Does Impact Investing Cost You Returns? The Case for "Impact Lock" | Will Richardson, Giant Leap (#150) の全文書き起こし

meet my guest, Will Richardson. 00:02:28.800 --> 00:02:31.120 I was at Melbourne University for a talk. 00:02:31.280 --> 00:02:33.680 There was a keynote and there were five speakers. 00:02:33.919 --> 00:02:43.280 And after the event, and I'm very open and I think untraditional in how I talk about my journey publicly, and I couldn't get out of the room. 00:02:43.360 --> 00:02:46.400 There's just this long line of people because they're so curious. 00:02:46.479 --> 00:02:46.960 They want to know. 00:02:47.360 --> 00:02:48.800 Let's hope that that happens. 00:02:48.960 --> 00:02:50.639 For me, that's what it's all about. 00:02:50.879 --> 00:02:52.479 So then consider a rolling. 00:02:52.639 --> 00:02:54.800 Well, thanks for coming on the show with me today. 00:02:55.039 --> 00:02:56.319 Thanks so much for having me, Scott. 00:02:56.479 --> 00:02:57.680 Great to be with you today. 00:02:58.080 --> 00:03:02.000 Your earliest years growing up was in an army family. 00:03:02.159 --> 00:03:08.319 So your family moved around a bit, and then there was a posting to India when you were nine months old. 00:03:08.479 --> 00:03:13.280 Your mother was a nurse who came to Australia from Malaysia at the age of 17. 00:03:13.439 --> 00:03:15.759 Your father joined the army at 17. 00:03:16.000 --> 00:03:21.120 So tell me what was your life like growing up in that family? 00:03:21.280 --> 00:03:23.199 And what did your parents teach you? 00:03:23.280 --> 00:03:28.000 And not only through words, but by the example through how they lived. 00:03:28.400 --> 00:03:40.400 I think one of the biggest things that's really memorable for me about my childhood, yeah, is that feeling of constantly moving around and not feeling like we had a sense of place, a sense of belonging. 00:03:40.560 --> 00:03:46.319 And that's not just physical in terms of home or schooling or so on. 00:03:46.479 --> 00:04:08.479 But I think it also crossed over into the fact that my mum is Malaysian, my dad is white Australian, and having this sort of third culture kid experience growing up, I'm incredibly grateful for the effort that both my parents put in to give my brother and I a lot of opportunity, really remarkable in terms of schooling and extracurricular activities. 00:04:08.639 --> 00:04:13.199 And one of the things I think that my parents demonstrate in spades is a sense of integrity. 00:04:13.280 --> 00:04:15.599 If they say they'll do something, they always do it. 00:04:16.000 --> 00:04:22.959 You have some serious entrepreneurial DNA on both sides of your family, a great grandfather and your mother's side. 00:04:23.360 --> 00:04:28.879 There's hasn't been a lot of information that was available about my great-grandfather. 00:04:28.959 --> 00:04:43.360 I actually had to seek it out, but I always knew from a very young age that we came from this line of this almost mythical figure who had overcome an immense amount of adversity growing up and then became an entrepreneur. 00:04:43.519 --> 00:04:54.639 And I think that mythology had a big impact on my concept of like resilience, creating something out of nothing, and then also giving back to others with less privilege. 00:04:54.800 --> 00:04:57.040 But his story began in rural China. 00:04:57.120 --> 00:05:05.199 He was part of the Hakka clan, and he had one brother, and his father had passed away when he was very young. 00:05:05.360 --> 00:05:12.399 And so his mother arranged for him to go with like a tinkerer that would go from village to village selling pots and pans. 00:05:12.560 --> 00:05:13.279 And he was very young. 00:05:13.360 --> 00:05:14.959 I think it was like seven or eight or something. 00:05:15.120 --> 00:05:16.639 We couldn't even fathom today. 00:05:16.879 --> 00:05:22.639 He did that and then he came back very unwell, and she swore that she would never let him out of her sight again. 00:05:22.800 --> 00:05:26.160 At the age of 10, a Malaysian trader came through their village. 00:05:26.319 --> 00:05:40.480 Somehow my grandfather convinced him to take him back to Kuala Lumpur because he wanted to work so they could send money back to the family because they were surviving on one bowl of rice a day for the three family members. 00:05:40.720 --> 00:05:43.199 It sounds almost like human trafficking in a way. 00:05:43.360 --> 00:05:57.519 So the trader took my grandfather to Kuala Lumpur and was garnishing his salary from working on a construction site doing labouring to pay for the costs of getting into KL and for his rune and board and so on. 00:05:57.680 --> 00:06:04.319 For my great-grandfather, like that was the life opportunity that changed everything for him because he was with other men working. 00:06:04.399 --> 00:06:09.040 They taught him to go to the market and buy fruits and vegetables and cook for himself. 00:06:09.199 --> 00:06:13.360 He was so malnutritioned, he had to stand on a stool to reach the stove. 00:06:13.600 --> 00:06:17.439 But over time, he was incredibly resilient and self-determined. 00:06:17.600 --> 00:06:22.000 He basically taught himself to read and write and was sending money home for the family. 00:06:22.160 --> 00:06:24.879 As he grew up, one day he was reading the newspaper. 00:06:24.959 --> 00:06:28.399 He saw the government was providing grants for rubber plantations. 00:06:28.480 --> 00:06:32.160 It was an area they wanted to support for export trade. 00:06:32.319 --> 00:06:33.759 So he applied for a grant. 00:06:33.920 --> 00:06:36.480 And from there, the empire begins. 00:06:36.639 --> 00:06:45.519 He became an owner of a number of successful rubber plantations that flowed into becoming an owner of a number of shops and businesses. 00:06:45.839 --> 00:06:54.399 He was building schools and I've actually visited one of the schools he built in Malacca with my my mum and my father and my son. 00:06:54.639 --> 00:07:01.519 And he was sending money back to China to pay for homes and schools to be built back there as well. 00:07:01.920

--> 00:07:07.759 On a tour back to China, where he was inspecting the schools and homes that he built, he actually got kidnapped. 00:07:07.920 --> 00:07:08.240 Wow. 00:07:08.399 --> 00:07:11.920 And they think that it was because probably some some sort of family connection. 00:07:12.000 --> 00:07:17.040 They knew the rich family member was coming back, will kidnap him, and then we'll get a ransom. 00:07:17.360 --> 00:07:21.839 And so his wife was asked to pay the ransom she paid, and then the kidnappers wouldn't release him. 00:07:22.000 --> 00:07:27.759 So one night he was playing chess with the kidnappers, they fell asleep and he escaped. 00:07:28.000 --> 00:07:40.000 As he was escaping, he fell down a like a cliff and damaged his back and ended up hauling his way along roads like crawling until he found some police to help him to get back home. 00:07:40.240 --> 00:07:44.560 So I guess that's that story of like stoicism and resilience. 00:07:44.879 --> 00:07:46.879 Almost like a real life action hero. 00:07:47.120 --> 00:07:48.639 It feels like a Hollywood story, exactly. 00:07:48.959 --> 00:07:51.600 So I see where all the entrepreneurial street came from. 00:07:51.839 --> 00:08:01.759 And then I understand that while most kids were unwrapping toys at Christmas, your grandfather was handing you stock share certificates. 00:08:02.000 --> 00:08:08.399 So were you actually looking at dividend tables or were you actually lobbying hard for a bicycle? 00:08:08.800 --> 00:08:09.839 Yeah, it's sort of both. 00:08:10.000 --> 00:08:13.279 When we were little, we just thought our grandfather was so odd. 00:08:13.519 --> 00:08:16.800 Who else got share certificates for their birthday and Christmas? 00:08:16.959 --> 00:08:25.040 But over time we became incredibly grateful because those shares enabled us to buy a a lot more than just a bike itself. 00:08:25.279 --> 00:08:30.319 But I think the money aside was really not the value that he was communicating to us. 00:08:30.639 --> 00:08:44.639 Every single day our grandfather would take out a uh a pen and the old sort of graph paper, and he would plot the charts of the stocks, and he would help us understand PE ratios and dividends. 00:08:44.879 --> 00:08:52.559 All of that was just really critical for me and yeah, guided me into what I feel is sort of my passion in investing. 00:08:52.879 --> 00:08:54.879 And what kind of student were you? 00:08:55.279 --> 00:09:07.440 I actually had to get my school records recently, and the common theme that was in there was William has enormous potential, but prefers to distract himself and other members of the class. 00:09:07.679 --> 00:09:13.600 I find school settings and formal environments really challenging and just sitting still. 00:09:13.759 --> 00:09:14.639 But I love learning. 00:09:14.799 --> 00:09:17.360 And if I'm interested in something, I'll go incredibly deep. 00:09:17.440 --> 00:09:19.919 And I don't need anyone to motivate me to learn about something. 00:09:20.080 --> 00:09:22.639 But if it's something I don't want to know about, no, not interested. 00:09:22.960 --> 00:09:26.320 And then when you were young did, you have something that you wanted to be when you grew up? 00:09:26.639 --> 00:09:33.279 My dad and I, I remember being at a careers fair at our school, and I remember seeing a stockbroker come in to talk. 00:09:33.440 --> 00:09:37.200 He was in wearing a white shirt and a blue suit, looked very suave, very confident. 00:09:37.360 --> 00:09:40.399 And I thought, ooh, I'd I'd like to be that guy. 00:09:40.559 --> 00:09:45.519 And so you spoke about his pathway, did commerce at Melbourne University, worked at Enstant Young. 00:09:45.600 --> 00:09:46.799 That's how he got into stockbroking. 00:09:46.960 --> 00:09:52.159 At that moment in time, I remember distinctly, I'm like, I need to get into commerce at Melbourne University. 00:09:52.399 --> 00:09:53.759 This is the score that I need. 00:09:53.840 --> 00:09:55.039 These are the subjects I need. 00:09:55.200 --> 00:09:56.960 This is what I need for each subject. 00:09:57.279 --> 00:10:03.679 And then somewhere around age 16, you met the person who's been the biggest influence on your life. 00:10:03.759 --> 00:10:06.000 So tell me about her and how that happened. 00:10:06.320 --> 00:10:13.679 Yeah, so my best friend from high school went on exchange with Rotary to Japan in U 10. 00:10:14.159 --> 00:10:17.840 And he met a girl from back in Melbourne as well. 00:10:18.080 --> 00:10:19.519 Her name was Melanie. 00:10:19.919 --> 00:10:24.639 My friend and I were writing letters to each other because back then we didn't have the internet. 00:10:25.120 --> 00:10:29.679 And then he wanted all three of us to be friends when he came back and she came back. 00:10:29.840 --> 00:10:36.080 And then I fell in love with this girl through writing letters and her photos. 00:10:36.159 --> 00:10:41.279 And yeah, we got together when we were 16 and have been together for nearly 30 years now. 00:10:41.600 --> 00:10:45.200 So he told you about her while he was with her. 00:10:45.679 --> 00:10:55.679 They weren't romantically inclined, they were friends living in Japan on the Rotary program, and he wanted all of us to be friends when we were back in Australia together. 00:10:56.000 --> 00:10:57.039 That's extraordinary. 00:10:57.279 --> 00:11:05.360 And then in 1999, you were off ultimately finally to the University of Melbourne, which was your objective. 00:11:05.600 --> 00:11:09.279 But then you ended up in a mailroom of an accounting firm. 00:11:09.440 --> 00:11:14.720 So what did that experience in the mail room teach you that the commerce degree didn't? 00:11:15.200 --> 00:11:16.720 So much, so much, Scott. 00:11:16.879 --> 00:11:24.879 And I think it's so valuable to start at the bottom and learn everything from first principles. 00:11:25.200 --> 00:11:35.679 Because it's okay to make mistakes and you can ask for help without any sort of repercussion,

which is very different if you're senior and you're making mistakes. 00:11:35.919 --> 00:11:46.960 What it taught me more than anything was how people treat other people where they don't think there's anything that's useful that they can get out of them or they don't have any sort of status. 00:11:47.200 --> 00:11:51.120 And what it also taught me is that there are some really amazing humans out there. 00:11:51.279 --> 00:11:57.759 One story is I remember a guy, he was a graduate, and every time he'd come into the mailroom, he'd say, Hey, Will, how are you going? 00:11:57.919 --> 00:12:00.480 with a big smile on his face, and it's really engaged. 00:12:00.559 --> 00:12:07.120 And he was like Melbourne University's rising star, who's incredibly accomplished, but just very, very generous. 00:12:07.360 --> 00:12:12.240 Funnily enough, I think it was about 10 years later, I get this call from this guy I hadn't spoken to. 00:12:12.480 --> 00:12:15.840 Hey, Will, I'm looking at joining the business that you work at. 00:12:16.000 --> 00:12:16.879 What do you think about that? 00:12:16.960 --> 00:12:18.559 And can you be a reference for me? 00:12:18.720 --> 00:12:26.080 So I'm not saying you should do things because of reciprocity or anything like that, but yeah, I think those people stand out to me. 00:12:26.639 --> 00:12:30.080 2006, you joined the CVC Group. 00:12:30.240 --> 00:12:38.080 And for most of my listeners who are outside of Australia, this is not the CVC Capital Partners based in London. 00:12:38.320 --> 00:12:43.600 So set astray, tell us what the CVC Group is and what your work there actually was. 00:12:43.919 --> 00:13:00.480 So that one of Australia's oldest private equity groups, they're initially established, I think it was a government sort of program, the Managed Investment Corporation Scheme or something like that, to try and stimulate investment into private markets and innovation in Australia. 00:13:00.639 --> 00:13:03.759 So they had offices in Melbourne and Sydney. 00:13:04.080 --> 00:13:06.960 They were incredibly opportunistic. 00:13:07.200 --> 00:13:13.039 So in terms of being able to invest into companies at the early stage and later stage. 00:13:13.200 --> 00:13:17.600 We worked on a lot of acquisitions of businesses and divestitures, restructures. 00:13:17.679 --> 00:13:22.879 We did cap raisings, debt raising, ultimately to then list companies on the stock exchange. 00:13:23.120 --> 00:13:31.039 So it was incredible because I had to really be agile and I could be dropped into one business one day and into another another day. 00:13:31.120 --> 00:13:33.360 And I feel like that was my second apprenticeship. 00:13:33.679 --> 00:13:42.080 So what did seven years of listings and turnarounds teach you about governance, capital structure, maybe some things you still use today? 00:13:42.399 --> 00:13:44.080 It taught me so many things. 00:13:44.159 --> 00:13:53.360 And my business partner, Rachel Yang, tells me that I quote my old boss so many times that if he knew how much I quoted him, that he'd be really flattered. 00:13:53.600 --> 00:13:58.159 Simple things like business goes where it's wanted and stays where it's serviced. 00:13:58.320 --> 00:14:07.679 I learned a huge amount about the differences between debt and equity and understanding risk profiles, and especially around preferred equity and mezzanine debt and so on. 00:14:07.919 --> 00:14:19.200 And I think governance-wise, one of the big differences I've I really see between the private equity approach and the venture capital approach, our approach at CVC was very dependent on control. 00:14:19.840 --> 00:14:32.960 So controlling everything at every level, whether it's who we have to make decisions on the board and the composition through to how we select the CEO and the CFO, all the way through to the minutes and the bank accounts, everything was controlled, right? 00:14:33.279 --> 00:14:45.919 Whereas what I learned in venture capital, and this is one of the biggest mistakes that I made when we were looking to invest into our first companies, was I was looking to apply that same mental model to venture. 00:14:46.159 --> 00:14:51.600 And I remember a a startup founder saying to me once, Will, you're asking the wrong questions. 00:14:53.759 --> 00:15:10.320 And in that moment, I got my back up that it was actually a gift because it helped me to understand that when you're taking minority positions, all of this diligence you're doing, trying to protect yourself, falls away because tomorrow everything else can be different and it's changed. 00:15:10.399 --> 00:15:12.159 And you've really got to trust the founders. 00:15:12.480 --> 00:15:23.840 But at the same time, it's nuanced and our approach to governance is very much guided by our deep understanding of risk and what we can actually control and what we can't control. 00:15:24.320 --> 00:15:31.840 What did you have to unlearn from the private equity experience when you moved into early VC investing? 00:15:32.320 --> 00:15:46.240 In terms of the weighting, with a profitable business, with established customers who've been with you for years, with a supply chain that's working, a team that's working, the people in the business are important, but they can be replaced. 00:15:46.720 --> 00:15:50.320 Just like the head of any sovereign state can be replaced. 00:15:50.480 --> 00:15:58.240 Whereas if you're putting money into an early stage business and the founders leave after six months, you're in a world of pain. 00:15:58.639 --> 00:16:05.200 Because we we could step into those businesses that we're working, we could find alternative operators. 00:16:05.600 --> 00:16:09.279 But for our venture-backed businesses, we run a portfolio approach. 00:16:09.360 --> 00:16:12.080 We will never be able to run those businesses well as those founders. 00:16:12.320 --> 00:16:18.559 And so the weighting between team is heavily skewed on the VC side. 00:16:18.720 -->

00:16:22.960 And therefore, we need to be doing different types of assessments of founders. 00:16:23.279 --> 00:16:33.440 So we actually worked with a psychologist who interviewed uh US VCs and founders and Australian VCs and founders to look at the attributes for what was really important. 00:16:34.000 --> 00:16:46.000 And so some of the things that were like red flags were being egotistical, lack of self-awareness, cunning, lack of trustworthiness naturally. 00:16:46.240 --> 00:16:50.720 And table stake, someone needs to be adaptive, they have to have some drive. 00:16:50.879 --> 00:16:55.519 But in terms of outperformance, they really have to be able to articulate a vision and hold a vision. 00:16:55.679 --> 00:16:59.120 They need to have immense grit and they need to be able to look around corners. 00:16:59.360 --> 00:17:03.279 We tried to do it initially like scoring on a checklist with those attributes. 00:17:03.440 --> 00:17:07.759 We tried to get founders to do psychological assessments, which they're really reluctant to do. 00:17:07.920 --> 00:17:16.720 But I think what it's done is just helped us to identify the blind spots that we need to be careful for and that we're all assessing anytime we're backing a founder. 00:17:17.119 --> 00:17:22.799 You got the pinstripe suit that you wanted, the Collins Street job and private equity. 00:17:23.039 --> 00:17:26.880 And somehow in the end, it wasn't quite working for you. 00:17:26.960 --> 00:17:30.880 What was happening to you or in you at that point? 00:17:31.279 --> 00:17:36.559 I think what was happening was that my world was becoming increasingly narrow. 00:17:36.799 --> 00:17:44.799 And we work on these equations, but at the end of the day, they're just coming down to our return on investment and nothing more. 00:17:44.960 --> 00:17:47.039 My time at EY was very backward looking. 00:17:47.119 --> 00:17:53.119 Uh CBC was very forward-looking, which was great, but forward looking only in a very narrow aperture. 00:17:53.359 --> 00:17:57.200 I felt like I wanted to do something that was broader and being additive. 00:17:57.440 --> 00:18:09.039 And I ignored it for a long time, but things started to send me signals that I couldn't ignore it anymore, so that my relationship with my wife, now wife, but then girlfriend, broke down. 00:18:09.279 --> 00:18:10.880 My health really suffered. 00:18:11.119 --> 00:18:18.640 A lot of the friendships that I'd sort of taken for granted were fading, and I was just finding it harder to get out of bed in the morning. 00:18:18.799 --> 00:18:22.880 So yeah, that was really a catalyst for me to try and look for something else. 00:18:23.359 --> 00:18:27.440 It truly impacted you not only emotionally but physically. 00:18:27.839 --> 00:18:33.039 Attended a conference in Melbourne that was RMIT, universities, Global Shifts. 00:18:33.200 --> 00:18:39.359 And I remember doing a session on happiness, and there was the facilitator was saying, Okay, I want everyone to

do an exercise. 00:18:39.519 --> 00:18:43.359 I need you to write down what makes you come alive. 00:18:43.680 --> 00:18:45.200 Great provocative statement. 00:18:45.440 --> 00:18:54.480 After the session, I was sitting at a bar close by and I was looking at my notebook and I saw what makes me come alive. 00:18:54.559 --> 00:18:57.279 And then I wrote down underneath how I feel now, and I said, I feel dead. 00:18:57.440 --> 00:19:02.079 And at that point, I just fell off my stool at the bar. 00:19:02.400 --> 00:19:09.680 And I woke up and there was one of the waitresses was just like, I was lying on her lap on the floor, and she's like, Are you okay? 00:19:09.839 --> 00:19:11.279 Do you have low blood pressure? 00:19:11.519 --> 00:19:16.480 She had low pressure, so she could get me an Icy Pole that she keeps for these sort of circumstances. 00:19:16.640 --> 00:19:22.079 That the barman had seen me that I was falling, and he'd luckily caught me and laid me on the floor. 00:19:22.400 --> 00:19:25.839 So my body was telling me, Hey, you gotta listen, Will. 00:19:26.160 --> 00:19:30.960 And then you went to a conference in Switzerland and near Geneva. 00:19:31.119 --> 00:19:37.519 And as someone who's lived and worked around Geneva for over 30 years, I'm very interested in hearing this one out. 00:19:37.839 --> 00:19:39.839 Tell me what happened when you arrived. 00:19:40.319 --> 00:19:42.400 I had applied to attend this conference. 00:19:42.559 --> 00:19:44.319 It was 300 people invite only. 00:19:44.640 --> 00:19:48.559 My application was I work in private equity on learning about impact investing. 00:19:48.640 --> 00:19:58.319 And I've heard that this conference is where I can learn about it because it was convened by Mahatma Gandhi's grandson that had representatives from finance, you know, don't nations, not for profits. 00:19:58.480 --> 00:20:00.079 It was very broad-based. 00:20:00.319 --> 00:20:08.640 When I was registering, I remember the lady saying to me on a Sunday night, William Richardson, we are so delighted to have you here. 00:20:08.880 --> 00:20:12.640 We can't wait for your presentation on impact investing on Wednesday morning. 00:20:12.799 --> 00:20:15.359 And similarly, I just felt like I was going to faint again. 00:20:15.440 --> 00:20:18.319 I am a fainter, but like I felt like I was just going to go. 00:20:18.480 --> 00:20:23.359 And I remember looking out and seeing this little train just leaving the station. 00:20:23.440 --> 00:20:28.240 I'd taken so many planes and trains and cable cars and this little train at the top of the mountain. 00:20:28.559 --> 00:20:29.759 So I couldn't escape. 00:20:30.000 --> 00:20:36.480 And I just decided to turn up and started going to the breakfasts and lunches and dinners that they'd organized. 00:20:36.559 --> 00:20:46.079 And funnily enough, met the originator of the microfinance program at BMP Parabah at a lunch and invited him to join my panel. 00:20:46.400 --> 00:20:53.920 I met a family office from the UK who had made some small sort of social enterprise investments. 00:20:54.000 --> 00:20:57.759 And I met an Ashoka fellow from Africa, so a social entrepreneur. 00:20:57.920 --> 00:20:59.680 And I invited them all to my panel. 00:21:00.000 --> 00:21:10.640 And I wore my blue suit and my white shirt and my tie and did a Wikipedia-based presentation to frame everything up about what impact investment was, and then interviewed the panel. 00:21:10.799 --> 00:21:20.079 And coincidentally, someone from Melbourne was in that session, loved the session, and made some very critical introductions for me when I got home. 00:21:20.480 --> 00:21:24.319 When you went out there, you knew you were going to give a presentation or no. 00:21:24.559 --> 00:21:25.759 No, I think it was just a mix-up. 00:21:26.000 --> 00:21:28.799 I think they misread my application letter. 00:21:28.880 --> 00:21:30.079 I I don't know what happened. 00:21:30.240 --> 00:21:32.559 Who was the person from Melbourne that was there? 00:21:32.880 --> 00:21:34.400 Oh, his name was Greg Phillips. 00:21:34.480 --> 00:21:40.400 So he's a university professor, one of the first like indigenous professors in the in his specialty area. 00:21:40.559 --> 00:21:46.480 And he introduced me to a lady called Jan Owen, who was one of the founders of Social Ventures Australia. 00:21:46.640 --> 00:21:47.680 So it was really critical. 00:21:48.079 --> 00:21:50.799 So what happened when you got back home? 00:21:51.200 --> 00:21:54.400 I went and met Jan because of that introduction from Greg. 00:21:54.480 --> 00:21:59.759 And I told Jan what I wanted to do, and she said, Oh yeah, well, you know, you've got all the right commercial background. 00:22:00.319 --> 00:22:02.000 But have you volunteered before? 00:22:02.160 --> 00:22:04.000 Have you been on a not-for-profit board? 00:22:04.240 --> 00:22:05.920 Have you done X, Y, Z? 00:22:06.000 --> 00:22:07.279 And I'm like, nope, nope, nope, nope, nope. 00:22:07.440 --> 00:22:10.720 Because I was going hoping she'd like get me a job at Social Ventures Australia, right? 00:22:10.880 --> 00:22:14.240 Like me and the hundreds of others that go to have a coffee with her. 00:22:14.400 --> 00:22:16.799 That didn't happen, but she gave me a blueprint. 00:22:16.880 --> 00:22:19.119 And so I went and did all of those things. 00:22:19.200 --> 00:22:23.200 And I volunteered my time in a bunch of different ways, writing business plans. 00:22:23.279 --> 00:22:27.440 I helped a Buddhist monk get funding for a center in Melbourne. 00:22:27.759 --> 00:22:33.839 I also joined a not-for-profit board called the Human Rights, Arts and Film Festival. 00:22:34.000 --> 00:22:35.440 Did that for four years. 00:22:35.599 --> 00:22:44.960 And so as a result of taking action based on that blueprint, it just opened up a whole different network of people, network of new opportunities. 00:22:45.119 --> 00:22:54.400 But then three different people ended up introducing me

to small giants, part of the Lidman family office, who were the ones who were bringing the School of Life to Australia. 00:22:54.559 --> 00:22:59.839 And so I went and volunteered and helped them out setting up their pop-ups and got to know them. 00:23:00.240 --> 00:23:03.200 Somewhere along the line you had about 50 coffees. 00:23:03.440 --> 00:23:06.640 So tell me about that and which one changed everything. 00:23:07.039 --> 00:23:13.680 For me, the 50 coffees, I can't remember where I got the idea from, but it's about increasing your surface area of luck. 00:23:13.920 --> 00:23:18.000 And at the outset, I didn't know who all of those 50 would be. 00:23:18.160 --> 00:23:21.759 But you meet one person, they introduce you to someone else, and so on. 00:23:22.000 --> 00:23:29.200 One of the biggest changes was I actually saw Simon Griffiths, the founder of Who Gives a Crap at a TED Talk. 00:23:29.359 --> 00:23:41.119 He was talking about two sort of businesses he was looking to build, the for-profit bar giving 50% of its profits to charities in Africa to build toilets, and similarly the toilet paper company, Who Gives a Crap. 00:23:41.359 --> 00:23:46.559 And I remember seeing him talk, and I followed him up afterwards, and I said, that was just remarkable. 00:23:46.640 --> 00:23:47.839 Can I come have a coffee with you? 00:23:47.920 --> 00:23:51.599 Maybe I've got people in my network that could maybe invest in your company. 00:23:51.759 --> 00:23:57.680 And yeah, I caught up with him and I was just blown away by his commercial acumen. 00:23:57.759 --> 00:24:08.079 And I just felt like he had this very astute, sharp mind, but at the same time had a really strong desire to use those organizations to deliver genuine impact. 00:24:08.480 --> 00:24:10.799 And the 50 copies, was that your idea? 00:24:10.960 --> 00:24:12.240 Or did someone tell you? 00:24:12.640 --> 00:24:15.680 I feel like I'm a Bower bird and I've grabbed that from somewhere else. 00:24:15.839 --> 00:24:17.599 I don't think that's an original idea of mine. 00:24:18.000 --> 00:24:28.880 2013, you ended up leaving CVC, and then you joined the Impact Investment Group, and I believe you were employee number one. 00:24:29.119 --> 00:24:35.519 So what was the brief and what did Impact Investing in Australia look like back then? 00:24:35.920 --> 00:24:37.519 We really didn't have a brief. 00:24:37.680 --> 00:24:39.359 It was genuine startup. 00:24:39.599 --> 00:25:06.000 I used to fly to Sydney to try and raise capital for deals that we're putting together in the property space because we're basically taking real estate that was not environmentally friendly and upgrading it to then attract better quality tenants, often government tenants, to then be able to increase the yield and the cap rate to sell them at a substantial uplift for our investors. 00:25:06.160 --> 00:25:12.240 The strategy there was in Australia, and especially back then, no one had any idea about impact because that was just philanthropy. 00:25:12.480 --> 00:25:15.200 Venture, very few venture funds in Australia at all. 00:25:15.359 --> 00:25:20.640 Most of the money would flow into real estate and listed equities and cash. 00:25:20.799 --> 00:25:26.799 And so if we wanted to start anywhere, we needed to start with property because we'd seen other people start somewhere else. 00:25:26.960 --> 00:25:29.200 There was not a box for people to put them in. 00:25:29.359 --> 00:25:30.880 So they just they all failed. 00:25:31.039 --> 00:25:32.640 So we thought we'd start with property. 00:25:32.799 --> 00:25:41.119 And yeah, I'd fly to Sydney and I'd sleep on my brother's couch, and then I'd hit the pavement and go and see all the people that I used to see and pitch and product. 00:25:41.519 --> 00:25:44.960 You were employee number one, but it wasn't your company. 00:25:45.119 --> 00:25:46.720 How did this come about? 00:25:47.039 --> 00:25:51.039 I'd met them because I'd helped with the School of Life project. 00:25:51.359 --> 00:25:54.559 And they had said, Well, you seem great. 00:25:54.720 --> 00:25:55.200 What do you do? 00:25:55.279 --> 00:25:56.480 And I said, I work in investment. 00:25:56.559 --> 00:25:57.440 And they're like, What do you want to do? 00:25:57.519 --> 00:25:59.279 And I said, I want to do impact investment. 00:25:59.440 --> 00:26:01.839 They're like, oh, we're looking at starting an impact investment. 00:26:01.920 --> 00:26:03.440 So mighty income work for us. 00:26:03.759 --> 00:26:10.400 So part of it was then, but it was also coincidentally part of what I was trying to do at the same time. 00:26:10.640 --> 00:26:12.160 I did pitch them an idea though. 00:26:12.319 --> 00:26:14.720 I pitched them the first fund idea. 00:26:14.880 --> 00:26:17.119 I still have the deck somewhere of building Giant Leap. 00:26:17.359 --> 00:26:18.480 It wasn't called Giant Leap back then. 00:26:18.559 --> 00:26:20.160 I called it a B Corp fund or something. 00:26:20.319 --> 00:26:21.200 It didn't land back then. 00:26:21.279 --> 00:26:26.079 And that was part of their thinking that it was too early in the market to try and go out to market with that. 00:26:26.319 --> 00:26:30.880 And that's why I wanted to start with property and then move to renewables and then Giant Leap later. 00:26:31.279 --> 00:26:31.519 All right. 00:26:31.680 --> 00:26:43.359 So you went from a private equity environment into something totally different, trying to build an impact practice inside of a values-driven family office. 00:26:43.599 --> 00:26:49.519 How is that kind of family office capital in that environment different from institutional money? 00:26:49.920 --> 00:26:55.200 I'm now a non-family, non-executive director of the Alberts family out of Sydney. 00:26:55.440 --> 00:27:02.000 I think I'm into my seventh or eighth year, I can't remember, but they're a fifth generation family and the Libman's third gen. 00:27:02.319 --> 00:27:09.359 I have not seen any family offices

operate in the same way, even within the same family line. 00:27:09.519 --> 00:27:18.880 And it's not surprising because even say if I make decisions to invest for myself versus making them with my wife, we'll make different decisions collectively. 00:27:19.039 --> 00:27:22.559 And I think that applies in the context of a family office. 00:27:22.960 --> 00:27:27.519 So what was unique about where you landed in the impact investment group? 00:27:27.920 --> 00:27:31.200 So I think there are sort of three things that are really prominent. 00:27:31.359 --> 00:27:34.480 I think one is Barry Liberman. 00:27:34.640 --> 00:27:42.640 And I think one of the biggest elements is Barry's desire to apply a values lens to investing. 00:27:42.799 --> 00:27:45.359 And a big part of it is the contradiction. 00:27:45.519 --> 00:27:55.440 Why are we making money from big miners and gambling and so on, and then donating through our foundation to address the problems that are being created over here? 00:27:55.680 --> 00:27:57.359 So I was looking for coherence. 00:27:57.440 --> 00:27:58.799 That's the first thing I'd say. 00:27:59.039 --> 00:28:02.079 The second is Danny's Berry's husband. 00:28:02.240 --> 00:28:04.240 They're not afraid of going first. 00:28:04.640 --> 00:28:07.119 In investment, people like to follow. 00:28:07.279 --> 00:28:09.680 But in Australia, even more so. 00:28:09.920 --> 00:28:13.759 But I I have utmost respect that they are willing to go first. 00:28:13.920 --> 00:28:19.440 And the third, they respond to what they feel and who they feel connected to. 00:28:19.599 --> 00:28:24.400 They apply a huge amount of weight to instinct. 00:28:24.799 --> 00:28:33.039 So when you started thinking about the dedicated impact venture fun, what was the model in your head that you were building from? 00:28:33.359 --> 00:28:37.039 It was sort of the confluence of a number of different threads. 00:28:37.279 --> 00:28:45.279 Because I was always scouring the world for what was happening, and I felt like the US and Europe were always ahead of Australia. 00:28:45.519 --> 00:28:53.680 And then in Australia, saw that there was like a gap to back people like Simon Griffiths from Who Gives a Crap? 00:28:53.920 --> 00:28:55.200 He was having to head over to the US. 00:28:55.279 --> 00:29:00.000 That's why he was at SoCap to try and find the capital for his business. 00:29:00.240 --> 00:29:03.200 There were sort of the points that were saying I had to pay attention. 00:29:03.519 --> 00:29:15.200 So then around 2016, you pitched the idea of launching Australia's first venture capital fund that was 100% dedicated to impact, which is Giant Lead, right? 00:29:15.440 --> 00:29:18.720 Tell me how Giant Lead came into existence here. 00:29:19.119 --> 00:29:32.079 We couldn't have done it without being within the Small Giants family group and within the Impact Investment Group, which is 100% owned by the Small Giants family, the multi-asset class manager with the impact lens.

00:29:32.319 --> 00:29:37.039 And then I said to myself, we don't have the track record internally. 00:29:37.200 --> 00:29:42.559 We'd made one investment into a car next door, Australia's biggest peer-to-peer car sharing platform. 00:29:42.720 --> 00:29:49.119 And they subsequently got it acquired by Uber and we made just under 10X, but I didn't have that proof point then. 00:29:49.359 --> 00:29:53.119 I'd only had the proof point that there was some deal flow that we could invest in. 00:29:53.359 --> 00:30:00.720 So we needed to, again, a bit like the panel that I assembled at that conference overlooking Lake Geneva, I needed to assemble a team. 00:30:00.880 --> 00:30:08.480 So brought in Pete Cameron, he's a serial entrepreneur with many businesses in his portfolio as a founder, but also as an investor. 00:30:08.720 --> 00:30:12.559 His computer virus software was on one in five computers in Australia. 00:30:12.880 --> 00:30:18.160 Kylie Charlton, who was and is the doyen of Impact Investing, she was the lady I used to go see at conferences. 00:30:18.319 --> 00:30:26.319 And Adam Milgram, who just incredible operator, he has his own family office called Triple, which is another impact-driven family office. 00:30:26.480 --> 00:30:30.480 So together we cornerstoned the fund and then went out and raised. 00:30:30.640 --> 00:30:35.920 So we needed five from our group, and then we needed to raise a minimum of five from others to get this special tax status. 00:30:36.000 --> 00:30:38.559 And then we ended up oversubscribed with 15. 00:30:38.880 --> 00:30:41.359 I understand the timing on the launch was memorable. 00:30:41.440 --> 00:30:42.799 What happened on that day? 00:30:43.200 --> 00:30:52.480 The I am went out to the database just as my wife was going into the operating theater to have her first child, who's now 10 years old. 00:30:52.799 --> 00:30:55.359 She had almost two babies that day. 00:30:56.000 --> 00:30:56.559 Put it that way. 00:30:56.720 --> 00:30:56.880 Yeah. 00:30:57.200 --> 00:31:00.079 And then the raise itself, tell me what made it so hard. 00:31:00.480 --> 00:31:01.839 I think it's a few things. 00:31:02.079 --> 00:31:11.440 As I said before, Australians back then really allocated their money to property, listed shares, and cash. 00:31:11.599 --> 00:31:19.440 There are a few private market funds, but it in terms of the split between private equity and venture capital, majority was private equity. 00:31:19.680 --> 00:31:26.079 And there were, I think at the time, like less than half a dozen VC funds that are raised more than we did at that time. 00:31:26.319 --> 00:31:36.160 So it was just like banging your head against a wall trying to explain things to people about tenure funds and this is how the fees work and this is what we're trying to build, and this is what power law looks like. 00:31:36.400 --> 00:31:46.960 But then also if when you're applying impact on top of that, very difficult because you're getting people to wrestle with two different concepts that in ways feel at odds with each other. 00:31:47.119 --> 00:31:56.640 I for me, I think with capital raising, and this goes to what we look for with our founders, there's a huge law of averages sort of rule that applies to cap raising. 00:31:56.720 --> 00:31:57.839 You've got to kiss a lot of frogs. 00:31:58.079 --> 00:32:03.119 You just gotta get out there and as my old boss used to say, you're gonna wear out the shoe leather on your shoes. 00:32:03.279 --> 00:32:05.039 I felt like it was what I was meant to be doing. 00:32:05.359 --> 00:32:08.000 You gotta say 15 million Aussie, right? 00:32:08.160 --> 00:32:08.720 Yeah, that's right. 00:32:09.039 --> 00:32:14.720 So then you finally get rolling and you can see the way forward, green road ahead. 00:32:14.880 --> 00:32:17.519 And then in 2020, COVID hits. 00:32:17.759 --> 00:32:22.880 Lockdowns, every company in your portfolio suddenly has its cash flow at risk. 00:32:23.119 --> 00:32:25.519 So what did you do that first week? 00:32:25.839 --> 00:32:36.240 The first thing that we thought about was communicating to our investors that we were doing something rather than sticking our heads in the hole. 00:32:36.480 --> 00:32:38.400 So we said this is what we need to do. 00:32:38.559 --> 00:32:54.160 And the plan was I was going to record a video to acknowledge what was happening, to say what we'd done, and to commit to continue increasing the frequency of reporting until we felt like we had got to a new baseline. 00:32:54.480 --> 00:33:00.880 So we reviewed the portfolio, we ran a matrix, building out a traffic light system from memory. 00:33:01.039 --> 00:33:04.559 The rubric was is this headwind, tailwind, or neutral? 00:33:04.799 --> 00:33:15.279 Looking at where the capital is and in terms of runway and therefore where we would need to spend more of our time or less of our our time. 00:33:15.519 --> 00:33:28.559 Positively, there were a number of companies in the portfolio that were effectively commodities and really benefited from the lockdowns and the changes, and others where revenues got just got turned off overnight. 00:33:28.960 --> 00:33:35.519 A year later, you spun out IIG and became independent and management-owned. 00:33:36.160 --> 00:33:38.000 What drove that decision? 00:33:38.559 --> 00:33:46.720 So I remember Danny giving me a call and he said, Will, you've been with us eight years and achieved so much more than we ever expected from Giant Leap. 00:33:46.880 --> 00:33:55.200 And we feel like being in your hands, you'll be able to spread your wings and achieve so much more than within the group structure. 00:33:55.440 --> 00:34:05.200 So we came to build out a really mutually beneficial arrangement where if we were successful, the the small giants group would benefit as well. 00:34:05.359 --> 00:34:16.880 And they also provided us with runway operationally, always be grateful, financial services license and accounting and fund admin and

processing all of the application forms. 00:34:17.039 --> 00:34:29.119 That is often not spoken about with investment managers and maybe for the young ones looking to building funds, it all looks fun, doing deals and that sort of thing, but there's so much administration in what we do. 00:34:29.280 --> 00:34:33.440 So to have that acknowledgement and support from them was really remarkable. 00:34:33.599 --> 00:34:34.400 And they were right. 00:34:34.559 --> 00:34:40.159 When we made that shift to be independent, the market responded in terms of voting with the capital for fund two. 00:34:40.639 --> 00:34:47.840 I've interviewed more than a hundred fund managers on this show, and I don't think I've met a single one who enjoyed their first fundraise. 00:34:48.079 --> 00:34:50.639 Your first fund took around two years. 00:34:51.119 --> 00:34:55.519 Fund two, the first 15 million Aussie came in under four weeks. 00:34:55.599 --> 00:34:56.800 So what changed? 00:34:57.119 --> 00:34:59.119 I think maybe there were five things. 00:34:59.440 --> 00:35:02.960 Firstly, we had existing investors from fund one. 00:35:03.280 --> 00:35:10.960 Two, we had gone from looking at like 100 deals a year to then, I don't know, call it 600 a year. 00:35:11.119 --> 00:35:19.760 The market had completely shifted in terms of investment universe and the lexicon, people's understanding of venture capital, people's understanding of impact. 00:35:20.000 --> 00:35:26.559 We had a portfolio of 20 companies that the investors could look at from fund one and look at the marks. 00:35:26.800 --> 00:35:30.000 One thing that I don't think is spoken about, it's people were stuck at home. 00:35:30.239 --> 00:35:35.039 And it meant I didn't physically have to go to their office to pitch. 00:35:35.199 --> 00:35:38.320 I could roll from Zoom to Zoom to Zoom to Zoom. 00:35:38.480 --> 00:35:39.760 It's far more efficient. 00:35:40.000 --> 00:35:44.320 And people were interested in what was happening with the world because they had a whole lot more time. 00:35:44.480 --> 00:35:46.559 And rates were at a different place. 00:35:46.719 --> 00:35:48.159 The economy was at a different place. 00:35:48.239 --> 00:35:48.960 It was a different time. 00:35:49.360 --> 00:35:52.159 That takes us to the Giant Leap of today. 00:35:52.320 --> 00:35:54.960 So give me a high-level overview of Giant Leap. 00:35:55.280 --> 00:35:59.840 Giant Leap's mission is to back visionary founders, solving the world's most pressing problems. 00:36:00.079 --> 00:36:02.079 Fund one and fund two have the same strategy. 00:36:02.320 --> 00:36:10.079 So we are investing in companies across climate and health and people with solutions with some sort of technology that can scale. 00:36:10.159 --> 00:36:17.280 So as the business scales, the revenues and ideally profits, but also the impact scales with it. 00:36:17.440 --> 00:36:29.119 In terms of our portfolio strategy, 20 to 25 companies, fund one was predominantly season series

A, and fund two, we've been able to go a bit earlier and make some precedes investments. 00:36:32.480 --> 00:36:39.840 So you have about 65 million in total across two different funds, and how many investors and what type of investors? 00:36:40.239 --> 00:36:48.400 Yeah, so under 100 for fund one and at 150 for fund two, we only wholesale in Australia. 00:36:48.639 --> 00:36:53.440 So we have family offices, we have high net worth individuals. 00:36:53.679 --> 00:36:57.760 It could be, you know, someone who worked at a close bracket investment bank. 00:36:57.840 --> 00:37:02.320 It could be someone who was a founder themselves and had a big exit, like a Pete Cameron. 00:37:02.719 --> 00:37:11.280 We have our first institutional investor, so NRMA, the National Motoring Association in New South Wales. 00:37:11.440 --> 00:37:13.360 So they've invested into Fund 2. 00:37:13.519 --> 00:37:17.199 They were actually the first investor in Macquarie Bank, as a fun fact. 00:37:17.440 --> 00:37:24.960 One of the big things, Scott, for us, was for fund one, we're trying to pitch something was new, both VC and impact. 00:37:25.119 --> 00:37:30.800 How do you make it as similar to VC structurally as possible to remove the complexity? 00:37:31.039 --> 00:37:36.800 So 10-year funds, we had 50% reserve for initial checks, 50% for follow-on. 00:37:37.119 --> 00:37:40.000 We had the same 2 and 20 fee structure. 00:37:40.320 --> 00:37:49.119 Everything was the same, and we used the ESVCLP structure, early stage venture capital limited partnership structure, which a government implemented to stimulate innovation. 00:37:49.280 --> 00:37:55.920 So all of that just looked the same to give investors comfort that they could make the decision to allocate. 00:37:56.239 --> 00:38:03.679 Tell me what impact lock means and give me the version that you'd give an investor those 30 seconds. 00:38:04.159 --> 00:38:09.599 So impact lock is where the impact is embedded in the revenue model. 00:38:09.760 --> 00:38:10.159 Why? 00:38:10.320 --> 00:38:11.760 Because it can't be stripped out. 00:38:12.000 --> 00:38:18.400 You can strip out a commitment to make donations, or you just don't make profit and don't make any donations. 00:38:18.639 --> 00:38:24.400 You can say you're going to hire staff that from disadvantaged backgrounds, but then automation can displace them. 00:38:24.559 --> 00:38:29.280 Whereas if what you're selling has impact embedded in it, that's a sure thing. 00:38:29.599 --> 00:38:34.159 And what kind of company fails that test that might surprise people. 00:38:34.559 --> 00:38:45.519 Maybe rather than talking to failure, maybe I'll talk to a company in our portfolio that people may misunderstand how we look at their impact. 00:38:45.840 --> 00:38:47.840 So back to who gives a crap. 00:38:48.000 --> 00:38:57.039 They're known for donating 50% of their profits to build toilets in countries in Africa to provide clean sanitation. 00:38:57.199 --> 00:39:04.400 So a lot of people say, oh, that's why Giant Leap invested in that company because they're one of the biggest corporate donors in Australia. 00:39:04.639 --> 00:39:06.639 And for us, that's not the case. 00:39:06.800 --> 00:39:08.639 So who gives a crap's a B Corp? 00:39:08.880 --> 00:39:09.840 That's not why we've invested. 00:39:09.920 --> 00:39:15.599 It's not the how of what they do, and it's not the what in terms of the profit distribution. 00:39:15.840 --> 00:39:17.920 It's actually the what they sell. 00:39:18.239 --> 00:39:23.760 So the toilet paper that they sell is made from recycled textbooks. 00:39:24.000 --> 00:39:28.559 So it reduces water use, it reduces the amount of urge and paper. 00:39:28.719 --> 00:39:36.719 And for the premium product, it's a sustainably grown bamboo that makes that pop, which again is far better for the world. 00:39:36.880 --> 00:39:39.440 And I can give you another example about Clean Slate Clinic. 00:39:39.519 --> 00:39:39.760 Sure. 00:39:40.000 --> 00:39:43.920 So we're really proud of our recent investment in Clean Slate Clean Clinic. 00:39:44.159 --> 00:39:45.920 P is just remarkable. 00:39:46.079 --> 00:39:55.039 So they are looking to address the really big problem of addiction in our society, substances like alcohol and drugs, and the access issue. 00:39:55.199 --> 00:40:06.639 So private residential rehab could be sort of$16,000 for a stay, whereas CleanSight Clinic's telehealth solution is a quarter of that, around$4,000, talking Aussie. 00:40:06.800 --> 00:40:08.400 And I guess COVID's a good example. 00:40:08.559 --> 00:40:11.920 It was really difficult for people to get out to go to rehab if they needed to back then. 00:40:12.079 --> 00:40:14.800 Whereas this telehealth solution is incredibly valuable. 00:40:14.880 --> 00:40:20.079 But also in the workplace, it's hard to tell your boss, hey, I've got an addiction issue, I need to go to rehab. 00:40:20.239 --> 00:40:23.199 Whereas this solution is a lot more flexible. 00:40:23.440 --> 00:40:31.840 And in terms of the impact they're having, the relapse rate is about one quarter of rehab in person. 00:40:32.000 --> 00:40:37.119 So again, as the impact is embedded in the revenue model when the business scales, the impact scales. 00:40:37.519 --> 00:40:41.679 You've said that you back missionaries and not mercenaries. 00:40:41.840 --> 00:40:49.119 Have you ever backed a mercenary who turned out to be great or a missionary who ended up being a mercenary? 00:40:49.519 --> 00:41:00.320 I think our initial approach to backing missionaries over mercenaries was really important to establish authenticity. 00:41:00.480 --> 00:41:05.519 We think authenticity is important to attract the right talent, investors, and convince customers. 00:41:05.679 --> 00:41:12.400 But we think it was lacking in terms of what we think you need to succeed in today's world. 00:41:12.639 --> 00:41:16.159 And instead of missionaries, we think of talking about visionaries. 00:41:16.400 -->

00:41:30.079 And visionary founders solving these problems, they still need that authenticity, but they need to have a the strength in terms of capital raising, because it's a it's a much scarcer market out there in terms of capital availability. 00:41:30.159 --> 00:41:31.440 You've got to be able to raise capital. 00:41:31.599 --> 00:41:33.440 Two, you've got to make hard decisions. 00:41:33.599 --> 00:41:38.000 And if the business needs to be downsized, you've got to do that quick to stop the burn. 00:41:38.079 --> 00:41:41.039 And then you've got to be able to hold the morale for the team and make it through. 00:41:41.199 --> 00:41:52.000 So I think this bifurcation between missionary and mercenary, I think we've got to evolve past that and be more complex in our understanding of what it takes to be a great founder and an impact startup. 00:41:52.320 --> 00:41:59.360 Right now, somebody's listening and thinking that impact always involves some kind of concession. 00:41:59.519 --> 00:42:05.039 From an investor standpoint, you always have to give up some return to do some good. 00:42:05.280 --> 00:42:07.760 So I'd like to steel man both sides of this. 00:42:07.840 --> 00:42:17.760 Make the case that investing for impact outperforms, and then tell me how you respond to the smartest version of the criticism that you inevitably give something up. 00:42:18.159 --> 00:42:25.760 I agree, in some circumstances, you will trade off financial returns for impact, but that's not what we're looking to do from Giant League. 00:42:25.920 --> 00:42:28.239 An example is Amber Electric. 00:42:28.559 --> 00:42:33.199 So we invested into Amber Electric when they had 100 customers. 00:42:33.360 --> 00:42:44.800 So two founders, both XBCG, one went to Goldman's, one went to Tesla, got together on a Mexican beach drinking coronas, coming up with their grand plan for what they'd build next. 00:42:45.039 --> 00:42:50.480 50 ideas, as you can imagine, lots of slides built. 00:42:50.719 --> 00:43:04.400 They landed on giving householders flexibility to manage their solar batteries and EVs in an automated way and to capture the economic value. 00:43:04.559 --> 00:43:12.800 They've now got 100,000 customers and Morgan Stanley's climate fund, when 1GT just led a$50 million euro round. 00:43:13.119 --> 00:43:20.400 So for us, that business is now managing 500 megawatts of battery power. 00:43:20.480 --> 00:43:23.280 It's automating, just like a gas-picking plant. 00:43:23.519 --> 00:43:25.599 And they're expanding to Europe. 00:43:25.760 --> 00:43:29.599 And we think with Morgan Stanley's backing, maybe even the US one day. 00:43:29.760 --> 00:43:45.840 And so they're the types of businesses that that we're looking to back where the impact is deeply embedded in the business model, and all of the stakeholders are winning in terms of the smarts on the business model, including fair investors. 00:43:46.159 --> 00:43:50.239 But but in terms of impact, what have they achieved? 00:43:50.400 --> 00:43:53.360 And in terms of returns, what have they achieved? 00:43:53.920 --> 00:43:59.760 So in terms of impact, they're now through their battery automation system, they're managing in decentralized. 00:44:00.239 --> 00:44:04.800 Way the equivalent of 500 megawatts of battery capacity. 00:44:05.039 --> 00:44:09.039 So that's the equivalent to a small gas peaking plant. 00:44:09.199 --> 00:44:17.280 So they're able to shift consumption from like energy to renewables through automating the battery technology. 00:44:17.360 --> 00:44:20.880 In terms of revenues, we invested when they basically had no revenues. 00:44:21.039 --> 00:44:26.559 They've now got over$33 million in revenues and over 200 staff. 00:44:26.719 --> 00:44:33.119 And armed with now$78 million of new Australian dollars to expand their growth globally. 00:44:37.920 --> 00:44:43.840 What evidence should an investor look at to judge whether it's really working or not? 00:44:43.920 --> 00:44:49.519 Aaron Powell Think about it at at many layers, and maybe the overarching layer is maturity. 00:44:49.760 --> 00:44:54.719 When we started out 10 years ago, no one knew about the term of impact investing. 00:44:54.880 --> 00:44:55.760 We were the first. 00:44:55.920 --> 00:44:56.880 There were no others. 00:44:57.039 --> 00:44:58.719 The deal flow was very limited. 00:44:58.880 --> 00:45:00.239 We're seeing 100 deals a year. 00:45:00.320 --> 00:45:03.039 We now see between 1200 to 1500. 00:45:03.199 --> 00:45:14.719 There wasn't the density of quality founders, and there wasn't the density of former founders or early employees of startups that had scar tissue and experience. 00:45:14.960 --> 00:45:20.559 And there just wasn't the density of angel investors and follow-on capital. 00:45:20.800 --> 00:45:25.199 So what I think has changed remarkably is the landscape. 00:45:25.360 --> 00:45:31.199 And for me, I'm a big believer in creating the right conditions for success. 00:45:31.519 --> 00:45:33.199 Well, what's changed in the landscape? 00:45:33.599 --> 00:45:37.519 On all of those metrics, there's been exponential change. 00:45:37.840 --> 00:45:40.880 We see 1,200 companies a year now. 00:45:41.039 --> 00:45:47.920 We're getting warm referrals from people we trust, whether LPs, other founders, other VC funds, 30% of them. 00:45:48.159 --> 00:45:56.960 It's just remarkable in terms of the quality of opportunities that we're seeing, which is far in excess of like the total deal flow that we used to see 10 years ago. 00:45:57.119 --> 00:46:12.239 And that we are investing into companies like an Amber Electric at a seed round, our targets are under 20 mil blended entry, and just to see the follow-on capital from groups like Morgan Stanley at a Series E, for me, that's the proof in the pudding. 00:46:12.639 --> 00:46:17.280 Where has purpose turned out to have been a disadvantage for you? 00:46:17.760 --> 00:46:20.800 I think there's a disadvantage at a number of levels.

00:46:20.960 --> 00:46:27.199 In the earliest days, it was a real disadvantage in terms of education and communication. 00:46:27.360 --> 00:46:32.480 We spent a lot of time on the definition of what impact was. 00:46:32.639 --> 00:46:32.960 Okay. 00:46:33.360 --> 00:46:34.480 And that's a trade-off. 00:46:34.559 --> 00:46:35.519 That's an opportunity cost. 00:46:35.599 --> 00:46:37.840 That's so much time explaining it to this person. 00:46:38.000 --> 00:46:45.039 That means a lower rate of conversion to an investment, but also trade-off on time of doing something else. 00:46:45.360 --> 00:47:04.719 I think that we spent a lot of time in terms of refining our frameworks to be able to communicate effectively to our investors that we were meeting both our obligations on commercial returns and impact. 00:47:04.880 --> 00:47:09.039 Because for a standard fund manager, they've got to just focus on the returns. 00:47:09.280 --> 00:47:14.159 Whereas in many ways, with all of the work we've done on quantifying impact, it's still subjective. 00:47:14.320 --> 00:47:19.039 Some people rank environmental impact higher than social and vice versa. 00:47:19.199 --> 00:47:29.599 And so being able to have very clear charters and policies and programs and quantification reporting, that's that's something that's taken time. 00:47:30.239 --> 00:47:44.079 And at the portfolio level, I think there can be, again, a misunderstanding from founders that if you're getting money from an impact VC, that it's going to be softer in some way. 00:47:44.320 --> 00:47:45.840 And that's just not the case. 00:47:46.000 --> 00:47:51.760 At the end of the day, we are custodians of our investors' capital and we're looking for risk-adjusted returns. 00:47:51.840 --> 00:47:56.880 And if they've deviated in terms of their impact, that can mean that we're not going to allocate full-on capital. 00:47:57.039 --> 00:48:03.039 And in terms of our reserves, they have to be allocated to the highest conviction opportunities. 00:48:03.519 --> 00:48:10.639 In the early years, giant leap steered clear of capital-intensive businesses and technical risk. 00:48:10.800 --> 00:48:14.960 Today, deep tech is about a quarter of your portfolio. 00:48:15.360 --> 00:48:18.239 So I don't think that shift was an accident. 00:48:18.320 --> 00:48:19.360 So what changed for you? 00:48:19.440 --> 00:48:40.559 Aaron Powell When I was at CVC, they had one of Australia's first sustainability funds, and it had in its portfolio a very interesting mix of infrastructure assets like wind farms, all the way through to early stage companies with huge amounts of technical risk like wave energy technology. 00:48:40.800 --> 00:48:53.199 And what I learned through that fund was it always takes more capital than you expect to do something, always takes a lot longer than you think to do it, and it always takes a lot longer to sell it than you think. 00:48:53.440 --> 00:48:58.719 And often the founder technically is not the founder

who will get the distribution. 00:48:58.960 --> 00:49:03.679 I think that experience led to some scar tissue for me in terms of what we were seeing. 00:49:03.840 --> 00:49:11.199 So we saw Amber Electric, I think it was five times, and I kept refusing to meet with them. 00:49:11.360 --> 00:49:22.559 And that was because from what I'd seen at CVC, energy businesses exposed to the spot rate, if you don't get your hedges right, you just get wiped very quickly. 00:49:22.800 --> 00:49:31.519 But at the same time, that was the type of business that we wanted to look at because it was capital light and it was software driven. 00:49:31.760 --> 00:49:42.559 What changed for Giant Leap was that A, we weren't seeing as many software businesses in the climate space, and our investors really wanted us to back climate businesses. 00:49:42.880 --> 00:49:55.119 And we were seeing these really remarkable opportunities that had a physical element that we felt created a moat for the business going forward. 00:49:55.360 --> 00:49:58.559 And I think that's playing out today with Andrews and Horowitz. 00:49:58.719 --> 00:50:14.000 I think they've raised across three funds, four billion dollars, for investments into infrastructure for AI and data centers, because they know that having that physical infrastructure is incredibly difficult to displace. 00:50:14.239 --> 00:50:16.239 So we invest in the business Fly Oro. 00:50:16.480 --> 00:50:23.519 Fly Oro is an on-demand, on-time fuel blending service that sits at the airport. 00:50:23.679 --> 00:50:37.039 Think of like a modular system at an airport that can blend jet fuel and SAF, sustainable aviation fuel, to whatever percentage that the airline wants on demand before it takes off. 00:50:37.360 --> 00:50:48.639 So for us, there's AI in in that business, in the algorithm that does the blending and the certification, but it's the physical element of being at the airport that provides the moat for that business. 00:50:49.119 --> 00:50:53.519 How does a small team like yours diligence technical risk? 00:50:54.000 --> 00:50:58.719 We typically in the past would diligence technical risk through revenue. 00:50:59.039 --> 00:51:02.239 So that was the shortcut that we learned. 00:51:02.480 --> 00:51:10.159 Because the at the end of the day, if if the customer's going to buy it, they have so much risk if it doesn't work out. 00:51:10.320 --> 00:51:15.119 They're the ones at the front line being able to make that determination against a range of different options. 00:51:15.280 --> 00:51:17.280 And so we back that evidence. 00:51:17.519 --> 00:51:20.559 Maybe I'll give you an example of OVAM AI. 00:51:20.639 --> 00:51:22.000 So we backed Dr. 00:51:22.079 --> 00:51:32.639 Ariella Heffenen Marks, a female doctor who had experienced challenges in the health system herself in getting treatment for the medical issues she had. 00:51:32.800 --> 00:51:35.760 She was often getting dismissed by doctors and so on. 00:51:36.000 --> 00:51:40.320 So she'd built a women's health coach. 00:51:40.480 --> 00:51:52.639 So it's not providing you with the medical advice, but what it's doing is understanding all of your specific needs and uh symptoms, and it helps you to have a different conversation with your medical professionals. 00:51:52.800 --> 00:51:55.679 But it's done in a safe environment. 00:51:55.840 --> 00:52:01.440 So one of the biggest principles for them in building out their architecture has been around privacy. 00:52:01.599 --> 00:52:06.320 So even for OVAM, all of the data is anonymized across different silos. 00:52:06.639 --> 00:52:11.760 You don't have the challenge of a number of different large language models trying to hoover up everyone's information. 00:52:12.000 --> 00:52:18.159 The architecture of OVM is to always protect the privacy of their customer base. 00:52:18.400 --> 00:52:25.280 So for us, in backing OVEM pre seed, we we were backing Ariella's experience as a doctor. 00:52:25.440 --> 00:52:29.360 We're backing her lived experience in understanding the customer's pain point. 00:52:29.519 --> 00:52:36.880 We're backing her phenomenal ability to get in rooms and to build profile and acquire customers. 00:52:37.119 --> 00:52:38.880 And it's it's proven out. 00:52:39.039 --> 00:52:45.840 So they've just had a new$4 million round come in to help grow up that business. 00:52:46.239 --> 00:52:49.199 So but there's a potential math problem, I see. 00:52:49.280 --> 00:52:51.920 You know, you're a$50 million Aussie dollar fund. 00:52:52.000 --> 00:52:57.280 Your best climate companies need around 20 to 50 million Aussie dollar rounds. 00:52:57.440 --> 00:52:59.679 How do you think about the follow-on reserves? 00:53:00.000 --> 00:53:05.039 Yeah, so we really think of ourselves as sprint coaches, not not marathon coaches. 00:53:05.280 --> 00:53:09.920 We are we are with the founders to get them really from zero to to one. 00:53:10.559 --> 00:53:20.639 We we acknowledge that the checks, even if we're at like our highest conviction super priority follow-on, may only be a small percentage of around. 00:53:21.039 --> 00:53:35.920 So our role is really to have a deep contact list and that when we contact those investors about considering an investment into our business in a later round, that that they'll take a look, they'll take the call. 00:53:36.000 --> 00:53:40.960 And we've seen this time and time again with introductions that we've made. 00:53:41.119 --> 00:53:51.199 And it's our our job as well to help them get ready for those follow-on rounds in terms of their their presentation, the narrative, the data room, and so on. 00:53:51.840 --> 00:53:54.000 Climate, health, and people. 00:53:54.400 --> 00:53:56.239 Three pretty different worlds. 00:53:56.480 --> 00:53:59.360 And you're doing all this with a team of five. 00:53:59.679 --> 00:54:03.679 What does a generalist team gain and what does it give up? 00:54:04.000 --> 00:54:09.119 I think Australia's an

incredibly small market population of 28 million. 00:54:09.360 --> 00:54:11.519 We have very few specialist funds. 00:54:11.840 --> 00:54:17.119 They've really emerged recently, and most of them I'd say are actually linked to corporates. 00:54:17.599 --> 00:54:29.519 And they I think it's it's just very difficult in Australia to have the niching down that you do in in other parts of the world because it's all driven by density and it's that maturity piece. 00:54:29.679 --> 00:54:43.920 What it does, to your point before around follow-on capital, it provides us with the ability to have a greater knowledge base and surface area of who the follow-on investors are and to be able to build relationships with those groups. 00:54:44.079 --> 00:54:48.719 Also, a lot of the support that we provide the founders is is actually horizontal, not vertical. 00:54:48.880 --> 00:54:56.320 One of the biggest challenges for these founders is just managing their own psychology founder tensions, hiring the right person, knowing when to let them go. 00:54:56.559 --> 00:55:03.840 It's on very similar problems around big enterprise sales, fundraising. 00:55:04.079 --> 00:55:10.639 And so they're the things that are horizontal that sit across that we are trustworthy confidence. 00:55:11.199 --> 00:55:16.960 Health is close to half of your portfolio, and almost nobody seems to ask you about it. 00:55:17.199 --> 00:55:19.199 Clinical evidence says yes. 00:55:19.440 --> 00:55:26.480 The business model says maybe, but then who pays, you know, and how do you get comfortable with that? 00:55:26.880 --> 00:55:28.960 That is the number one question in health. 00:55:29.119 --> 00:55:32.239 We can understand who the user is, but who's the payer? 00:55:32.400 --> 00:55:42.880 And so I think for us, we don't think every health startup is going to fit into our commercial screen, but we're looking for those ones like CleanSlate that do. 00:55:43.199 --> 00:55:45.440 So a reimbursement pathway is a must-have. 00:55:45.840 --> 00:55:46.400 Not always. 00:55:46.559 --> 00:55:46.880 Not always. 00:55:47.199 --> 00:55:52.960 With CleanSlate, like yes, they've got huge coverage, nearly 100% coverage of insurers in Australia. 00:55:53.119 --> 00:55:59.119 But for a lot of families, they'll pay the$4,000 for their son or daughter to go through rehab out of pocket. 00:55:59.440 --> 00:56:04.320 You've read 100 impact reports and believed maybe three of them. 00:56:04.559 --> 00:56:07.840 Why should people reading yours believe yours? 00:56:08.239 --> 00:56:22.960 I have to credit Rachel from our team with the I think it's the combination of the rigor, that in a way it doesn't look like an academic document, that you can look at it and you can understand it. 00:56:23.039 --> 00:56:28.320 And so I think simplicity is a sign of true understanding. 00:56:28.559 --> 00:56:30.639 I think that's one of the first elements. 00:56:30.880 --> 00:56:38.480 The second is we are very upfront and transparent that we make assumptions that nothing is perfect. 00:56:38.800 --> 00:56:47.119 We don't have the resource to be able to get an independent verifier to go and audit all of the numbers from our portfolio companies. 00:56:47.280 --> 00:56:52.400 We just make a very strong commitment around reporting the good news and the bad news, being open about that. 00:56:52.480 --> 00:56:57.519 You can find our portfolio impact highlights report on our website for anyone to see, not just our LPs. 00:56:57.760 --> 00:56:59.199 And we're committed to get better. 00:56:59.280 --> 00:57:01.760 And you can see over 10 years our reportings got better. 00:57:01.840 --> 00:57:08.320 And I think a big part of it is the intent, and a big part of it is the quality and caliber of our portfolio company founders as well. 00:57:08.400 --> 00:57:18.320 Aaron Powell I looked at your FY25 report, and it shows more than half a million tons of carbon avoided across your portfolio. 00:57:18.639 --> 00:57:25.039 Tell me about those numbers and then help me understand how much of that is directly attributable to the giant leap. 00:57:25.519 --> 00:57:32.400 A big portion of the carbon emissions saved over the 10 years is attributed to Future Super. 00:57:32.559 --> 00:57:36.800 That's Australia's first fossil fuel-free superannuation fund. 00:57:36.960 --> 00:57:41.840 When we invested in Future Super, they had$500 million of funds under management. 00:57:41.920 --> 00:57:45.039 I think they're tracking it something like$14 billion now. 00:57:45.360 --> 00:57:53.760 And switching your super fund is one of the biggest ways that you can actually reduce your personal carbon footprint. 00:57:54.079 --> 00:57:59.119 We acknowledge that we take minority positions in companies. 00:57:59.360 --> 00:58:05.360 We report on the whole impact of those companies and we we're very transparent about that. 00:58:05.599 --> 00:58:17.039 We think that it's really important to acknowledge that part of our capital has a role in catalyzing other capital for the business to exist in the first place. 00:58:17.199 --> 00:58:21.199 For instance, with Future Super, we're the first install money into that into that business. 00:58:21.440 --> 00:58:31.440 And the second is that if you just began to try and attribute how much comes back to Giant Leap itself, there'd be a lot of assumptions that would be going to that. 00:58:31.519 --> 00:58:37.599 And so once again, our philosophy is to be as transparent as possible and including how we calculate and attribute. 00:58:38.079 --> 00:58:40.079 You've been doing this for about 10 years now. 00:58:40.400 --> 00:58:45.679 So give me an idea of the things that have worked and what hasn't worked. 00:58:45.840 --> 00:58:48.719 And what does Giant Leap do differently now? 00:58:49.199 --> 00:58:54.639 Maybe I'll start with what do we do differently as a result of what we learnt from fund one. 00:58:55.039 --> 00:58:59.599 $15 million, while we were$5 million

oversubscribed, we were undersized. 00:58:59.760 --> 00:59:07.440 We really needed 30 plus to be able to allocate the follow-ons into the companies to concentrate into our winners. 00:59:07.679 --> 00:59:10.400 For fund two, we have have that ability. 00:59:10.719 --> 00:59:11.280 One. 00:59:11.599 --> 00:59:19.519 Two, our initial checks into early stage companies at seed stage were just too small. 00:59:19.679 --> 00:59:25.280 We were dipping our toe in the water to get privilege access to then determine whether we'd follow on. 00:59:25.360 --> 00:59:30.079 But we really should have been targeting an ownership percentage on those earlier checks. 00:59:30.239 --> 00:59:33.760 We have incorporated that into our strategy to gyrate too. 00:59:34.000 --> 00:59:37.840 In terms of what has worked, it's a bit similar to our portfolio impact reporting. 00:59:37.920 --> 00:59:48.239 I don't want to attribute everything to us, but what is remarkable in terms of what has changed is really the maturing of the ecosystem. 00:59:48.480 --> 00:59:59.360 So in terms of the family office lens, so the Albert Alberts family have made their own investments into impact startups, which is remarkable. 00:59:59.519 --> 01:00:07.119 Triple Adam's own family office, similarly, and he they do public reporting on their website about what they're doing. 01:00:07.280 --> 01:00:21.039 And there's just countless others that have moved in from the family space, which is really important because families, although they're different and complex and non-homogenous, they can make decisions quickly without the agency problems of a big institution. 01:00:21.360 --> 01:00:22.159 So that's one. 01:00:22.320 --> 01:00:29.679 And then two, just the amount of founders that we're meeting every single day that are just remarkable and just give you so much hope about the future. 01:00:29.840 --> 01:00:38.880 I feel like the amount of optimism as a result of this growing ecosystem is really an antidote to a lot of the challenges in the world today. 01:00:39.119 --> 01:00:43.599 And then we have the mainstream world changing as well. 01:00:43.679 --> 01:00:48.000 So if you look at our peers in other VC funds, they now have heads of impact. 01:00:48.239 --> 01:00:48.719 Imagine that. 01:00:48.800 --> 01:00:53.440 And some of them invest, say they're looking for B Corps or have B Corp certification themselves. 01:00:53.599 --> 01:00:56.559 These are these are red meat eating genic catholists. 01:00:56.800 --> 01:01:04.880 And also just the big wealth managers and have gone through their RCs and they've recommended us to their clients. 01:01:05.039 --> 01:01:08.960 That's been a major shift as well because they're the gatekeepers of so much capital. 01:01:09.360 --> 01:01:11.679 When is kindness the wrong hole to me? 01:01:12.000 --> 01:01:13.920 It depends on what the definition of kindness is. 01:01:14.000 --> 01:01:15.760 I don't think of kindness as weakest. 01:01:15.840 --> 01:01:23.840 I think of kindness can be honesty and it can actually feel like it's aggressive or destructive. 01:01:24.079 --> 01:01:29.360 So that example I just made then that was made out of kindness, that it could feel like an attack. 01:01:29.599 --> 01:01:35.039 I think the more power and influence you have, the more gentle and kind that you can be. 01:01:35.519 --> 01:01:39.840 A few years ago, every pitch deck had blockchain on slide two. 01:01:40.239 --> 01:01:41.920 Today it's AI. 01:01:42.159 --> 01:01:49.119 How does a mandate built on direct impact hold up when nearly every startup is AI enabled? 01:01:49.440 --> 01:01:52.639 I think blockchain and AI are completely different propositions. 01:01:52.880 --> 01:01:58.480 I think that in today's world, you need to incorporate AI into your ways of working. 01:01:58.719 --> 01:02:06.320 I read recently that maybe only 30% of people are, but it's just an undeniable force in terms of productivity. 01:02:06.559 --> 01:02:13.599 In terms of what we're looking for, the AI businesses we're looking to back are solving problems across climate, health, and people. 01:02:13.760 --> 01:02:26.079 We're looking for founders that have deep understanding of the problems within those areas and are using AI as a tool, but it is only a tool to deliver the solution. 01:02:26.239 --> 01:02:27.840 It is not the solution itself. 01:02:28.079 --> 01:02:33.360 They need to be able to have something that is unique and defensible. 01:02:33.519 --> 01:02:51.119 So coming back to OVM AI, even though they're anonymizing those data sets, they're actually going to aggregate the data set to then be able to incorporate it into the development of drugs and personalized medicine and trials. 01:02:51.360 --> 01:02:58.480 Because I think up until 1991, that the FDA actually included women in trial assessments. 01:02:58.719 --> 01:03:04.320 And so a lot of the healthcare solutions out there are just not built for women. 01:03:04.480 --> 01:03:17.119 And so we think that with Ariella's trustworthiness to the user, that trustworthiness results in the creation of an asset that is very difficult to replicate. 01:03:17.280 --> 01:03:20.079 And that is the inherent value that we identified. 01:03:20.480 --> 01:03:25.840 Do you have any qualms about factoring in the AI's energy footprint against the impact? 01:03:26.159 --> 01:03:27.760 No, there's definitely definitely trade-offs. 01:03:27.920 --> 01:03:33.360 We wrote a piece on this in our Small Steps newsletter about all of the considerations of AI. 01:03:33.440 --> 01:03:43.840 And when we looked at our portfolio, the volume of AI that our companies are using is very limited relative to the big frontier models and so on. 01:03:44.239 --> 01:03:46.480 It's not the core value proposition. 01:03:46.639 --> 01:03:52.320 And we we think that will play out similar in terms of the other portfolio allocations we'll make. 01:03:52.719 --> 01:03:55.280 Your portfolio is majority women-led. 01:03:55.679

--> 01:04:02.079 And in a market where women-led startups get really a tiny fraction of venture funding, tell me how that happened. 01:04:02.400 --> 01:04:08.559 I think this comes back to your question around the history of Giant Leap's creation. 01:04:09.199 --> 01:04:16.480 We always had a strong female leadership influence on our culture, and we decided to integrate that across every level. 01:04:16.639 --> 01:04:21.280 So across our investment committee, the investment team, the advisory board. 01:04:21.519 --> 01:04:26.719 And as a result of that, even though it wasn't documented, it changed our behavior. 01:04:26.880 --> 01:04:28.639 We've always been trying to be conscious of that. 01:04:28.800 --> 01:04:35.599 And that's due to Kylie Charlton being part of the investment committee on Fund One, for instance. 01:04:35.920 --> 01:04:44.239 And then when Rachel joined first as an associate, but's risen to partner, she's really led that work to codify what we're doing. 01:04:44.480 --> 01:04:45.840 And you know, it's interesting, Scott. 01:04:45.920 --> 01:04:56.079 If you look at the impact movement globally, and you probably already know this, it's actually the women that have led it both on the founder side, like found more likely to found a startup as an impact benefit. 01:04:56.239 --> 01:05:02.000 And then on the investor side, it's it's often the women in the family offices that are driving the allocations. 01:05:02.400 --> 01:05:12.159 You say that, but the statistics show that the percentage of VC investment that goes into women-led firms is really small. 01:05:12.320 --> 01:05:13.119 Like 100%. 01:05:13.360 --> 01:05:14.719 But I think both can be true, right? 01:05:14.800 --> 01:05:18.960 In most firms, even in Australia, it's very rare to have a VC partner who's a woman. 01:05:19.199 --> 01:05:23.519 It's changed slightly over the past sort of five years, but the proportion is still out of work. 01:05:23.679 --> 01:05:30.960 And so if you don't have that representation on the team with decision-making power, it's not going to make a difference in terms of the allocations, right? 01:05:31.119 --> 01:05:32.480 Even if you increase top of fun. 01:05:32.800 --> 01:05:41.840 But what I think is going to happen is the women making decisions on LP allocations into the GPs are going to be asking for more changes. 01:05:42.320 --> 01:05:49.519 Six months from now, a founder or somebody raising their first impact fund is going to hear this conversation. 01:05:49.760 --> 01:05:51.840 What do you want them to walk away with? 01:05:52.159 --> 01:05:57.280 I I want them to walk away feeling hopeful and defiantly optimistic. 01:05:57.519 --> 01:05:59.760 I want them to have a crack. 01:06:00.400 --> 01:06:04.880 At whatever they're drawn to because I think life's too short. 01:06:05.039 --> 01:06:13.199 And my great uncle Jack actually said to me when I was really down prior to making the jump, he said to me, Will, what's wrong? 01:06:13.360 -->

01:06:15.760 And I said, Oh, I'm not happy at work and this and that. 01:06:15.840 --> 01:06:17.519 And he's like, Well, it's pretty simple, isn't it? 01:06:17.679 --> 01:06:18.719 And I said, What do you mean? 01:06:18.880 --> 01:06:21.760 And he said, just do what you love every day with people you love. 01:06:21.920 --> 01:06:29.119 It's not easy, may not work out, but if we're in such a privileged position where we actually get to have some sort of agency on how we spend our time. 01:06:29.360 --> 01:06:31.360 I think it's actually beholden on us to do that. 01:06:31.760 --> 01:06:37.199 And for the first-time fund manager, what's the single greatest obstacle still in their way? 01:06:37.519 --> 01:06:40.800 It takes a lot of fuel in the tank to just work through those meetings. 01:06:40.880 --> 01:06:46.239 And I think the biggest obstacle for the first-time fund manager is finding your first believers. 01:06:46.559 --> 01:06:53.280 And that's why I'd be always grateful to all of the investors from Giant Leap One and the beliefs that they've had in us. 01:06:53.679 --> 01:06:57.760 Well, I've got a last few rapid-fire questions to wrap up our talk here. 01:06:57.920 --> 01:07:00.000 So just give me whatever comes to your mind. 01:07:00.159 --> 01:07:02.800 Or if nothing does, feel free to take a pass. 01:07:02.960 --> 01:07:10.639 If you had to name the single most important challenge in the early stage impact VC space at this time, what would that be? 01:07:11.039 --> 01:07:18.719 I think the biggest challenge at the moment is the world is in a scarcity phase, not an abundance phase. 01:07:18.960 --> 01:07:26.079 And that makes it really difficult for impact startups, but I believe that the best founders will adapt. 01:07:26.559 --> 01:07:28.239 You don't have to name names. 01:07:28.400 --> 01:07:36.639 Can you describe an impact investment that you were involved in it giantly that you were convinced ticked all of your impact boxes? 01:07:36.960 --> 01:07:38.559 But in the end it didn't turn out. 01:07:38.719 --> 01:07:42.079 And what was the investing lesson learned from that experience? 01:07:42.559 --> 01:07:45.760 We backed a company in epilepsy detection. 01:07:45.920 --> 01:08:03.119 It became the gold standard in Australia, thousands of patients, urologists referring as a matter of course, Save Lives, including one of my closest friends, approved by the FDA and was rolling out in the US, but they hadn't heeded our warnings on cash burn. 01:08:03.519 --> 01:08:09.679 And when they were trying to raise the the markets had moved and they couldn't fund the US opportunity. 01:08:09.760 --> 01:08:11.679 So the business is now in new hands. 01:08:11.760 --> 01:08:18.239 The tech will survive, but unfortunately, our our investors won't participate in that economic upside. 01:08:18.640 --> 01:08:20.800 And what was the investing lesson? 01:08:21.279 --> 01:08:26.800 The lesson is that saying the right thing and being heard are two different

things. 01:08:27.119 --> 01:08:38.319 Can you describe an investment that you had some level of skepticism about, or maybe you passed on it, that turned out to be far more successful than you ever would have expected? 01:08:38.560 --> 01:08:42.159 And what was the investing lesson you learned from that experience? 01:08:42.560 --> 01:08:44.880 Yeah, I I remember it distinctly. 01:08:45.119 --> 01:08:58.239 We went met with a fantastic founder who'd been recommended to us by a number of individuals, deep-lived experience of the problem, had traction with customers, but it was limited. 01:08:58.560 --> 01:09:12.079 The revenue multiple on the valuation felt excessive to us, and we tried to chip the vowel, and we pissed off the founder, and we missed out on the deal. 01:09:12.399 --> 01:09:14.720 And it was a runaway success. 01:09:16.159 --> 01:09:25.520 It taught us that haggling on the vowel, which is something that I was always required to do at CVC, can actually mean that you miss out on the deal completely. 01:09:25.920 --> 01:09:34.720 If someone wants to pursue a career in early stage Impact VC, where or how would you advise them to cut their teeth and get a start at it? 01:09:35.119 --> 01:09:41.600 My number one recommendation for someone wanting to start an Impact VC is to be at the source of flows. 01:09:41.840 --> 01:09:48.000 So I think it's really critical to get transactional experience, not infrequently, but as frequently as possible. 01:09:48.239 --> 01:09:51.199 Daily, looking at looking at information daily. 01:09:51.439 --> 01:09:53.600 That is how you get compounded experience. 01:09:53.680 --> 01:10:00.239 And if you do it for other people, even if you're volunteering, you're just going to learn so much throughout osmosis. 01:10:00.479 --> 01:10:03.840 And it'll just create opportunities aplenty in the future. 01:10:04.239 --> 01:10:06.479 Will you've been very generous with your time. 01:10:06.640 --> 01:10:10.000 I think we've about beat this thing to death today. 01:10:10.079 --> 01:10:12.800 But thank you very much for taking me through all of this. 01:10:12.960 --> 01:10:13.920 I really appreciate it. 01:10:14.000 --> 01:10:14.880 I've learned a lot. 01:10:15.119 --> 01:10:15.920 Oh, it's a pleasure. 01:10:16.000 --> 01:10:19.760 Thank you very much for your patience and your mastery of your craft. 01:10:20.720 --> 01:10:22.239 Well, you're very kind. 01:10:22.479 --> 01:10:33.359 Now tell everyone about your website and the small steps newsletter and your acts and social media accounts and all that good stuff if people want to follow all the great things you're doing. 01:10:33.600 --> 01:10:37.199 Our web address is giantleap.com.au. 01:10:37.920 --> 01:10:41.039 We have a newsletter called Small Steps. 01:10:41.119 --> 01:10:43.119 You can subscribe via our website. 01:10:43.359 --> 01:10:46.399 The editor is Joanna Lee, our investment manager. 01:10:46.720 --> 01:10:53.600 And you can follow us on LinkedIn, Adam Milgram, Rachel Yang, Will Richardson, Joanna Lee, and Charlotte Moose. 01:10:53.920 --> 01:10:54.720 All right, everyone. 01:10:54.880 --> 01:11:01.680 Go over to giantleap.com.au and check out all the great things Will's doing. 01:11:01.920 --> 01:11:03.279 Will, thanks again. 01:11:03.680 --> 01:11:05.119 Oh, it was a real pleasure. 01:11:05.279 --> 01:11:06.079 Thank you so much, Scott. 01:11:06.239 --> 01:11:06.560 Loved it. 01:11:06.800 --> 01:11:08.159 Goodbye, everybody. 01:11:08.960 --> 01:11:12.159 You've been listening to SRI 360. 01:11:12.399 --> 01:11:17.279 If you enjoyed it, please hit the like button and subscribe to get future episodes. 01:11:17.520 --> 01:11:34.000 You can find an archive of all previous podcast interviews and more articles and information on SRI ESG Impact Investing, Sustainable Investing, and Socially Responsible Investing at our website, SRI360.com. 01:11:34.319 --> 01:11:44.159 If you'd like to read more lessons learned from world-class SRI investors, get a copy of Scott Arnell's book, Sustainable and Responsible Investing 360. 01:11:44.319 --> 01:11:53.760 It's a must-read for anyone wanting to know more about investing for positive social, environmental, and ethical impact, all with market financial returns. 01:11:53.920 --> 01:12:00.800 These are the stories and tactics of those leading the way as sustainable and responsible investing goes mainstream. 01:12:01.119 --> 01:12:10.000 Sustainable and responsible investing 360 is now available in hardcover, ebook, and audiobook format wherever books are sold.