By Thomas Ansell
We sat down with Ronald Huisman and Bernarda Coello, founders of Floyd Davis Finance, to find out how they can help investors change to the world of investment, whilst supporting innovative and responsible organisations in the process. This first blog looks into how Floyd Davis Finance works, whilst a second upcoming blog will look into impact and purpose-led investing more widely.
Floyd Davis Finance, a member organisation of The Hague Humanity Hub, aims to bring together investment capital to companies that can use it: measuring success not only on capital returns but also on positive impact. Founded by Ronald Huisman (who also lectures on energy finance and financial markets at Erasmus University of Rotterdam, and on impact and sustainable investing at Utrecht University), the consultancy takes a significantly more holistic approach to investing than one might expect.
In essence, Huisman and Coello help unlock funds from capital-rich organisations that want to invest in impact (for example pension funds), and match these funds with impact or sustainable-focused companies that have great ideas but need more capital to scale. This approach is innovative in the financial world, and allows fund managers to really diversify their portfolios whilst also working on a greener, more just, and peaceful world. However, working with scalable companies is a two-way street, and where Floyd Davis really comes into its own is in the services and consultancy it offers companies that receive investment.
So, how does it work?
Really, explains Coello, the process begins long before any company receives its investment. Floyd Davis works to help companies with exceptional ideas become “investment ready”. As Huisman explains, many of the companies they work with have Founders with a STEM or engineering background: in short, organisations with great ideas, initiatives, or products but without the know-how to set up an organisation ready to receive investment.
Often, Floyd Davis will work with companies that are looking to scale, rather than start-ups or mature offerings; because scale-ups are a slightly neglected sector in the investment world, says Huisman. What these companies most often need, says Coello, is help in setting up solid financial, legal, and communication strategies; alongside clear impact statements. Once these are set up, they increase the likelihood of a company receiving capital to scale; as well as being useful tools for improving relations with investors and strategic partners. “The style in which we work is hybrid: in the world of business and with reporting systems that are often found in the non-profit sector”, she adds.
The extra consultancy services offered are quite different to a usual funder/company relationship, taking in capital raising, coaching, legal and communications assistance; data analytics, financial structuring, and more. The team is led, though, by a wish to work collegially and collaboratively with their partners: even if it takes longer to enact change or become “investment ready”.
Does the world of finance want to change?
“Well”, says Huisman, “fund managers are people who are aware of the world, too. They want to use their positions for positive impact.” Indeed, organisations such as pension funds look at much longer term investments than (for example), hedge funds. This long-term view, and a wish to adapt to a changing world, makes large institutions ripe to be the trailblazers. “These funds want to set an example as capital leaders”, says Huisman.
And, there are various financial institutions with large amounts of money set aside for purpose-led investing: Floyd Davis actively partners with these institutions to help them achieve their goals. “For example, several larger financial organisations are looking to specifically invest in innovative energy transition-related companies”, says Huisman, “what these organisations are looking for are serious solutions to long term problems, that are scalable and work sustainably.”
Where is the money invested?
The Floyd Davis team generally work on several project companies at once: spread across the Netherlands and sub-Saharan Africa, as well as exploring possibilities for collaboration in the Americas. Investments are taken on a case-by-case basis, and funding is sought from a wide range of institutions, via self-raised funds, and on much longer return models than you might be used to in the world of finance.
If you’d like more information on sustainable and purpose-led investing from Ronald Huisman and Bernarda Coello, make sure to read the second part of this series! For more information about Floyd Davis, check out their LinkedIn page– or just say hi at The Hague Humanity Hub!