ChangeMaker Interview: Luni Libes and Investorflow.org

Continuing our conversations with folks from the newsletter community, our next “Changemaker Interviews” is with Luni Libes. Luni is a 25+ year serial entrepreneur, most recently founder of Fledge, the conscious company accelerator, along with the Entrepreneur in Residence at Presidio Graduate School.  Luni is the author of The Next Step series of guidebooks on entrepreneurship, and The Pinchot Impact Index, outlining a technique for measuring impact across a portfolio of companies. Luni is an active impact investor through Fledge, Toniic, and Investors’ Circle and shares his stories annually at SOCAP and periodically on his blog.

 

FIRST: A BRIEF OVERVIEW
 

I recently spoke with Luni about investorflow.org, a platform he launched last year to help tackle the challenge he is hearing about from impact investors.  As Luni states “… in reality, most impact investments come from investors talking to other investors, not from companies pitching investors. The problem isn’t a lack of deal flow… The problem is efficiently matching the right deal to the right investor, one investor to another. Or more simply… the problem isn’t deal flow but investorflow,"

The goal of Investorflow.org is to put trusted investors together to fund companies and to fund funds. It is an online network where impact investors can hear about deals that fit their particular interests, vetted by fellow investors. All the deals are posted by investors seeking co-investors, not by entrepreneurs or fund managers.

 

Q&A WITH LUNI

Although you describe this a bit on your website, tell me a little more about the genesis of launching Investor Flow?

In 2016, after attending five impact investing meetings in less than three weeks (SOCAP, Investors’ Circle, Toniic, Gratitude Railroad and Big Path Capital), some common themes emerged:

·      Impact investors are spread around the world and not bunched up into any one or two or three cities. This makes it difficult for those seeking funding to find these investors – and - it also means that investors tend not to know each other.

·      Impact investors’ interests are specific and split across a large variety of topics (e.g. seventeen areas under the UN Sustainable Development Goals). Even when there are two dozen investors in a single room, the chance of them liking any one investment is rare. Instead, what often happens is that opportunities are being pitched to investor groups, but you can’t find enough interest in the room for people to join as co-investors to get an investment fully funded.

For example, someone with an investment opportunity in a clean water venture in Nigeria. Most times, it is pretty challenging for the interested investor to the find who else shared interests in:

·      Clean water (WASH)

·      Region/area (West Africa)

·      The type of capital (equity, debt, or revenue-based)

·      The risk level, timing etc…

Investorflow.org helps like-minded investors find each other. Our goal is to get as many interested impact investors as we can “in” the network to help facilitate investments to solve the “investorflow” challenge for investees.

 

How does Investorflow work?

 

It is actually incredibly simple. My partner and I both have a background in the tech world, and know from experience how no one wants yet-another login to yet-another website. We thus designed the system so that everything is conducted over email.

It is free to sign up. Registrants include details on themselves, their specific investment interests (using the UN Sustainable Development Goals as a guide), some information on their investment history, etc. Investors can be individuals, families, funds, foundations, or whatnot. Some are even unaccredited.

All deals come from fellow investors within the network, not from entrepreneurs or fund managers. Once posted, investment opportunities get forwarded to investors with a matching sector, geography, stage, and ticket size. If interested, members can simply click a button (“I Like This”) to get in contact with the leads to learn more.

There is currently no fee to post.  We plan on adding that when the network is much bigger.

 

Progress to date

 

Since launching the platform on January 2nd, we have had someone sign up just about every day. Our network has grown to a total of 259 individuals, family offices, foundations, funds, investing groups, and ecosystem organizations. We have developed two reports on the investor subscribers, including one we published back in August analyzing our first “205” investors (http://investorflow.org/reports/)

 

Were there any “surprises” for you from the report? Or what interesting take-aways?

I have blogged that impact investing is global, and the data proved this. Outside of the USA, Africa is the #1 investment area. The research also really showed the difference in popularity across the SDGs. And – importantly – the data also confirmed that Impact Investing is quite new.  Most of the investors have 0-5 years of experience doing impact investing.

 

What are your goals forward?

Step 1 – facilitating deal flow

Today we’re focued on building a base of interested impact investors who can learn about and submit investment opportunities in the areas – and of the types of capital – that suit them best. In terms of ‘type’ of capital, the definition in our network is “any money in any form”.

** While it hasn’t happened yet, we would love to see/facilitate a ‘blended deal’ – where, say, a foundation would come in with the first loss capital, and other investors would ‘stack’ other layers (with different risks/returns) on top to that

Step 2 – making connections

In 2018, we plan to proactively make connections between people with similar interests (through data analysis): “Here are people you should know”

We had a chance to try this out in 2017, collecting the profiles of the investors at Gratitude Railroad’s annual event, providing the organizers with cohorts of attendees who shared similar interests.  For 2018 we hope to go beyond this at SOCAP and other events, so that a week before an event you receive a list of “here is who you should meet” based on your similar investment interests, etc.

 

One of the goals of Investorflow.org is to really tackle a ‘systemic’ challenge with (current) Impact Investing – that is – how hard it is currently for investors to find other like-minded investors to support specific opportunities. Solving this challenge really strengthens the broader ecosystem.  What else do you see happening in the broader impact investing field around building/strengthening the ‘ecosystem’

I came to Seattle in the early 90’s, when the tech field was just starting to take off. One thing that (clearly) made the tech space move so fast was huge amounts of capital. The other – importantly – was Tech Crunch. It was media that became the ‘go to’ source and really played a critical role in how the field evolved

[Impact investing] doesn’t have good media coverage right now. We don’t have a ‘go to’ source yet, although ImpactAlpha.com is becoming a regular read for many.

Given how spread out impact investors are, we need a new structure where all the individuals and local groups have someplace to turn to find out what is happening, what is coming next – what to do next. This is the only way we’re going to get impact investing to work more broadly

With entrepreneurs, we need to move beyond the pitching in accelerators and business plan competitions and get to the learning. We need similar groups to find each other (like similar investors finding each other on Investor Flow)

We need to build an entire ecosystem globally. There are definitely folks working on these efforts, folks like SOCAP, the US Impact Investing Alliance.

 

Where can folks learn more the topics we’ve been discussing, your work with Investor Flow, and your ideas more broadly

First, I will be at SOCAP this week, and will be running a workshop at 5pm on WED titled:

“You’re doing it wrong: Investing without Exit”

Second: Anyone interested can sign up on Investorflow.org.  The URL is the name.

Third: I did a conversation with Devin Thorpe of Forbes discussing Investor Flow and why “It Shouldn't Be Easier To Find Your Mate Than To Find A Co-Investor Online” – you can see here: https://www.forbes.com/sites/devinthorpe/2017/06/28/it-shouldnt-be-easier-to-find-your-mate-than-to-find-a-co-investor-online/#2e27fcec12ec

Finally,  there are other issues holding back Impact Investing, and I’m doing what I can to help there too. One of these is structuring investments. See “The Next Step for Investors: Revenue-based Financing” (https://amazon.com/author/luni) for details on how to overcome that issue.

Thanks Luni!

http://investorflow.org