Andy Lurling
Through this article, Lurling highlights how impactdriven venture capital can strategically connect emerging technologies with business opportunities and societal needs while addressing challenges in scaling, cultural dynamics, and long-term positive impact.
Bridging Emerging Technologies, Business And Societal Impact
With LUMO, we invest in both societal and environmental impact. In defining our investment thesis, we have looked at challenging megatrends in the world and how technology and ‘common sense’ could help to disrupt these trends. So, I always start thinking from the Audacious goal and then re-engineer and re-cast back to where we are today to define the path, including all technological, commercial, financial, regulative, and political steps of the journey toward that audacious goal.
For example, two megatrends in healthcare are the exponential rise of costs and the increasing lack of health workers. We, of course, must look at the factors that drive the costs and the lack of health workers. The audacious goal should not be about curing people but keeping people healthy because if people are healthy, the costs of curing and the need for health workers go down. So, as a society, we should shift the focus, efforts and funds from cure to prevention. Technology can support this shift enormously as we increasingly have more wearables and AI available to help us stay healthy or predict, e.g., a heart attack or other attacks before the event. Though you must take everybody along, you must convince the policymakers by showing and proving. You have to convince the pharma and insurance companies that this saves money and gives new ways of getting positive financial results.
“As impact-driven funds, besides the return on investment (ROI), we need to consider the positive impact that our portfolio over the fund lifetime creates. This starts with choosing an investment thesis for the fund that allows both ROI and impact.”
Overcoming Challenges In Impact-Driven Venture Capital
As impact-driven funds, besides the Return on Investment (RoI), we need to consider the positive impact that our portfolio over the fund lifetime creates. This starts with choosing an investment thesis for the fund that allows both RoI and impact. Secondly, in deal sourcing, we need to consider how a startup's business model can scale where the business model is aligned with creating impact. If this isn’t the case, there is a chance that the impact disappears in a subsequent round of investment when the focus is on growth. Also, with LUMO, we guide and support our portfolio companies in creating inclusive work environments and ensuring that they can sustainably secure a positive impact at the core of the company and product.
Leveraging A Global Perspective For Strategic Investments
We invest early on in companies that have the potential to become global leaders. We aim to exit between 4 to 7 years after the initial investment. The world will look different again in that time frame. Therefore, it is essential to focus on your investment thesis and only adjust where necessary. An example of this is investing in dual-use companies.
Starting the fund, we determined that we would only invest if we could be considered smart capital and have value added beyond financial input. We are more involved in the early stage (say 1.5 to 2 years). Therefore, we decided to invest only initial tickets in European headquarters startups, where we proactively focus on The Netherlands, Belgium, Germany, Nordics & Baltics and the Iberian Peninsula. We have people on the ground in strategic locations to deal with the cultural differences. This includes people in the USA, as many of our portfolio companies deal with USA companies and/or VCs. These LUMO employees and mentors support us and our portfolio companies in learning to bridge and deal with cultural differences. Also, they have insights on local markets/regions they share better to understand the home market of potential portfolio companies.
Advice For The Next Generation Of Investors And Entrepreneurs
It has become clear to European leaders that Europe needs to stand independently and be independent. 1) Finally, and 2) This provides significant opportunities for the European markets. Therefore, I am glad we chose to keep a European focus with our fund. Of course, now it is the task of European leaders and the financial institutes to become bold and dare to invest more capital in the early stage. Take the suitable lessons of the West and East and make it your own.
