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Is Social Entrepreneurship the New Normal
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00:00Sous-titrage Société Radio-Canada
00:30Sous-titrage Société Radio-Canada
01:00Select Stage 3 and start typing away to give us your questions.
01:04Our panel will be pleased to answer any queries or comments that you might want to share.
01:10And with that, our wonderful moderator, Charlie Perrault, is going to be back with her three brilliant panelists.
01:16Please welcome them to the stage.
01:20We'll be right back.
01:53We'll be right back to the topic of social entrepreneurship.
01:57And to talk about it, I have Kat Borlogan.
01:59You're the Chief Impact Officer of Content Square.
02:02Ramzi Rafi, new founder and general partner of Nolabel Ventures.
02:07And Elodie Broad, you're Head of Impact and ESG at Balderton.
02:11Thank you very much for being here.
02:14So we are good students, so we're going to start by a small definition.
02:18So how can we define really social entrepreneurships?
02:25Because I'm sure we have different definitions.
02:27So how would you say?
02:31I'll start.
02:33And hi, everyone.
02:34So, you know, at Nolabel Ventures, we don't really like labels.
02:38But I'm going to try to answer a question on social enterprise.
02:42You know, obviously, I think the definition has changed a lot over time.
02:46I think you go back 10 years ago, social enterprise was probably, or, you know, a company that was doing
02:51impact was probably a company that only, you know, targeted, you know, positive change in society without economic rationale or
02:58without necessarily being economically sustainable or scalable.
03:01And I think that definition has over time changed.
03:04And today, you know, you see a lot of companies that are, you know, scaling VC back that have an
03:10impact label because they're trying to, at scale with a very economically viable model, make an impact.
03:16So the point that I'm trying to make is that this has over time evolved as a definition.
03:21Yeah, I'd agree with that.
03:22And at Balderton, so as one of Europe's largest VCs, we're increasingly backing what we call our impact-first companies,
03:31so companies who have been founded with an explicit social and environmental mission in mind.
03:38But as investors, our mandate and our investment strategy hasn't changed.
03:42We're still backing them because we have that commercial conviction.
03:46So I think, absolutely, we've moved on from this binary of is it profit or purpose, but actually it's profit
03:53with purpose.
03:54Yeah, maybe to build on that, I've been in the tech for good space probably for as long as I've
03:59had a career.
04:00And I remember a time where social entrepreneurship was this super narrow little club that you could only get into
04:06if, you know, you were like the purest of the pure.
04:09And I remember, like, all the fencing around that category and all that label, whereas today, I think the thing
04:14that I'm really excited about is that it's becoming less of a category, less of a subcategory, less of a
04:19club.
04:19And it's becoming more and more just like a social norm on how companies should be operating in 2023.
04:26So can you become like a social company or you are born like a social company?
04:32I mean, I think there's can, but there's also, you know, should you, right?
04:36Like, isn't that the, you know, going back to this notion of norm?
04:40So I'm the chief impact officer at Content Square, which is a UX analytics company, which you're like, what's the
04:47connection with that and impact?
04:49But the truth is that, you know, at the time that we're in today, with the challenges that we have,
04:54whether that's inclusion, whether that's climate, whether that's accessibility and so on,
04:59we start, we need to see companies like Content Square and other companies pulling their weight.
05:04So I think that for companies like us, it breaks down into two things, right?
05:10It's like, if you look at your mission, you look at your technology, you look at your assets, what are
05:15the things that you want to change in the world?
05:17And what are the things that you can actually change?
05:19So, for example, for us to be super concrete, we're a UX analytics company.
05:23We see it drive business.
05:24The way UX drives business is very obvious.
05:26The way that it drives good, not so obvious.
05:28But the truth is that if you're looking at more human digital analytics, you're talking about UX that is more
05:35inclusive.
05:35So you're talking about digital accessibility.
05:37You're talking about UX that does not mess up the planet.
05:40So you're talking about all of the different norms of sustainable web design that can be integrated and normalized.
05:45And you're also talking very much about data ethics, considering the sheer volume of data that you're collecting and processing,
05:50right?
05:51And then at the same time, you know, whether, well, we're talking, and the distinction between impact and ESG is
05:56very holy to LOD.
05:58So I'm going to let her break it down a little bit later.
06:00So that covers the impact part.
06:02But whether or not you pursue that as a business, as part of your product roadmap and so on,
06:07there's also the responsibility of maintaining certain levels of ESG, which, again, I will pass this one on to you.
06:15Thank you very much.
06:16So, yes, at Bolderton, as mentioned, we have invested in impact-first companies.
06:22But something we probably feel even more strongly about is helping all of our companies to understand that sustainability is
06:33relevant to them and that sustainability is a driver of value creation.
06:37And so, as Kat preempted, we have two sort of – we see ESG and impact working hand-in-hand.
06:44So ESG, on the one hand, is really those universal principles of environmental sustainability, social responsibility, and robust governance that
06:54any business should build on versus impact,
06:57which is really when those principles really feed into the overall business model of products and services.
07:03And so, back to your question, Charlie, around, you know, do you have to be born a social enterprise or
07:10can you actually – we believe that any company could evolve to becoming more socially or impactfully kind of minded.
07:17And even at this very scale of our portfolio, we see the happening companies who have technologies who, you know,
07:23weren't at all designed with, you know, planet or people in mind are starting to explore at the edges of
07:29things.
07:30How can they go in that direction?
07:32So, it could start really simply by, you know, almost philanthropy.
07:35So, you know, you'll all have bought products when they will match with a tree planting or a charity sort
07:41of donation.
07:42And then it start – and then it evolves into mainly an aspect of the value proposition.
07:47So, we're seeing a lot of our B2B SaaS companies, you know, integrating carbon footprinting as part of their proposition.
07:54And so, over time, they're really thinking about how can they leverage sustainability and impact as a source of differentiation
08:01and value creation.
08:03And what Eladie is saying is really important and I kind of want to translate it into, you know, operational
08:09terms for founders that are in the room, right?
08:13ESG is not tech for good.
08:15ESG is tech for not bad.
08:17Because the truth is that if you don't pay attention to what you're doing when it comes to diversity and
08:23inclusion, you will inevitably mess up as many, many, many startups have shown us today.
08:27And they get to a growth stage where they've, you know, they've incurred a massive amount of diversity debt and
08:32there's nothing they can do.
08:33You know, it's very hard for them to change that afterwards.
08:36You can't buy back, you know, the mistakes that you've made in terms of climate as well when you get,
08:42you know, and you will inevitably pollute and add to carbon emissions.
08:45You can't take on any debt as well when it comes to data ethics and to privacy.
08:50So tech for not good.
08:51I mean, ESG is a little less about trying to become a social entrepreneur and a little bit more about
08:58saying like, hey, here are the norms and here's where we need to be today.
09:01How do we put in place this right operational ethical risk mitigation so we don't screw up?
09:07You want to add something?
09:08No, I mean, the only thing I wanted to add is to answer your question is, you know, sometimes companies
09:12that have nothing to do with impact end up making a huge impact.
09:16I mean, think about infrastructure companies, railroads, think about the Internet, you know, and, you know, not saying that big
09:22tech is, you know, is very impactful.
09:24But it is true that I think the, you know, no one thought with the Internet that this was going
09:27to have a positive impact on society.
09:30And you can argue today that it has lifted a lot of people, you know, into education and things like
09:35that.
09:36So, yeah, the only thing is I think you have to be quite open minded in terms of like some
09:40companies start with nothing related to impact and end up actually making a huge impact without them knowing from the
09:46first place.
09:48Kat, can you tell us more about your job, how you are, you know, turning Content Square into a more
09:54impact company?
09:55We're going to say that because you've been there for two years now.
09:59Yeah, that's right.
10:00So it is not just a very fancy rebrand of head of CSR.
10:06Impact, as you know, I think Ramzi was trying to point out is really about intentionality, right?
10:10It's about where we want to go.
10:12And so as chief impact officer, it's easier to see my role like a little bit like the chief revenue
10:19officer.
10:20So if you have the chief revenue officer's job is to work cross-functionally so that whether it's with marketing,
10:27with ops, with finance or whatever, we drive as much revenue as possible.
10:31My job is to do the same, but to be able to maximize positive impact and minimize negative impact.
10:36So if I want to be really concrete and build on the categories and the concepts that we were talking
10:41about earlier today, my portfolio is split in two.
10:45I have ESG and impact.
10:48Under ESG, formerly I have diversity and inclusion, the net zero roadmap and what we call digital trust, which is
10:57to a large extent data ethics for a company like Content Square.
10:59And then so most of these things cover the company's practices, right?
11:04So like, you know, everything from everything from the workplace to hiring and so on.
11:09And then on the other side, and so for that, I have my core, like the core team of impact
11:14actually focuses on that.
11:15You have a VP for each of these for these topics.
11:18And then you have impact, which really is about the things that we want to change in the world and
11:25the things that we can change.
11:26So that's very external facing, which means that it connects directly to the product roadmap and it connects directly to
11:34the way that we work with our communities.
11:35So philanthropy.
11:36So under product, it's a little different because product stays in product.
11:40So we have the product units inside the product house that work on, say, digital accessibility or sustainable web design
11:47that after that have multiple exec sponsorships.
11:50So impact, customer success, and also product, of course.
11:54And Elodie, you're kind of the chief impact officer for all the startups in your portfolio now.
12:01And do you have like sort of a guide for them?
12:05No.
12:06Well, thank you, first of all, for the title upgrade.
12:09So I'll be taking this back with me.
12:13Great question.
12:14So as mentioned, I think we've got 29% of our portfolio is currently made up of like impact first
12:20companies.
12:21But I'd say that my number one priority is with the other 71%.
12:27I hope I got the math right.
12:28Yep.
12:29Of the portfolio who weren't founded with, you know, that sort of intentional explicit mission in mind,
12:37but who we want to sort of really understand that they, you know, and we want to guide them on
12:43that journey of ESG.
12:45So back to what Kat was saying, you know, it's really about how they operate and the values and the
12:50practices they build and grow their business.
12:54And so we recently launched a startup guide to ESG, which is trying to do just that.
12:59And it's all organized around Bolton Sustainable Future Goals.
13:03So quick one on that.
13:05Bolton Capital, Generalist VC.
13:08Back in 2020, we launched our sustainability framework called our Sustainable Future Goals,
13:14largely aligned to the UN Sustainable Development Goals,
13:17because we felt that as early stage investors, we had not only the opportunity,
13:22but also a responsibility to plant that sustainability seed early in all of the businesses that we sort of, that
13:28we touch.
13:29And so a large part of my role is portfolio facing, almost as this sort of little in-house consultant,
13:35to help our companies understand why ESG is important and why, you know, why and how it applies to them,
13:42and then giving them really practical, actionable tools to embark and accelerate on their journey.
13:49And Ramzi, your fund is very, very young, right?
13:53You just launched it a few weeks ago.
13:55Have you already invested in a few companies and maybe in France?
13:59Because, yes, France is like a big target for you.
14:03Indeed.
14:03So the fund is new.
14:05It's called Modible Ventures.
14:06It's an early stage VC fund.
14:08It's focused on backing teams that have at least one fund or was an immigrant in Europe.
14:11And the core belief in, you know, the thesis that we're pursuing is that immigration is a factor of performance.
14:18Immigrants tend to perform, especially, especially in mature markets.
14:21In the U.S., immigrants accounts for 55% of startup founders.
14:25And I think something very similar is happening in Europe.
14:28So it's first and foremost a strategy of overperformance.
14:31And to your point, yes, we're very active in France.
14:34We've done six investments to date, year to date since launch.
14:37Three of them are in France, including businesses like Sport Biotech, Guided Energy.
14:42And the core focus is backing VC scalable business.
14:46And it's not necessarily businesses that are making a direct impact, but it always has an element of immigration in
14:54it.
14:54And then, you know, the impact element, if we do our job correctly, is to back amazing founders, amazing startups
15:03that end up scaling and end up at some point exiting and hopefully creating new role models of founders that
15:08can inspire future generation of immigrant founders to go on to the entrepreneurial, take the entrepreneurial route.
15:13So that's the, you know, that's the end objective.
15:17And are there any countries where we can find more social entrepreneurs or not?
15:23Of course, we maybe we can think about the Nordics or maybe, you know, it can be a cliche, but
15:28do you think there are?
15:33Well, the one thing I'd say is that obviously, if you think if we take climate tech for a second,
15:37some, you know, leading European climate tech companies right now,
15:40I think Northvolt, you know, HD Greensteel have all come from the Nordics.
15:45So there's probably something there.
15:47Just look, thinking about the Boulders and Boulders and portfolios, we've got 115 active companies.
15:54And of those 29% I mentioned earlier, there's no, I can't say I'm seeing a clear sort of pattern
15:58or like, oh, they've all come from like, say, Scandinavia or France or any of the other geographies.
16:05So I don't know.
16:06What about you guys?
16:07What do you think?
16:07What do you see?
16:08I think you're right.
16:10And I think, you know, Scandinavia has historically produced a lot of startups that make an impact.
16:14I think you start seeing everywhere at the moment.
16:17And I think the current, the newer generation of founders, they, you know, they're different from perhaps the founders from
16:2310, 15, 20 years ago.
16:24In the sense, I think there's a bigger proportion of them that want to solve a big problem.
16:28They're ambitious.
16:29They have a chip on their shoulder.
16:30They want to prove themselves.
16:30But they also want to do something that creates a better place.
16:33So I think it's, you know, the rest of countries are probably catching up with Scandinavia in that sense.
16:40I mean, so I'm Filipino and, you know, very, very large country and a large market.
16:48And my tendency is to see that for people from countries like mine, it doesn't look like, like, it's social
16:56entrepreneurship by default when more than half of your population is living below the threshold of poverty.
17:02And that's just what you call your market.
17:04So I think that maybe, I don't know, like, if this is your experience, right, where the labels tend to
17:08evolve depending on who your market is.
17:10I agree.
17:11I think it's, you know, sometimes it's a lived problem with the founder.
17:15You know, the lived problem, the experience problem is a huge source of inspiration, not always, to the startup.
17:20And very often you find this in maybe immigrants or diversity, perhaps, a founder, where, you know, that lived problem
17:26is something that they've seen, that they've experienced, and they have a solution for it.
17:30And, yeah, so there is an overlap in that sense, yeah.
17:33Yeah, and I think that on top of the personal sort of lived experiences, the two other drivers I'd say
17:39I've seen are typically, you know, regulation.
17:42So, and that's why I think maybe some countries will see bigger sort of spurs of social entrepreneurship sort of
17:48impact first ventures.
17:50And then secondly, so the countries of culture and, you know, and I think if we have Europe as a
17:55region, we're definitely, you know, stronger on both fronts than a lot of other parts of the world.
18:02And I have a question about hiring.
18:05Do you think that those kind of companies, you know, the social ones, for them, is it easier to hire
18:13some people?
18:14Are they more attractive today?
18:17Yeah, so definitely, you know, speaking to some of our founders.
18:21So, founders of mission-led companies that are, you know, especially social impact, you know, tell us when I hire,
18:30you know, my team, you know, more often than not.
18:33And I want to ask them about their motivation and say, well, I want to come and work for a
18:36mission-led company.
18:38So, definitely in terms of winning that talent award and attracting top talent.
18:42By contrast, companies who don't explicitly have anything yet, at least, on sustainability, they get asked about it too.
18:49So, they're like, well, what are you doing about this?
18:51You know, they probably don't use the words ESG, but, you know, what are you doing about diversity and inclusion?
18:56What are you doing about climate change?
18:57And then, thirdly, it's a bit outdated now, but in 2020, there was this really interesting study in the UK
19:03that showed that, well, focus on irresponsibility and showed that one in five employees in the tech industry had quit
19:11following witnessing what they deemed irresponsible behaviours in their management.
19:17So, absolutely massive impact on recruitment, retention, and churn, and we know that all these things are very costly to
19:24companies.
19:25Yeah, I mean, I would say the old school way of thinking about work was, you know, work was just
19:32work and, like, you take your salary and then, you know, you do your purpose outside of work.
19:36But the reality is that, you know, for some of us, we're spending eight hours a day, sometimes even much
19:40more, you know, 12, 15 hours a day at work.
19:43And, you know, in your life as a human being, if you're looking for purpose and purposeful things, well, you
19:49know, work has to be one of the first things where you find a purpose and where you accomplish something
19:53that's meaningful and you make an impact.
19:55It cannot be sort of the secondary or its way.
19:58So, you know, I think taking a step back, I think, in our societies, people are starting to reflect on
20:03this and I think are starting to realise that actually, you know, your job as a human being or, you
20:07know, your job as a person should be a great way of fulfilling your purpose in your life.
20:11I had a really cool conversation, actually, with our recruiters when I first joined at ContentSquare.
20:16And, like, my takeaway from that is that, yes, like, it helps, but people aren't interested necessarily in impact as
20:23a whole, right?
20:23There's going to be something that they will identify with very strongly.
20:27So, and that will be different in terms of sector, in terms of background, in terms of geography.
20:33So, for example, for us, so we're in about 15 different geographies.
20:40Does it work?
20:41Yeah, sorry about that.
20:43So, in the U.S., what happens is that we get a lot of questions on what we're doing when
20:48it comes to diversity, equity, and inclusion, especially out of our office in New York.
20:52And it's super important for our team there from entry level all the way up to exec level.
20:57In Europe, and more specifically in Western Europe, so France and Germany, we get a lot of questions about what
21:06we're doing in terms of climate, but more specifically from people that go into product, which is really interesting.
21:12And then from people that are in the tech team, so mostly, like, developers and so on, they're interested in
21:19climate, of course, but they tend to have the most questions regarding data ethics and privacy.
21:24So, I think it's, you know, and then, and then, interestingly, we did a survey internally to see what made
21:31people join Content Square, and on the impact side, it was none of these things.
21:35The thing that was the thing that was the most important to them, or that was the most checked, was
21:40the fact that we had a foundation that was focused on digital accessibility.
21:46And was it hard to build your team inside of Content Square? How many people are there now in your
21:52team?
21:52So, the team is sort of transitioning now. So, you have the foundation team, so that they're a legally separate
22:00entity. You have the core impact team, which is comprised mostly of the sort of VPs and their verticals and
22:08the program managers.
22:08And then we have kind of what I refer to as, like, the impact slashers. So, let's say if you
22:14take digital accessibility, the way digital accessibility functions is that you have the design system team, the UX design team,
22:22that doubles as our accessibility team for the actual product.
22:28You will also have digital accessibility experts, but they're inside professional services because they work with the clients as much
22:34as they work with us internally.
22:35You will have people in marketing that are focused on digital accessibility regarding all of our norms, our websites, and
22:42so on.
22:42And then you have digital accessibility in impact that works on the philanthropic side of it. And then all together
22:50we coordinate at a quarterly level.
22:54So, you know, for the past year, you know, the tech, you know, has been, you know, crisis, of course,
23:04with downruns, with, you know, cutting costs, layoffs.
23:08So, is it harder today to build a social company or on the contrary, it's a huge advantage?
23:15Yeah, I mean, to a certain extent, I think today, you know, it should have always been the case, but
23:21the focus is even more on making profits and more on, you know, being cash flow positive and on making
23:26revenue.
23:27So, you know, in some sense, perhaps those founders that thought that they could raise on perhaps the basis of,
23:35you know, impactful story without really thinking through their business model, they are being impacted in the sense that the
23:40capital is more scarce and it's harder to raise.
23:42But I think it's, in itself, it shouldn't be seen as something negative because to the point we made earlier,
23:47I think the only way to make impact or the only way to make a great impact is to build
23:51scalable, I shouldn't say only, but one of the only, one of the best ways of creating impact is to
23:56build greatly scalable businesses that themselves make an impact.
23:59And so to answer your question, I think, yes, it has an impact on some founders that are, that are,
24:05that are thinking about building impactful businesses, but it's not necessarily a bad thing in the sense that out of
24:10it will come perhaps a better way of reflecting through business models that, that can, you know, be more sustainable
24:16from an economic and an impact perspective.
24:19Yeah, so on the fundraise front, I guess, you know, you've got, I feel every other week, there's this new
24:25announcement of a new specialist impact fund that is being sort of created.
24:30And then on top of that, you've got generous investment, you know, large VC investors like ourselves, who are also
24:36investing, but absolutely, to sort of Ramsey's point, it's like, I feel more than ever, we are stress testing the
24:42robustness of the business model that is underpinning the, you know, social,
24:48mission of businesses. Another interesting impact, I think, impact is a bad word in the context of this panel, but
24:55another interesting consequence, I guess, of the current macroeconomic context, what we see in companies internally is that when they
25:06want to try, in a context of budget constraints and resource constraints, where they do want to secure some budget
25:12for sustainability and ESG, more than ever, they are tying it back to the business model.
25:17In this case, so I get approached a lot by the companies in our portfolio, ask, you know, do you
25:22have like data? Do you have like numbers that I can take to my board? Or do I can take
25:28to my sort of CFO to really sort of make the case for ESG? And I think that's a really
25:32positive development, because more than ever, we are showing how, you know, economic value and social value work hand in
25:41hand.
25:41And I mean, for us, like, you know, it would be just so depressing if I said that Content Square,
25:48which is a company that raised $600 million not too long ago, an evaluation of $5.6 billion, couldn't afford
25:54impact. That would be the most depressing thing I could possibly say.
25:57But the truth is that like a lot of different, like a lot of companies in the macroeconomic context, we've
26:02had to learn how to be lean when it comes to impact.
26:05And I think that, you know, like, for example, if you take philanthropy, a lot of people are like, oh,
26:09the act of philanthropy is what counts.
26:10But if you're actually looking at the results in terms of the change that you're creating, you're looking at that.
26:15So for us, the synergy, like, where I think we've had to be more careful is one, definitely focus more
26:20on building in-house expertise versus relying on external consultants, which is just huge in ESG, right?
26:26Like there's this strong dependency on external support.
26:30And I think another thing for us has been to double down on things that have very clear, that are
26:36very much in synergy with all of the changes that are already happening.
26:39I'll give you an example. The sustainability travel policy is when you're in a situation of sort of limiting travel
26:47in general anyway, the synergy is so strong that it makes sense to accelerate on that.
26:52But regarding like the financial component, I think where we've had to become 10 times more rigorous is to work
26:58much, much more closely with the financial team.
27:00Like the FP&A team, specifically under the CFO, to make sure that when you're putting in place changes around
27:07ESG, whether that's, you know, net zero or like the new DEI policies, that we're able to predict at a
27:13pretty granular level what the impact will be on the overall spend in the coming quarters.
27:20Elodie, what do you advise your portfolio company this time of pricey? Just, you know, just cut this budget?
27:29So, it's always important to, you know, acknowledge the reality and the challenges of the current context.
27:36And then we really have to encourage them to focus on what I call the sort of the win-wins.
27:41And if we take climate as an example, but I think that definitely applies to other sort of impact and
27:47ESG themes.
27:48One is around the customer strategy.
27:50So, many of our companies are service providers to often large corporates.
27:57And we remind them that those large corporates, largely because under the pressure of like incoming regulation, are starting to
28:05really put ESG criteria at the heart of their procurement process.
28:09And so, if as a service provider to those large corporates, you can't account for your carbon footprint, you can't
28:17account for, you know, commitment to diversity, then you're more likely than not going to lose the sort of the
28:25procurement sort of process.
28:27So, the customer strategy is a really sort of important focus for them.
28:30And then secondly, and I think that's what you were alluding to, Kat, you know, in the context like cost
28:35efficiency, where actually traveling less, being more energy efficient is not just the right thing to do for the planet,
28:42and it's great for your footprint, but it's also going to save you money.
28:45So, it's really about finding, and I've just given quite two quite general examples that I think are quite universal
28:52to a lot of companies.
28:53But then if we get to the specifics of individual business models, markets, geographies, we can help them find those
29:00more specific sort of win-wins.
29:03Ramzi, do you want to add something maybe?
29:05Look, my lens is an immigration lens when I invest.
29:08And so, maybe asking the question, you know, how do immigrant founders get affected in an environment with less capital?
29:14I think, I mean, just like everyone else, they will get affected.
29:17That's one.
29:18Two, I think immigrants, and I don't like to generalize, but you see this pattern, I see this pattern in
29:24a very qualitative way.
29:26But immigrants tend to be even scrappier than the rest of entrepreneurs.
29:29You know, you've grown up in a country, typically in an emerging market, you've, you know, been educated in a
29:34very sort of cost-conscious way, in a very sort of, you know, scrappy way.
29:39And you tend to see this thing with immigrant founders, the back side of it, the flip side of it
29:45is that, you know, maybe sometimes immigrant entrepreneurs need to be a little bit more risk-taking.
29:50But the good thing is that in moments of crisis, you know, there is this tendency, again, you cannot generalize,
29:56but on average, of, you know, immigrant founders being very sort of cost-conscious, being very cash-flow oriented, being
30:01very efficient with capital.
30:02And I do think this environment can be, you know, relatively beneficial for that profile of founder.
30:10And we have more and more impact startups, I mean, social, environmental, but especially in the early stage, do you
30:19think that those businesses can really scale?
30:23And, or maybe, yes, it has to scale to have more and more impacts again.
30:31I was going to say, I love to say, I always say, you know, you need a big business to
30:34have a big impact.
30:35So, absolutely.
30:37In terms of, and you're not the first person to sort of mention how it feels like there might be
30:42a bit of a funding gap as it stands in that sort of growth stage.
30:45I think time will tell, and I think that those companies that, you know, don't have that really robust sort
30:55of thought through business model on top of the impact that they want to sort of drive and deliver, you
31:03know, will definitely struggle to scale.
31:05But I think those that have that in place will be able to.
31:09I 100% agree.
31:11And I think the, one has to make a nuance around where an impact, you know, that question applies.
31:16Because I do think there's a scarcity of capital going towards, for instance, you know, capital intensive, you know, climate
31:24focused companies.
31:25And I do think that if capital went there, I think that capital, you know, the return will be very
31:30efficient because the need is there.
31:32The market need is there.
31:33And so, you know, being able to invest in those companies who make an impact, I think, will be very
31:37productive and scalable in the long term.
31:39I do think there's a lot of capital going into climate businesses that are developing, you know, someone like software
31:47solutions, for instance, for the climate.
31:48And I'm not saying software solutions for climate are bad.
31:50We need them as well.
31:51But there's an overproportion of capital going into accounting, you know, climate accounting software at the moment.
31:57And so, to answer your question, I think it really depends on which subsector within the impact space.
32:04I mean, 100%.
32:05So, my other hat is that I sit on the board of the European Innovation Council, which is a 10
32:10billion euro fund plus plus for deep tech across Europe.
32:15And so, really, when we talk about impact, for some reason, the first type of company that comes into people's
32:20heads are like, oh, yeah, like, too good to go or blah, blah, car or back market.
32:24But, really, I feel like the biggest impact is not necessarily going to come from software.
32:30It's going to come from deep tech.
32:32So, you're looking at health tech startups, climate tech startups, you know, you're looking at synthetic biology and all that.
32:38And there is a massive funding gap, which explains the European Commission's presence in that space.
32:42And so, I think the question looking forward is really going to be, one, like, how do you fix that
32:48funding gap?
32:49But, secondly, the funding gap happens at the growth stage, as you mentioned.
32:52But it happens very early as they transition right out of, like, university and the laboratories into tech.
32:59And I have a question about AI, always, in every panel, you know.
33:04So, you have to answer this one.
33:08If you're a social, you know, startup, can you be a social startup in the AI space, actually?
33:18Yeah, I think...
33:19You have one hour.
33:21I mean, I think the interesting with AI was that, and the current trends within AI are on the open
33:27source models, for instance.
33:29You know, open source models are acceptable for everyone.
33:32Now, using them still requires computing, which is very expensive still.
33:36But I think computing costs, you know, as we've seen over the past few years, has gone down and should
33:40continue to go down.
33:41So, in some sense, I think what AI is doing is that it's bringing down the cost of entrepreneurship.
33:47And it's, you know, enabling maybe people that are in their house, in their garage, to, you know, build very
33:54impactful business, you know, for the good or the bad, by the way.
33:58But, you know, hopefully more for the good than the bad, with a lower cost.
34:02And I think that is a great impact of AI that we're going to see over the next few years.
34:06And in my end, like, what I'm seeing is, you know, this sudden interest in AI ethics.
34:13And now, suddenly, like, you know, companies are hiring people in charge of AI ethics, AI ethics officers, you know,
34:19directors of AI ethics, and so on.
34:20And my general stand on that is, you can't do AI ethics if you haven't done ethics period before.
34:26You know, if you, if, you know, anyone who actually runs ethics inside the companies knows that it's separated into
34:31two things.
34:32You have structure, like, what are the governance processes that allow us to make certain decisions at certain times, when,
34:37how, what, you know, what are these policies, and so on.
34:40But you also have content.
34:42And content is, like, really, like, how you discern what you believe to be right and wrong.
34:47And a company can't suddenly just be like, look, we haven't done this on anything, nothing.
34:52But we will do it on AI.
34:54So, you know, my general feeling is yes, but it has to be holistic.
34:59It has to be, you know, understood across the board.
35:03It can't be treated in a silo for one specific thing only and not the entire company.
35:10Yeah, I mean, I'll just add, yeah, I think to unleash the net positive impact potential at AI,
35:17we need very robust sort of ethics and governance frameworks in place.
35:23And maybe back to something I touched on earlier, you know, in our portfolios, for example, Kili is one of
35:28our portfolio companies.
35:29They do data labeling.
35:32And so they use their core product to, and partner up with Ocean Cleanup to develop a model around plastics
35:43in rivers, sort of, yeah, like a model to start building a database.
35:50So I think it's a great example.
35:51There's lots of potential, but it just seems to be managed very carefully.
35:55And can entrepreneurship exist in every sector today?
36:00Because now, I don't know if you heard, but some startups that are in the defense space say that we
36:05have impact now since, of course, you know, the war in Ukraine.
36:10You're talking about Helsing, right?
36:11I mean, it was so interesting.
36:13I mean, I think it was super interesting because that was the first investment of Prima Matera, so Daniel X
36:19Fund,
36:20which had positioned themselves to a large extent on sort of impact before they made that investment.
36:27And then they did.
36:28And everyone was like, wait, what?
36:30You know, how is it that your first investment is a hundred million ticket into a defense company?
36:37And I think it's really interesting.
36:38Like, you know, we're talking about impact, but I think that ties also to a lot of the discussions that
36:42are happening right now on European tech sovereignty,
36:45which used to be just about, again, like AI, synthetic biology.
36:48And now everyone was like, wait, what about defense?
36:51So I think, you know, the prism is different.
36:54Right now, if you look at the actual policy spaces or from an LP perspective, it's still very much siloed.
37:01But I think there is a growing school of thought that believes that your ability to hold your borders
37:07and your ability to defend your values is, especially in the context of the invasion of Ukraine,
37:15part of the kind of positive impact that we want to see at a macro scale for a very long
37:19term.
37:20Yeah, I 100% agree.
37:22I also think there's, this is also the problem with labels like impact, is that they make the world very
37:29binary, very black and white.
37:30And the reality is actually much more complex than this.
37:33And especially in this world, especially in things like war, you know, is war something good or something bad?
37:37Well, the answer is that really depends.
37:40You know, of course, you know, you know, it's something we don't want.
37:44But sometimes you have to fight war to, you know, get the peace.
37:48And I think that's also where I think people are struggling when it comes to impact,
37:51is that I think historically impact has been seen as a very binary thing.
37:54You know, if you're an impactful company, then everything you're doing is right and you're not doing anything wrong.
37:59And if you're not an impactful company, then everything you're doing is wrong and you're not doing anything right.
38:03But the reality is much more complex.
38:04And I think as investors, as founders, as, you know, that tech ecosystem,
38:09we have to get comfortable with that ambiguity because the world is very ambiguous.
38:13Yeah, definitely not black and white and not a topic we're really discussing today.
38:17But that's what makes impact measurement, you know, very complicated.
38:21The fact that everything is this kind of gray area and that impact ultimately is always going to be to
38:27some extent,
38:27you know, subjective and relative.
38:30To your question, so, you know, can any sector, you know, have impact-led or impact-first companies?
38:39I think it's worth remembering that investors, you know, institutional investors, private investors,
38:47now pretty much we all have our negative screening list.
38:50So we'll have a list of sectors that we will just not touch.
38:55So, you know, classics being around tobacco, alcohol, adult entertainment, etc.
39:00And I do think that, again, I'll keep an open mind, but, you know,
39:05to see an impact of social enterprise pop up in one of those sectors would be surprising.
39:13And I have a question from the audience.
39:15So, what are the two, three issues, no, what are the two, three best practices, tangible actions you see the
39:24most throughout the companies you follow?
39:29I'll start.
39:30So, the way we think about it, and I mentioned this guide earlier on,
39:35is really your impact and your issue action should be proportionate with where you're at on that growth journey.
39:43And so, typically, sometimes we invest in, like, C-stage,
39:45so we're talking two founders and one tech person or software developer.
39:50And really, the key thing we talk to them, you know, from the get-go is diversity,
39:55because, actually, you know, you will be hiring employee four, five, six,
39:59and if you put that diversity lens front of mind from the get-go,
40:04you're much more likely to end up with a, you know, a diverse workforce to realize the benefits of it
40:10and also be ready for when you get in scope of some of the regulation requiring you to disclose
40:15on your, you know, employee, your sort of workforce and also board diversity.
40:21So, that's definitely the sort of top one from the get-go that I would recommend.
40:27Yeah, I mean, I, you know, as opposed to Bollerton, my checks are very, very small.
40:32So, I'm almost like an angel investor.
40:34I am an angel investor with the fund.
40:36And so, the tracking that I do for, you know, the companies are,
40:40is not nearly anywhere sophisticated to what you're doing.
40:43But what I would say is, you know, from a sort of a feature, a founder feature,
40:46I think those founders that are obsessed about the problem they're solving,
40:50and very often that problem is an impactful problem or an impactful solution,
40:54as a feature sort of best practice in me sort of picking those founders
40:57or them, you know, being, having the right motivators to build a great business
41:01and impactful business, I think that obsession with the problem,
41:04that constant focus on the long-term, you know, problem that they're trying to solve
41:08and never being distracted by anything else, but, you know, really only focusing on the problem
41:12is a great, you know, best practice, if I can call it in that way.
41:18Maybe you can sort of speak from experience regarding what I think helped Impact to work
41:25in a company like ContentSquare, and it boils down to really a couple of things.
41:30First of all, alignment and focus.
41:31The way you'll see Impact being carried out in a lot of different organizations
41:35is it's very, like, guerrilla style.
41:37You have people in different departments that are kind of impact ambassadors and heroes,
41:42and they're always trying to, you know, advocate and push for things and so on,
41:46and sometimes they win, sometimes they lose, sometimes you'll track things,
41:49sometimes they'll stay, sometimes they won't, and so, you know, it becomes this flux.
41:53And I think one thing that I'm really grateful that, you know, we did fairly well at ContentSquare
41:58is from the get-go, and I say from the get-go meaning before I was even hired,
42:04we had a really important conversation on what is Impact to us,
42:07what are the things that we want to invest in, what are the things where we want to be, like,
42:12you know,
42:14best in class, where are the things where we just want to hit market standards,
42:18and, you know, there's an alignment around that,
42:20and because with an alignment around that comes an alignment also on resources,
42:24whether that's the budget, that you don't, you should not be, like, boots,
42:27like, you can be bootstrapping, which is totally normal,
42:29but you shouldn't be trying to find pieces of it across the year,
42:32and also shared responsibility in terms of what am I responsible for as the Impact Department,
42:37what is the chief people responsible for, what is CFO responsible, and so forth,
42:41which then allows the roadmap to kind of move more naturally
42:44and to be able to be adjusted as necessary, but together, as a team.
42:50And I have another question from the audience, two, actually.
42:54What are the two, three issues, problems that you've seen startups most focus on,
43:00and what social problems do you believe startups should focus on, but they aren't?
43:06Maybe, Elodie, you have, like, a wide vision.
43:09I mean, you know, right now we're seeing there's a real boom, obviously,
43:14in companies trying to tackle the climate crisis,
43:21and maybe the counterpoint to that is we've had this global awakening,
43:26I would argue, in the last year, that the nature and biodiversity crisis
43:30is just as, you know, severe and critical and potentially existential
43:35as the climate crisis is.
43:37So we definitely, you know, I feel for every nine companies we speak to on climate,
43:42one might start talking to us about, you know, might talk to us about nature and biodiversity.
43:48So that's probably my view on the environmental side of things.
43:52And then I think on the social side of things, there's a lot,
43:55and we're investing in a few companies really focusing on sort of financial inclusion
43:59and financial health.
44:01So that's a really sort of positive development.
44:04There's still this question as to whether they are reaching the sort of,
44:09the individuals who actually need, would potentially need them the most.
44:14So that would be my reflection on the S.
44:16And sorry, I probably haven't hit the top two or three on either.
44:21Yeah, I mean, I would just throw maybe a couple.
44:23I think one of them is, you know, solutions that are going to help us
44:29deal with probably the negative impacts of AI.
44:32I think that is probably something that we need to see more of, I would say.
44:37And then two, I would say, is around education, I would say.
44:43And, you know, that could also be around AI.
44:45But I do think that education has the power to, you know,
44:48lift a lot of people out of their current state.
44:51I do think with AI, the problem is even bigger because, you know,
44:54the future world in 10, 20, 30 years,
44:57the skills needed for that world are going to be very different from the skills today.
45:00And I think there's going to be a huge educational gap
45:03that will only grow over the next 20, 30 years.
45:05And AI has the power to maybe lift a lot of us out of,
45:08or a lot of people out of, you know, their current economic condition.
45:11But it can also accentuate economic differences.
45:15And education, you know, will be the way to upskill a lot of people
45:18and hopefully get them to where they should be.
45:22I mean, honestly, like climate, it's probably of all the impact topics,
45:27it's the one where people are making very, very big bets.
45:32Whereas, say, education is very important.
45:34When people are making, like, micro bets, you know,
45:37in terms of, like, the kind of tickets.
45:39And even from, like, a procurement standpoint,
45:41if you look at, you know, what big corporates or what countries even,
45:45like the kind of startups that they're likely to work with,
45:47they're more likely to kind of color outside the lines when it comes to climate,
45:52not so much when it comes to the usual types of services.
45:55Maybe that's on the impact side.
45:56And on the ESG side, I totally echo what Elodie was saying earlier about diversity.
46:03Not so much diversity, but I'd say more importantly, inclusion.
46:07I think the topic is very different if you're looking at it from a national perspective.
46:13And when, like Quantum Square, you're present in 15 different geographies
46:16because it's not easy to implement and to have that conversation.
46:20Like a cliche, but very real kind of clash that, you know,
46:24you're, like, transit landing companies are likely to experience is on one end,
46:28and let me know if this, like, rings totally false.
46:31On one end, you know, you have the American seems that are going to be like,
46:34hey, you know, in Western Europe or, like, hey, in France,
46:38you don't recognize, you know, you say you're colorblind,
46:41but really, you know, you're reflecting decades of systemic racism and so on,
46:45and you're not integrating that at all.
46:48And then a lot of Europeans will be like,
46:50you want to talk to us about equality, come back when you have social security.
46:56So it's really interesting because when you're trying to build a company
47:00that is multicultural but at the same time is working on diversity,
47:05you recognize that there's diversity and diversity
47:07and have to be able to do these sort of things that, one, don't necessarily scale,
47:11and two, for which there's no obvious answer as to what the right answer is.
47:16Whereas in climate, like, that can be broken down into numbers,
47:19whereas for DEI, it does not.
47:21Well, thank you.
47:22Time is out, as you can see.
47:24So we have to stop.
47:25But thank you very much for being here and sharing all your experiences.
47:29Thank you for the great questions.
47:30Thank you.
47:32Thank you.
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