How can founders and investors have more positive impact?
By Britta Gruenig, Impact Officer & Coach LUMO Labs
LUMO Labs is an impact-driven multi-stage investment fund. With our investments in early-stage emerging tech startups, we strive to achieve both a financial return and a positive impact on solving global challenges.
We are very grateful to have Britta Gruenig – one of the leading European experts on impact investments – on our team to set up the impact framework, support and coach the startup founders, monitor progress and maximize the impact of our efforts.
Because she plays such a key part in our approach to impact, we asked Britta to share her perspective on impact investing and impact coaching at LUMO Labs.
“When I developed the impact framework with LUMO Labs, it was key for me to integrate impact into the whole investment process”
“When I developed the impact framework with LUMO Labs, it was key for me to integrate impact into the whole investment process, starting with the deal screening stage to onboarding to investment management and reporting. Just as important for me was that the impact framework makes sense and provides value for both the founders and the investors. Let me explain what that means in practice”.
“I challenge the founders to develop a meaningful impact vision and to develop a coherent Theory of Change”
Value for the startup founders
When working with startup founders, I help them think big in terms of the contribution their ventures could make towards the UN SDGs. I increase their awareness of impact depth along the Impact Management Project’s 5 dimensions of impact. I challenge the founders to develop a meaningful impact vision and to develop a coherent Theory of Change that states with which inputs, outputs and outcomes they want to make that impact happen.
When needed, I’m available to create and lead impact workshops for their entire teams to make sure every employee is aligned with the “Why” of the business and can connect their individual roles to the company’s mission. I also help the founders establish and track Key Value Indicators. In the impact investing ecosystem, an impact investment needs to have measurable impact and therefore, for LUMO, a venture’s ability to monitor and communicate progress is essential. Impact updates are a fixed topic during our quarterly operational and strategy team meetings.
On a personal and team level, the ability to be explicit to yourself and to others about the meaning of your work and the contribution it makes is extremely motivating and stimulating.
“Changemakers need to build up their mental and emotional fitness to deal with the pressures of developing solutions to the world’s challenges”
I know from experience that everyone holds the key to greater impact: It’s their personal transformation. It’s my specialty to provide this unique and tailor-made support. Because the most successful impact-driven changemakers are those who are able to align what they do with who they are and what they truly believe in, I offer one-on-one personal development coaching to the founders.
My coaching doesn’t start with handing out a framework and trying to fit everyone in. Whether I work with investors or founders, the very first step really is taking stock of who you are and developing clarity about your personal inner compass for the impact journey. You have to experience the destination you want to reach in order to make a plan on how to actually get there. Then, it’s just as important the changemakers are able to build up their mental and emotional fitness to deal with the pressures of developing solutions to some of the world’s challenges.
Each startup has its own challenges. Some founders have their impact statement hard-coded in their DNA. They know exactly where they want to go and why, but need support in turning this into an operational plan that fits and developing inner resilience and overcoming blocks on a subconscious level. Others seem to know very well how to get somewhere but can’t articulate their destinations well enough yet to make consistent and productive choices about the direction they are supposed to be going. I adjust my coaching and consulting accordingly.
Value for the investors
How does this translate into how we look at impact from an investor’s perspective? Like for founders, it matters also for impact investors to 1) be intentional about creating positive impact, to 2) be able to measure the impact created and to 3) be clear about the additionality of one’s activities.
What does this mean for investments in the LUMO fund? The following reflections illustrate the main reasons why LUMO Labs drew my attention in the first place.
“Investing in startups has a great impact potential from an ‘additionality’ perspective. Without individual backers, they wouldn’t exist.”
Regarding intentionality, Sven and Andy have already been looking at their fund and portfolio from the very beginning with the intention of being an impact-driven fund that creates positive impact alongside financial returns. They also want to mobilise capital that might otherwise go into pure tech investments and channel it towards making a positive contribution. The advantage of tech solutions for impact is scalability and therefore the potential to replicate the positive outcomes around the globe with the right business model. Regarding measurability, investors will get a yearly update on progress towards the impact goals. This will hopefully encourage existing investors and trigger new impact investments.
I would like to elaborate a bit more on additionality. “Additionality” is the extent to which desirable impact outcomes would have occurred without the additional resources provided.
Investing in startups has great impact potential from an “additionality” perspective. Without individual backers, or, in this case, a fund that channels those individual backers, they wouldn’t exist.
Let’s contrast this with an investment in a public company. If an investor chooses to invest in a sustainable company that is already listed, the “additionality” of their investment is fairly limited, since it’s easy for the company to get the capital from another investor as the shares can be bought and sold on the stock exchange.
To maximize the “additionality” aspect of their investments, LUMO Labs minimizes the risk of investing money in something that already exists, that already had a better alternative or that didn’t really need the investment.
Their very specific emerging tech focus, primary focus on pre-seed and seed funding, active involvement in the related ecosystems and hawk’s eye on innovation and impact, allow them to assess the “additionality” of potential investments very early on. Investors need to be aware that within the spectrum of capital, these early-stage venture investments are the higher risk, potentially higher return types of investments.
Conclusion
In a nutshell, thanks to combining the founders’ and the investors’ needs into an elegantly integrated approach, I am able to effectively support LUMO Labs in maximizing and showcasing the impact of their aggregate efforts. I’m already looking forward to onboarding the next startups and to exploring their impact potential!
Outside of LUMO Labs, Britta’s Zurich-based firm Gruenig & Partners GmbH provides personal development coaching and consulting to groups of future owners from families of wealth and to individual asset owners globally. She is dedicated to guiding and mentoring the next generation members of family offices and investors who newly came into money or are shifting into impact investing. Her specialty is to support them on their personal transformation journey and enable them to become the changemakers they are born to be.