“Impact investing is really about doing good and doing well in the most basic sense of the word”
Cecile Blilious from Pitango Venture Capital, talks to Michael Matias about the nitty gritty of impact investments
The impact investing market is a $715 billion-dollar space, and as Cecile Blilious, Head of Impact and Sustainability at Pitango Venture Capital explains, there is a huge opportunity for tech entrepreneurs and investors to develop impactful business strategies and products. There is a common misconception throughout the business world that individuals can only turn to philanthropy and emerging markets to create a positive social impact, but, as Blilious explains, this is not the case.
In reality, there are issues in every city that require solutions, and Blilious emphasizes that founders can simultaneously create social good while also managing a prosperous company. Blilious spoke with Michael Matias creator of the 20MinuteLeaders video podcast about how she uses this integrated approach in her current position at Pitango where she helps portfolio companies integrate impactful strategies into their existing framework.
Both as part of Pitango, but really throughout your whole life, you've been all about impact. I want to find out what it means to have an impact and be an impact entrepreneur, but first I want to hear about who you are.
I've always been an entrepreneur in everything I did, and somehow life led me to become founder and manager of some startup companies. I got into the hassle of the dot-com bubble, in and out, and after that was very lucky to join the Noaber Foundation, which is a foundation that focused on the early stages of impact investing and what we now call impact investing. So I really have done so many interesting things and it's been a hell of a ride and I tried to reinvent myself every 10 years or so. So it makes it interesting.
Let's start with talking about what is impact investing and then maybe we can dive deep into some of the different projects you've worked on and are still working on.
So, first of all, impact investing has a Wikipedia definition. It's really the intentional use of investments in order to create a positive change to society or to the environment. Now, because it’s impact investing, we're talking about financial returns, of course, it can be different kinds of financial returns. It can be lower or higher, it can be market trade financial returns. It could be an asset class that you can choose. And really, impact investing is about everything we do. What I specialize in and really care about very much is impact tech investing, which is something that still is very very much in the shadows of impact investing because if you look at the whole impact investing market, you'll see about $715 billion invested in 2019. Only $2 billion out of that are tech. How is that possible?
The problems that we are facing in humanity and our planet with the sustainable development goals, which were designed and defined by the UN, really is an opportunity of about $12 trillion from now until 2030. How is it possible that we haven't thought about blending high-tech into impact and blending impact into high-tech? So, really impact investing is about doing good and doing well in the most basic sense of the word.
When we talk about impact and creating a positive change in the world, you know immediately I think most people draw their mind to nonprofits, charity work, donating money to help others. You don't really think about business and you don't think about financial returns, which is part of the responsibility of an investor, right?
Yeah. So first of all, making an impact is something that is very broad. Impact is a word in the dictionary. You can make an impact by giving money away. It can make an impact by helping people and you don't necessarily have to blend returns into that. However, impact investing really means that you want to blend those two when you are creating a solution to a problem. You need to look at the problem through a few different lenses, one is the business lens. Okay. So you're creating a product that is a solution for a problem. And the solution you're creating is a business solution that has to have a big enough market. It has to have a big enough opportunity and a way to the market that makes sense with your product. Next to that, if you look at the same product or the same problem through a social and environmental lens and you define it by thinking about who your stakeholders are and who are the people you are trying to really serve, then you can very easily tweak your product in your business in a way that is very very focused.
Now if you're a Tech-entrepreneur and you see a problem that you'd like to solve and you can see this problem also as a social problem and you can understand who are the people who are going to be the beneficiaries or the stakeholders that you're going to serve through addressing that problem, then you're going to be able to blend the two in a way that maximizes profits because the more you sell your product, the more revenues you'll have. But also the more people that will use your product the more impact you will make on them. So, the integrated approach is what I'm looking for.
How do you explain that such a small fraction of the funds go towards impact investing or why is there such a small fraction of impact entrepreneurs, because I'm completely shocked by the number that you gave me before.
When I think about impact, I think about the DNA of an entrepreneur that's looking at the problem and is trying to address it. It's an interesting thing that a lot of the entrepreneurs are actually addressing the sustainable development goals, only they don't know it. If you look at Israel as an example, it has about 6,600 startups at any given moment. From the research that's been done, about a third of them are actually addressing one, or at least one of the sustainable development goals. Only either they don't know it, or they don't know what to do about it, or they don't understand how that has anything to do with their business. Or, even worse, they think that if they're going to be talking about the problems or the social aspect of what they're doing, then their investors are going to be saying, 'Oh, maybe they're not going to maximize profits. Maybe we shouldn't touch it, etc.
I divide my world into two categories: one is the impact natives, and one is the impact migrants. The impact natives are the ones who are really born into it, it's like, you know, the internet natives. So, it's basically your generation. It's people who understand it very deeply, see the world in a very holistic way, and understand that actually when you look at a problem or anything you do in life, it's always about everything. Impact migrants, on the other hand, which are the majority of the market, and I'm talking about the investors and the entrepreneurs, and everything in between are the people who actually do have something with sustainable development goals, but again, they might not know it. And they might need the support of an investor or a consultant or someone who'll come to them and say 'Ok, you know what? Let's look at your product with a different lens and think about the stakeholders that you're serving when you're selling your product and then blend the two in a way that's integrated, that's actually within your DNA and your intention.'
You'll find that the majority of these people actually were somehow natives, only they even didn’t know it. So, with a good process of migration, you can really migrate them into understanding what is the impact that they're going to create, which sustainable development goals they can target, how that is really embedded into their business in the sense that when you take their business results and you look at them through the stakeholder’s eyes, then you can really understand how that impacts the world. Measurement is key. So, if you don't measure, you obviously don't know what you're doing and you don't know if you’re improving. At the end of the day, It's a profession and you need some professional help. Migration is where we can really tap into the mainstream VCs and the mainstream entrepreneurs, and you'll find out very quickly that these people are totally on board and they're on board for various reasons. One is because they care about it, but two is because they want to hire the best talent.
Paint me a picture of the process that you're working on at Pitango
I'm super proud of Pitango and their decision to embed and integrate impact metrics. We call it the ESG to SDG Continuum Strategy. I think this is so Innovative and pioneering. I believe that within a year or two, everyone else is going to want to do this because why not. We're not compromising any financial returns. We're going to be able to create much better companies. Why wouldn't everybody do it?
So, how does it actually happen? First of all, I work with the existing portfolio companies of Pitango to think about how they integrate the impact to what they're already doing. I'm talking about early-stage startups, but also unicorns. Just to give an example, I'm working with Via, which is a unicorn that deals with ride sharing and I'm looking at their business results and what they actually do in terms of providing transportation, which is affordable and accessible, and how that impacts their stakeholders. Of course, it makes money, but it also makes an impact. We make an analysis and we make a measurement. Next to that, early-stage startups, like Zapata, which is a Quantum Computing company that is looking at influencing how material is being developed and how drug discoveries are done. Just think about the impact, the positive impact that can be done with Quantum Computing. Now, with regard to companies that are approaching us. First of all, we'd like to have as many impact companies as possible approach us, which they might not have before I joined the team because they might not have thought that Pitango would be interested. Then we're going through an assessment of thinking about their ESG, so that's really the baseline, and do no harm, of course. Then we try to assess which are the indicators in the sustainable development goals, that are relevant to their product and try to see how that integrates into our due diligence process. So it's really about integrating the impact into the business. When we do due diligence, we look at the questions together. Then when we do the analysis, we try to figure out in advance what is going to be the impact and what can be a potential negative impact.
What are three words that you would use to describe yourself?
A relentless optimist, a believer, and authentic.
Michael Matias, Forbes 30 Under 30, is the author of Age is Only an Int: Lessons I Learned as a Young Entrepreneur. He studies Artificial Intelligence at Stanford University, while working as a software engineer at Hippo Insurance and as a Senior Associate at J-Ventures. Matias previously served as an officer in the 8200 unit. 20MinuteLeaders is a tech entrepreneurship interview series featuring one-on-one interviews with fascinating founders, innovators and thought leaders sharing their journeys and experiences.
Contributing editors: Michael Matias, Amanda Katz