Machtelt Groothuis (Social Impact Ventures): “Making money and a positive impact on society go together in the long run”

Social IV is the first independent fund for social enterprises in the Netherlands. The company believes that the power of entrepreneurship can create solutions to the social and environmental challenges that the world faces right now. It acts as a hands-on investment partner, providing social enterprises with financial resources as well as business support to help them achieve their social mission and financial goals.

Posted jeudi, septembre 15 2016
Machtelt Groothuis (Social Impact Ventures): “Making money and a positive impact on society go together in the long run”

Leaders League. What made you shift your career path, from consulting to mainstream private equity and then to social business investment?
Machtelt Groothuis. While I had a great time in strategy consulting, working from the inside with many large and small companies, shifting to PE enabled me to be involved with a company for a longer period of time and have real influence on how companies develop. It also helped me learn about all aspects of doing business, not only strategic but also finance, legal, fiscal, marketing, sales and operations. But I got increasingly disappointed with how investing in mainstream PE is still just about money, in spite of the great influence you have on companies as a PE/VC investor. I think this influence is both a moral obligation and an opportunity as I believe that making money and a positive impact on society go together in the long run. Through my old employer, McKinsey, I met Willemijn Verloop, who had set up an innovative charity called War Child and was working with social enterprises in the Netherlands. Together we decided to set up the first independent fund for social enterprise in the Netherlands.

 

Leaders League. What sets Social Impact Ventures apart from other firms that support social entrepreneurs?
M.G. The most important thing that sets Social IV apart is that we have a very experienced team and can provide both capital and venture support. All five partners in the team have highly complementary backgrounds. They act as active partners to the management teams, helping them achieve their growth plans for example by finding talent to augment their teams, and figuring out impact reporting. Along with our own team, we have a network of companies that help us, partly pro bono, like McKinsey and PWC. Additionally, our fund is large enough to help companies with follow-up financing during their growth phases.

 

Leaders League. Just last month Social Impact Ventures closed an additional €19m for its Fund I. How hard is it to raise money for an independent social impact fund?
M.G. It took us two and a half years, if that may be considered a measure of how hard it is. We were very lucky to get the support early on from a group of investors who believed in the team and saw the need and the opportunity in the Dutch market. Our first closing of €11m was the basis to start talking to larger investors like EIF. Their due diligence process is very strict, but at the same time they bring a lot of knowledge about how similar funds in Europe operate. One of the things our investors like is the fact that the partners co-invest in the fund through a social carried interest which is linked to both financial and impact targets. In this way our interests really are aligned with the fund.

 

Leaders League. If you could point out the three most important things that social business funding needs right now, what would they be?
M.G. For me, numbers one, two and three would all be: more success stories about how businesses aiming to provide solutions for our society’s problems, become successful both financially and in their impact mission. More success stories like Greyston Bakeries internationally and Tony’s Chocolonely and Buurtzorg in the Netherlands are needed to draw investors, and entrepreneurs, to the social business space.

 

Leaders League. Does Social Impact Ventures plan to expand outside of the Netherlands anytime soon?
M.G. Not for this fund. We do help our companies with international expansion, but we are focussing our investments on social businesses in the Netherlands as we believe our local presence is critical in providing the type of support we give.

 

MRC