybody, we can really move this forward, and social problems can be addressed, and maybe make the world better $1 at a time."
It is preferable to assist mission-driven businesses in succeeding and competing with others.
Address social problems and make the world better $1 at a time.
About Lizette of Kachuwa
Lizette Peña is the board treasurer of Kachuwa Impact Fund, a democratically owned and controlled investment cooperative and public benefit corporation focused on owning and operating impact real estate and investing in privately-held impact companies.
She is passionate about supporting responsible economies and business practices, renewable energy, and sustainability. She developed strong work ethics and accountability during her nearly 30 years of business and professional accounting experience.
To find her, you can visit the Kachuwa Impact Fund website. Alternatively, contact her on LinkedIn.
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