KITE Invest examines impact investing with François de Borchgrave, the Founder & Managing Partner of KOIS Invest, an impact investing firm, placing capital in impact ventures and funds. As with all firms specialized in impact investing, KOIS Invest’s aim is to generate a competitive financial return, as well as a positive impact on society and the environment. KOIS mainly preforms private equity investments and also offers advisory services of impact assets across all asset classes.
KITE Invest: Is there a difference in impact investing whether it occurs at the private equity, venture capital or business angel asset classes?
François de Borchgrave: Overall, the due diligence process of investing in these different asset classes in impact investing is the same. Independently from the type of asset class, we look both for the financial viability of the venture as for the strength of the social or environmental impact. Nonetheless an important difference between these asset classes is the level of risk inherent to the stage of development of the company. This level of risk is central because it will also determine the sustainability of the social or environmental impact. For this reason we focus on private equity opportunities to make sure that the impact we support is strong and last on the long term.
KITE: Would you estimate that the deal flow and size, and exits in impact investing firms are the same to that of firms who not specialize in impact investing?
FdB: Impact investing is a growing although young market. Currently, the deal flow, the size and the number of exit have been growing over the past years and keep growing at a strong pace. Investors become increasingly interested into the opportunity of shaping a better future for society while earning a return on their capital. The paradigm is changing among them. There is a rising consciousness that they can support ventures that share their moral values. This creates a potential for the further development of the deal flow, the size and the number of exits in the impact investing market. It is currently still small in comparison to the “non-impact” market because of its youth and thus, lack of history and track record.
KITE: KOIS Invest sector focus is in health, education and living environments, and investments are done across the region. Please shed light on why these sectors are of particular interest to KOIS Invest.
FdB: Out of our personal and professional experience and convictions we are fully convinced that these sectors have the biggest potential in building businesses with impact. In these sectors, there is a lack of access to quality and affordable services and products. Some social issues are still struggling to be resolved but face states’ budget restrictions. There is therefore a potential to promote innovative businesses that aim to resolve these societal issues through sound business models.
KITE: Where is the main crux of KOIS Invest’s investment carried out? Are there intentions to expand the firm’s reach?
FdB: KOIS is based in Brussels but focuses its activities in Western Europe and India. In the past, we invested in a few businesses in the US because of the great investment and learning opportunities they represented in a field that was just nascent in Europe. Our goal remains however to focus on Western Europe and India, unless we find robust business development possibilities in other regions.
KITE: What are some non-negotiable traits/components in terms of selecting an investment opportunity?
FdB: It is really important for us to have a financial viability along with an ability to build a long-term relationship with the entrepreneurs or the company we finance. So we neither look at purely speculative venture capital opportunities nor at listed companies. On the other side, it is also essential that the social or environmental impact is inherent at the core-business of the company. It should not be considered as just a positive consequence of the business activities.
KITE: Prior to founding KOIS Invest three years ago, you founded an Internet startup and worked within large corporates in the technology sector. What was the reasoning for your career change and why did you decide to focus on impact investing specifically?
FdB: Next to my career, I was also carrying some private equity and real estate investments in SMEs. Besides, I was involved in the founding Toolbox, a non-profit that provides management skills to NGOs through mentoring by senior corporates. It was the combination of these two elements that motivated me to finally invest and promote investments in well-run businesses with social and environmental impact. Obviously, my experience in technology and start-ups was an asset on which I could count on in order to better understand the risk and opportunities related to investing in SMEs.
KITE: In your estimation, has impact investing changed in the short time since the founding of KOIS Invest? How do you foresee it changing in the future?
FdB: Many elements have grown up, and mostly in a positive way. There are many more actors – some bigger, some smaller – and all are ready to cooperate on various projects. Some networks, such as the EVPA and TONIIC have arisen and let us exchange intensively with companies in the same sector. I believe these evolutions will keep up but with a gradual increase of the implication of the mainstream actors / traditional sectors players.
KITE: What have been some of the main achievements of KOIS Invest and what are some of the firm’s goals that it is striving for?
FdB: We are proud of all the work that has been done by KOIS since the beginning. We have shown that there is a possibility of scaling businesses with social or environmental impact with funds coming from committed investors. We are also proud of having succeeded to get large partners such as the Banque Degroof and IL&FS within the sector of impact investing through strong partnerships respectively in the social real estate and in socially relevant businesses in India. Finally, we are proud to have launched one of the first social impact bonds on the European Continent, showing the way for non-Anglo-Saxon countries.