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Impact Investing w Mike Winterfield – Ep. 9

by | Apr 16, 2019 | Private Equity, Venture Capital

SUMMARY

Mike Winterfield is the founder and CEO of Active Impact Investments.

He is blazing an interesting trail in the world of finance with a focus on companies that have a defined social benefit and purpose.

The thesis of his fund is to invest in companies that have a clear stated mission to tackle some of our most challenging social and environmental problems. The thing is, it is not a charity by any means.  Along with a purpose that goes beyond just profit, his fund is looking to make outsized returns the same way a typical venture capital fund would.

Impact investing may be gaining a meaningful following. From high-networth investors looking to have more meaning in their investments to companies using a greater purpose as a competitive advantage, Mike and his team are on to something really interesting.

Mike Winterfield on:

LinkedIn

Twitter

Website

TRANSCRIPTION*

* This is a software-transcribed article. 

Cory Cleveland [00:00:41] Welcome to this episode where I met with Mike Winterfield, the founder and CEO of active impact investments. Mike has received a number of accolades including being a Top 40 Under 40 recipient as well as having grown and led some pretty big successes in the startup space. He’s now blazing a new trail in the world of finance.

What’s marketable is that his career is primarily focused on building purpose driven companies. This is partially what led him to start active impact investments; a fund focused on purpose driven company. The thesis of the fund is to invest in companies that have a clear stated mission to tackle some of the most challenging social and environmental problems we’re facing. The thing is this is not a charity by any means.

Along with a purpose it goes beyond just profit. His fund is looking to make outsized returns the same way a typical venture capital fund would. What occurred to me in our conversation is that this may very well be the trend for the future from high net worth investors looking to have more meaningful investments to companies using a greater purpose as a competitive advantage. Mike and his team are onto something really interesting. This is a different perspective. I’m sure you’ll enjoy it.

 

Cory Cleveland [00:02:00] I’m on the line with Mike Winterfield of Active Impact Investments. Mike really nice to have you here.

 

Mike Winterfield [00:02:06] Thanks for having me Cory.

 

Cory Cleveland [00:02:08] Excellent. It’s an interesting path you’ve taken. You definitely have some accolades in your career from small early stage companies up to running some some big private or public companies as I understand and now Active Impact Investments. Can you give us a bit of background an elevator pitch on yourself?

 

Mike Winterfield [00:02:27] Sure. So. I guess I started with a corporate background but always with super entrepreneurial companies. So I’m generally not that big companies with them… sorta a range between thirty to a few hundred employees. And really entered in from a sales standpoint. And doing B2B sales and and loved that. But what actually did it in a model where when I started off I was actually 100% commission. And so, what appealed to me of that was sort of building a business within a business. Like I said for that entrepreneurial mindset. And then I had the opportunity to kind of move up through that organization. And get experience with a bunch of different things and. Between that organization and a few other organizations. You know I got a chance to be venture backed at one point by KKR and Torquest. Got an opportunity to some M&A work. An opportunity to the turnaround guy for a while and kind of going into underperforming divisions and regions got to do some geographic expansions moving into other cities other countries. With product lines and then got an opportunity to do some product launches. So commercializing IP from software services and moving them over to to be sort of more traditional SaaS subscription software.

 

Mike Winterfield [00:04:02] So it was a ton of fun. I mean I just I consider myself lucky to have had the opportunity to dabble in a number of different industries and a number of different roles and and to experience some of these sort of projects and events that small companies typically go through out there trying to grow and scale. And that was a little bit kind of what brought me to doing what I’m doing today was just. You know trying to harness the things that I really had built some experience doing that I really love doing but where I thought there was actually a need in the market to support small businesses… Startups that couldn’t really afford having someone on their senior leadership team that had necessarily been through these things before.

 

Cory Cleveland [00:04:52] So that brings us in to Active Impact and in your investment fund there and what your you’re focused on there. Can you give us a high level of what Active Impact does.

 

Mike Winterfield [00:05:04] Yeah. So you used to be a forty five minute description of what we do now move to. Where we’re a small impact venture capital fund. So I can say it in one sentence now. Yeah. The reason this fits in with longer before is I think the reasons behind why I was doing it and and what I believe to sort of our unique approach to doing it right. Yeah we it’s one that I founded that organization actually passed two years ago. In those two years we are running and we now have 10 million dollars in assets under management. And that’s spread across across 50 investors all accredited investors. And and yeah what our mandate is is to invest that money in 15 startups. That are early stage revenue but also as are very literal name implies, they are all impact. We believe to be impact organizations. And. Then when I see impact I mean companies that we believe. Through the course of their business and their revenue generation. Are solving important social or environmental issues. And then the other very literal part of our name on the active side. Is that both myself and a number of our investors. Took a keen interest in getting operation involved in supporting our portfolio companies. And so we were lucky enough to attract investors that had backgrounds that complimented mine. People who had been head of sales a finance and all of the head of marketing in others successful or small or medium size private companies. And just saw this as a way to get involved with their money.

 

Mike Winterfield [00:07:14] Instead of mail off the check to the financial advisor. Once you’re making your RSP contributions or whatever you do. And then just receiving your annual report on your earnings this way is an opportunity for people to invest. Very much in issues that they cared about get involved in the startup community. Paying attention to you know interesting innovations that are happening here in Canada. And to hopefully influence the success of their investment. Now there was that great alignment that our investors could leverage their network and leverage their expertise to help our portfolio of companies and more of them would succeed. And the ones succeed would grow faster than is typical in the market. So that’s the medium length version of the story of what we’re doing now.

 

Cory Cleveland [00:08:12] All right. When I look at that it’s an interesting combination there of investing in companies which have a. Perhaps a capitalist conscious to them and then also involving accredited investors high net worth individuals to participate in those. What I notice is, I definitely understand and see that there’s a great purpose here. But when you look at purpose driven funds they’re definitely in the minority. How big of a market is there for investors who are looking to invest in more socially conscious businesses?

 

Mike Winterfield [00:08:52] So luckily it’s growing really quickly. So I tend to kind of scrape a bunch of data and reports that are getting posts on this on a daily basis. And then you send it out via LinkedIn and a few other channels, Twitter and so on. And what I keep seeing reinforced is that it’s actually the fastest growing financial category, fastest growing investment category. So there’s a bunch of stats about sort of the big transfer of wealth that’s happening from the baby boomer generation. And you know, unfortunately passing from the men to the women because the men tend to die a little earlier and the women tend to be a little more socially conscious and and it’ll pass from the women, from the moms to the kids. And then that you draw some of this millennial generation and millennial generation is this massive jump in interest in social or environmental issues. So we’re seeing it grow from that standpoint just from a demographic standpoint and where the money is either flowing, intergenerational or the millennials are starting to earn into their own money. And then we’re seeing also I would say some of the skepticism of the traditional capitalists starting to decline which is nice to see. Where this was sort of a nacent category and there wasn’t a lot of data. And then you start to see more and more funds performing well that have this combination of financial returns and social or environmental benefit. And so when people start to realize that there is not a trade off in making that decision. Then I think you kind of ask yourself why not. Why wouldn’t you invest in that category if there is no trade off.

 

Cory Cleveland [00:10:56] Yeah I see what you’re saying there. There is a benefit to your investment along with the potential return. It begs the question though is there… Are socially conscious companies comparable and competitive when it comes to venture state or venture class investments with the potential returns, the IRRs and so on? I mean are they are they in the same class or do they get treated treated special?

 

Mike Winterfield [00:11:21] Well I I mean I believe they’re just like any other company. They’re not inherently better or inherently worse. It’s you know first you set your intention in terms of what your product or service or you know impact or mission, your why. You know if you’re on your assignments and make a world of what you’re going to do. And then you’re either a well-run company or a poorly-run company. They have a great leadership team or a poor leadership team or you know… So I kind of like to lead people down that path a little bit and say hey listen you know if you believe there are companies out there that are doing good and companies out there doing harm and everybody would agree either are OK. And you believe there are companies out there that are run well and we’ll make lots of money and companies are they’re run poorly and we’ll probably owe the business. Yes, I agree. Well we’re just interested in that one quadrant where all of these things align where they have the opportunity to produce venture great returns and are capable of large scale. And at the same time create a lot of impact. So gives us a little bit of a smaller pool to draw from. That’s not that is, that’s true. But it’s not, there aren’t enough of these to choose from. We’ve seen over 400 startups in the last yea that fit into into this category and of that so far we selected the top four. So…

 

Cory Cleveland [00:12:58] You know it’s interesting to think that perhaps you got a smaller pool of companies who have a defined purpose there. A larger purpose but I would imagine these companies probably have a better opportunity to attract qualified talent. Because there’s you know there’s something there beyond just creating a great piece of software.

 

Mike Winterfield [00:13:25] Absolutely. And so the statistics which would support what you just added and I’ve lived it personally. I mean I’ve worked at some work in the software services company called Tracks on Demand. They were a certified B-Corp. They really kind of live to their mission values. And they worked in a hyper competitive states trying to attract top technical talent. And, they’re a private company so I can’t I can’t say what the profitablilty is but I would say that they grew faster than any other competitors and they were more profitable than any of their competitors. And so. You know. This focus on doing the right thing for employees doing the right thing for customers doing the right thing in their community. And not making short term decisions around profit can actually lead to higher levels of profitability and you know very specific to your point. How that plays itself out on the employee side I think is. Like employee attraction is expensive. Unless you have a good employment brand. These companies do have a great employment brand. This is where millennials want to work which is where a lot of the up and coming talent is. Employee training and engagement is expensive. If you don’t have a great place to work. And of course retention is expensive you know the cost of free hire and so on. So if you can have that down and then then you’re right there’s actually. There is an economic benefit that you could sell for any you know pure capitalist that is you know bottom line oriented even though you’re leading with a social or environmental impact. And I would take the employee bucket and then I would move that over to the customer side. I would say what the customers want to buy right now. Customers are voting their wallet. And so how do you have more loyal customers? Or how do you differentiate yourself? And in many cases if your product or service addresses its need then you’ve got a huge growing population that wants to consume from companies that have this sort of thought and leadership. And then interestingly moving over to a third bucket. You’ve got the investor pool. And so when you think of it that way that. Boy if I had some of these considerations in mind if I was… If I could create an offering that was economically viable and offered important social or environmental issue. And that would get me. The best talent. From an employee standpoint and that would attract a unique and larger customer base. And that would allow money to flow into my company from an investment standpoint. Those are three pretty reasons to do you haven’t considered going this way.

 

Cory Cleveland [00:16:26] You know when you when you talk it out it makes sense and I mean when you talk about statistics of money moving into more purpose driven funds and and attracting millennials who have the biggest interest and some of the the fastest growing earning power and so on. I mean it all makes sense. Do you find though that there is a… Is there still a stigma around this and perhaps it’s not a stigma like you know something in the forms of a stigma for mental illness but but maybe an ego stigma from the financial community when it comes to investing. In well one your fund. And two in purpose driven companies.

 

Mike Winterfield [00:17:06] There is. There is but you know. I think. You know I have a gash in terms of where that comes from and where it comes from is. When I when I was a kid. If I saw. Some sort of. Issue or cause that I really related to and I wanted to do something then. Kind of chip in the a part of the solution. Pretty much anybody with only a they might be that two things you can do donate money. Or you can volunteer. And so you know for for a few generations we were really relying on. Sort of non-profit entities. And government entities. Trying to run around and deal with a lot of these issues. And then this this kind of concept of social ventures and conscious capitalism and impact investing started to come around. Then you had some of you know. The great strategist who you know Michael Porter from Harvard and talking though should have the ability to leverage capitalism and basically you bake these things into the DNA of a for profit entity. And so what you have right now and so a good reason for skepticism is. You do have some of the. The old players that have kind of dusted off you know a not for profit volunteer based organization. And they’ve they’ve put a banner on it and tried to make it look like a for profit. And some of those are. Not good companies.

 

Mike Winterfield [00:18:46] So so the problem with impact is that it all gets painted with the same brush. And. So there are people out there that are okay with. You know sort of what they call concessionary return impact products and so you know there are people out there investing because they care so much about impact. But they actually don’t care that much about financial returns. And then there’s other people who are out there investing in things that. Are sort of market rate returns. And then there’s other people that are investing so they’re looking for venture returns.

 

Mike Winterfield [00:19:23] So. I think the most important question is really. When you are looking to invest in impact. What are you looking for in terms of return. And then is the. You know if you’re making direct investment is the founder of that company. Is that what their interest is that they have. You know lofty ambitions around you don’t. Economic. Returns. And scale and and and are they putting together sort of a world class business. Or did this kind of smell more like a charity? And so. Yeah I don’t leave it at that but I’ll just say. Again just like any category. You have good know good opportunity and bad opportunities. But what exists within the impact world is. Three different categories. And you know one of the category is one that is accepting of low returns. And so you just need to know what you’re buying.

 

Cory Cleveland [00:20:22] I hear you there. Yeah. And for clarity what side of the that spectrum does Active sit on, Active Impact?

 

Mike Winterfield [00:20:30] That’s we. Funny enough it was it was it was a debate amongst our team where we where we should all and how we can create the most impact. But we did ultimately land on the fact that we wanted venture grade returns.

 

Mike Winterfield [00:20:46] We wanted above market returns we wanted risk adjusted rates of return whatever you want to call it. Basically yeah we’re trying to create the highest economic return that we can. Alongside the highest impact.

 

Cory Cleveland [00:21:00] So that brings me into the next question. Because that would help frame up the kind of businesses you’re looking at and what are the parameters of your investments what what kind of companies do you look at?

 

Mike Winterfield [00:21:19] So I guess I’ll start with. Right. That’s the that’s sort of the binary one like people very quickly gets qualified in or qualified out. Find out whether we need more in fact. So. On the impact side you know my partner and I are probably most. Passionate about environmental. You know environmental impact. So companies are doing things to reduce the effects of climate change or they are doing things from us sustainability standpoint, a regeneration standpoint, or conservation standpoint. And then if we’re not doing something on that side of the equation then on the social side. Everybody has a different definition of. What what are the pressing social issues of our time or where the ones that move you or you know what what qualifies. You know our biggest test there is just is it something that can benefit. The many versus the view like we see something come in front of us where. People would say hey this is a social venture and know we do this thing to improve. Quality of life or extend you know extend life or what have you and then you look at the. Size and you say OK but this is only available for the top 1 percent of the world. And so if we were going to qualify him. We would look for something that’s removing. You know access. Removing barriers to access or creating you know just creating more inclusiveness doing something that addresses the needs of. You know more of the population and creates more of a level playing field. So we like innovation is not so anyways qualified in that we believe. That your company can solve one of these issues. And then I would say we will probably probably move to. Doing what most. Venture capital funds do. We get into a very deep due diligence. Which ones do we think have. The most to gain and have the fewer risks and have some kind of leadership teams and have great market timing and and. Have a great great idea. And specifically what we invest in. Is companies that are early stage revenues usually for doing kind of a first couple hundred thousand a couple couple million in revenue. And we have focused on companies that have. Either software or growth services business model just because that was. That was my whole operational. And leadership background or at least you know there that. I have more of an ability to kind of screen who I think the winners would be and companies that after we invest I know that I can use some of my White House work experience to try to help them out.

 

Cory Cleveland [00:24:16] And then with those What’s the theme from those parameters what’s kind of the bite size how much. For a company who is approaching you what kind of ask should they come with?

 

Mike Winterfield [00:24:28] That’s our first chapter is is typically about a quarter million dollars. And then we keep a big chunk of the fund into reserve for follow on investments. And so you know that first quarter a million invested there will be we’re usually participating in a seed round. It could be appreciated it could be here today but typically a seed round where the whole round is around a million dollars. So we’re kind of taking a quarter of that round. And we’re going in as a syndicate with a number of other investors. And and then what we hope to see happen is that we work with that organization they experience know tremendous success growth. And then at some point within the next. Nine to 18 months that they’re actually going out and doing another round of financing moving on to Series A or Series B where the valuation of the company is increased hopefully dramatically. And that for the ones that we really believe are going to be winners and where we really and who. Is coming in and taking a lead position in that next investment. That we would exercise our pro rata rights and we would come in. With more money to maintain our percentage ownership. And so you know we might take 750 or a million dollar position in a company after after kind of tracking them. For for a period of time.

 

Cory Cleveland [00:26:05] So you made a point there about the ones that you really see that you really believe in. Aside from the well you know they’re they’re hitting there. You know they’ve generated revenue to profitable. Maybe they’ve got a few other of the typical checkmarks. What do you look for? What tells you you know what I think this is a winner?

 

Mike Winterfield [00:26:30] Before we measure her or we invested.

 

Cory Cleveland [00:26:31] It could be before or after and in this case. I was referencing when you’re looking at doing a follow on round and you’ve worked with the company for some time. What is it that gives you that that insight to say yes this is worth another round?

 

Mike Winterfield [00:26:55] Look before we before we’ve invested we we skew very heavily our screening to to team.

 

Mike Winterfield [00:27:03] And there’s a in a whole bunch of really interesting research shows. The TED talk by and by guy Bill Gross talked about how. Many investors have sort of under prioritized the importance of the team and of what happens in the startup. Ecosystem being that there’s going to be a lot of pivots there’s going to be changes in business models and changes in pricing and even changes in the customer segments we go after. But you really have to kind of have yourself attached to the right you know benefit on the right that on a horse so to speak.

 

Mike Winterfield [00:27:43] So you know we are really deap in founders springs and and look for people who we think. Have have the traits for success have the tenacity and the grit elegance and accountability and the ability to get lots of other people. So what we’re really looking for before we invest is. Do we think these core people. Can execute. And then after we’ve invested we get a chance to watch them. And so I would say you know as we make a decision to put more money into our company. I mean for one you’ve got a bit of a stack ranking in the top is we’ve invested in 15. We will find the final investments in companies. And you know what a lot of kind of. Portfolios will do is they’ll they’ll really stack up on the top. You know. Two three four five 5 of those. And so you know if you’re picking the top 5 and you’ve had an opportunity to look compared to being 15 years giving the top 5 more money. And what we’re looking at is. Execution. Right. What were they forecasting what actually happened or the things that they said they were gonna do. Did they do the things that they thought would happen happening. And. Then. And. Well yeah I mean I could name off a zillion different metrics but probably pretty pretty boring year for your list there so I’ll stick with that. I mean I think it really kind of have to do with. Average working with them and as they have to. Handle and tackle. The daily challenges that come to especially small businesses. How are they handling those those those times of adversity and. And when it comes to kind of setting intention and plan in place of where they want to go and how they want to get there and how. How effective have they been in doing that.

 

Cory Cleveland [00:29:45] You make good points there and it’s something that I hear time and time again I mean this is for public companies as well is setting those points saying here’s what we see here’s what we’re going to do and then actually coming back to report on them and showing the progress. And if you don’t hit that progress explaining why and and explaining what you learned. I hear it time and time again of how important it is.

 

Cory Cleveland [00:30:11] And then the other thing and I mean perhaps it’s it’s just table stakes. But it’s when you talk about the team. It’s it’s incredible how powerful it is especially in very very heated markets something like the cannabis space. You know damn everybody can come up with a new idea of how to use cannabis. But the ones that are getting the big bets and in an investment are those who have a solid team who’ve been they’ve been in the trenches before and more importantly been in the trenches before together. So from that and understanding some of the deal terms and the bite size you do something else that I find interesting about Active Impact is the incorporation or the the funding as well of B-Corps and you’d all be a lay my my relative ignorance on the table here I’m not I’m not well versed on B-Corps and how they receive investment and is if it is it different. What is that whole world about?

 

Mike Winterfield [00:31:15] Yeah. So we are a certified B-Corp and the certification is done by this independent third party called B-Lab. And in a couple of our portfolio companies or view corruption and we would love it if all of them make the decision to become calm so we don’t. We don’t mandate that. So. The best way I could describe our opposites. It’s a third party. Scoring System and validation of that scoring system similar to like how. You. Know compliance line like ISO or on the ethical side like an Ocean Wise or Fair Trade or when you play instead of being related specifically to the manufacturing industry or the coffee industry or the clothing industry or whatever. Or that the seafood industry they came up with something that they felt would be universal good use for. Any company any industry any size any geography. And I think that’s what was so compelling about it and so. You now have. I think the numbers. Seventy thousand companies have now can be for quick impact assessment to retool if you want to kind of see how you stack up against other companies that are paying attention to these things.

 

Mike Winterfield [00:32:42] But what B-Corp is it’s just. It’s. Their way of thinking is how to use business as a force for good. And not just know that really resonated with me. And so what I would say it is in practice once you decide to that step for your company. Is it’s just it’s a way to bake your values. Into the DNA of the organization. So that doesn’t just sit with. Kind of one leader or say yes it’s our department. It’s actually sort of encoded into your business and so it’s kind of. Good governments. For being aware of your. Your total footprint if you will. How do you treat employees. How do you treat customers. How do you contribute to the community. What impact you have on the environment. So just being aware and you don’t you don’t have to be perfect. You just. Have to. You know be better than where the average is.

 

Cory Cleveland [00:33:49] Do you have any examples or stories of perhaps very well-known companies that perhaps people don’t know of the corps?

 

Mike Winterfield [00:33:59] Well you know I’m in Vancouver and so you know the big things in BC are Patagonia and who’s We Jackson man a lot of people know Kickstarter the top on the platform therapy for. So now there’s. There’s a few quite large brands that have adopted this. There is a challenge for the really large brands of the challenge for publicly traded companies because of. Well what is stated to shareholders. Is that we will focus first on maximizing profits. And there’s a bunch of research actually showing that that. Is probably broken. And probably leads to lower profits. But it’s difficult to change sort of the legal. Requirements. That have been committed to shareholders. It’s it’s really hard to change after the fact for publicly traded companies that they think would be Pakistan.

 

Cory Cleveland [00:35:04] So in that case if if. I’m trying to think through this here because I was under the understanding that a B Corp. And perhaps this is only in the United States if. It is regulated or it’s under a different set of rules to where the obligation to shareholders is different than if it was just a regular corporation?

 

Mike Winterfield [00:35:30] Yeah I’m sorry… You know you bring up a great point there is that there is confusion on this general marketplace. So. There is the B-Corp certification. And then there is also a B-Corp in terms of how you have registered your company. So you can. You can register as a as a benefit corporation. And so yeah that’s a designation that exists in. An. Either every state in the US right now or almost every state. I happen to track. And it has been legislation that is moving into other territories so there’s there’s actually. Legislation being proposed right now in the province of British Columbia for instance to bring that in place. So to your point before that change. Anything about sort of of your company or how you can receive financing and if the answer is No. It mimics very much what a typical registered. Corporation would look like. With save for a couple of lines. Of description of. How or how the organization will be. So yeah. So there is there a legal way. To incorporate your company. And then their ID which is available in some jurisdictions and some not. And then there is this certification. And you can have one. Or the other. Or both. So it’s not that no one requires the other and vice versa.

 

Cory Cleveland [00:37:18] Ok. Yeah. Thanks. Thanks for the clarity on that I mean it’s some I think it’s an interesting world and it definitely has a lot of benefit. Excuse the pun.

 

Cory Cleveland [00:37:28] So In changing direction a little bit from what you’re doing there with Active Impact and perhaps more to do the insights from your. Your job as a fund manager. What should what should founders and CEOs know about your job specifically? You know one thing I say often is that investment funds. They often live and die off of good deal flow. As one example. But what are other things people should know about your job as a fund manager?

 

Mike Winterfield [00:38:02] Specific to companies perhaps that are applying For funding with us or investors or?

 

Cory Cleveland [00:38:11] Well I think in this case yeah. With. The companies looking to speak to you let’s let’s tailor it down that path because I think that would be most beneficial.

 

Mike Winterfield [00:38:22] So I think the. The mistake I see made most often from companies. Is our founders of companies that are seeking funding is. That. They try to talk investors into their investments. And you know the big piece of advice I would give them is that that’s not a good use of time. They think the best thing you could do as a founder of companies that very quickly qualify any investor or any fund manager. But what essentially kind of get a sense of. What fits in their box and what doesn’t.

 

Mike Winterfield [00:39:05] And so you know as I described to you that we look for growth services companies we look for impact companies. We look for companies that are doing this into under two million revenue. We only invest in companies that are earning less. We are ones that are headquartered in Canada. You could ask me for questions and you get to that sort of investment thesis of us. And in fact. If it’s not short of funds on our Web site then shame on me. But typically fundable will be pretty clear on what fits in the box. Front page of the website as well. And. So what’s kind of curious to me is that. I go to tons of events and when you’re the person with the money and you’re a popular guy in the room sometimes and in founders to come up and they’ll talk to you and they spend a lot of time explaining their idea. You know five minutes later it’s what have you in them. And sometimes something that can be it can be inappropriate because typically investors kind of get the gist of the idea not all the nuances understood but at least they just the idea that it’s something they would want to know more about. Or. Not alive. Within a sentence or two. And then. The example I was going to give to people trying to talk you. Into. Thinking about something outside of your your box. And why I think that’s such a terrible use of time. Standing in a line up at the Soul CAF conference in San Francisco. A guy approached me. Tells me a little bit about I was there he says. And I quickly learned that they were prerevenue you and I explained to him that our fund is prerevenue. So unless I really wish the best for you and it sounds really awesome like you’re doing so if you want to get in touch with us for generations then then I’d be happy to take your call. And any kind of signing around here why you might want to think about us you know free revenue you know you don’t use your revenue in why we’re dead on.

 

Mike Winterfield [00:41:22] And yeah I didn’t take the time to explain it to him but. But the reason why if he understood what happens in a minor key that he wouldn’t waste his time doing that is when fund managers who raise money they raise money from people under a particular pretense of what they’re going to do with it. And so we have the investors in our fund and I told them what I was going to invest in. And so I can’t just meet a guy and I call friends and hit it off. And decide. You know I guess I’ll call all 50 of my investors and I’ll let them know that I think that we should and. That’s pre revenue in this case you know a lot of clients. So I think it would be kind of comical if that you know that individual. Knew that that was what would have to happen in my world. Right. And would call I understand it’s not just the outsider.

 

Cory Cleveland [00:42:20] I really think that’s an example of a really important point that CEOs and founders need to to keep in mind that when they’re approaching money there’s their set parameters that fund managers work with in. They set their thesis and you can’t just bend it on a whim and be like oh geez you know that is really cool I’m going to stroke you a check right here. Doesn’t work out like that. Right.

 

Mike Winterfield [00:42:43] Right. Yeah.

 

Cory Cleveland [00:42:44] OK. Thank you for that. I mean it’s I suppose I could I could rant about that but it’s it’s always better hearing it from somebody in the in your seat. So that’s fantastic. Any other thoughts around there you wanted to share before we move on?

 

Mike Winterfield [00:43:01] You know I I would say I would encourage more founders to check in. Earlier though with funds so let’s say they do take all the other boxes except for planning stage. So you know they’re in the right industry they’re in the right geography they’re you know they’re whatever other criteria fund might use it to tick all those boxes. They don’t say that you know they’re at a million in revenue and the fund and you’re talking to likes to invest a 2 million round you. I would prefer someone like that approaches us just says… Them I wanted to be on the radar. What would you like to track of us. You know in our journey between one million two million I know we’re not ready yet to go through a formal process appeals. Process. But you know I’d like to be able to. Prove to you. What we can do in the path between being and would have your investment thesis in advance your investment thesis. And I’d like to know from you. Some of the things that will be. Important to you. You know a year from now so that we can set ourselves up for success. And. You know I do I do a lot of advisory work for startups. As well. And that’s one piece of advice that I could give and something I. Certainly would really respect and appreciate with some of the Fortune we’ve heard for it’s.

 

Cory Cleveland [00:44:36] Excellent. Thanks for that. It’s those tidbits which I think can go a long way. I’ve also heard a number of times and I think it’s great advice that. When you’re closing your A you should start raising your B. Voice first or whatever not vice versa excuse me you know whatever stage you’re in, you have to start early and it is it is that kind of conversation listen I know I’m out of your wheelhouse right now. But how can I communicate with you for the future of where I see us going because you mean maybe a good fit. So yeah. Awesome.

 

Cory Cleveland [00:45:09] Moving on here to to the future of active impact. What’s most exciting you now and where do you see this in the future? 

 

Mike Winterfield [00:45:19] Exciting for us was just getting this close. I worked for some fun show to raise ten million dollars for personal funds. Was the first one fund manager and it’s a bit of a different thesis for. And we were. We were over the moon and so. Take a moment to celebrate when we just close the fund a couple weeks ago and so the team and services out for dinner and you know take that once one kind of take a breath and congratulations by the way. Oh thanks so much. Thanks so much. So. So that was a big deal for us. That was where we set our goal and our intention. But. What. Was compelling us to do this from the get go was that we really wanted to make as big of a difference as we can. And I think we’ll have to continue to learn. What are the ways that we can. Really make a big difference. And you know we understand 10 million dollars. From a global standpoint and with the complex global issues it’s a drop in the bucket and we would be pretty hard for us to. Move the needle but what we get excited by is this rebel ripple effects like all the people we have conversations with all the people who kind of scratch their heads and say So why did you choose to do that or why should I consider doing that or you know any of the competitors that we inspired in the space which I’d be happy to have an impact control system.

 

Mike Winterfield [00:46:52] And then and then the more you know the more direct way that we can continue to grow our our impact on our influence is just. By raising subsequent funds. And so. You know our our first priority is to make this fund a winner and to fix great company and get some good results. But on the heels of that if we can if we can. Prove to people that we’ve got a good formula here and the team. Then the next one we would raise would be would be larger maybe 15 million dollars and if we do all of the 50 million mark on that we would probably raise a larger one after that. And so. You know. This kind of lemon and the ambition from our standpoint is is kind of tied in to our mission which is just to move as much money and as much talent as possible. Over to social ventures. And so we do that through seeking leadership. We do it through our fund. We do it through. You know just contribute to the ecosystem. In any way that we can. But some of the issues that we care most about they. Don’t have a lot of time. And so. You know I. Yes I have a financial ambition. I know I have a family that I need to. Provide some economic. Security for. And I use the economics of them as a measuring stick and a competitive guide to you know just see whether I’m I’m you know I’m living up to a standard that I’m happy with and being a competitor. But the more burning issue is I feel like I can I can compete on financial rewards for extra years and I can accumulate wealth for the next two years. The more burning issue for me is the social environmental issue. We don’t know how long that lasts. And so. That’s what drives my urgency around. You know growth the fund and growth of the companies we have in the fund the growth of you know introduction of new investors into this space. And. So so yeah I think you can expect us to be. Really relentless and really impatient to to try to scale up our concept as quickly as we can.

 

Cory Cleveland [00:49:22] Well that’s excellent. And it’s. It’s already validated by some other some other funds out there and to the point you made at the at the start of the interview here that. We’re seeing or you’re seeing and I’m sure we’ll see more and more money move into into impact investments. So I think you’re on a good track there.

 

Cory Cleveland [00:49:45] To wrap this up. Is there any final thoughts you’d like to leave with the CEOs or even the investors who are looking at the work you’re doing. What would be a final thought for them?

 

Mike Winterfield [00:49:57] I guess. My final thought on the impact would just be… You know I’ve only been alive for a little over 40 years so super short period of time in all of human history on this planet but the period of time that I’ve been alive there has been a doubling of the population on Earth. And a world wildlife without report last year that showed 60 percent decline in in population sizes of all other species. So sort of the biomass has reduced by 60 percent in that same period of time just in the last four decades. And then you’ve got lives sort of these pretty scary or horrible kind of coming in terms of how important it is that we. We keep the warming of the planet is no greater than a degree and a half and. Fairly damning report there.

 

Mike Winterfield [00:51:01] So look look at this stuff kind of mind they think. It happens on such a macro scale. I. Think a lot of people kind of go to. Not necessarily a place of complacency but a place of. I wish I could help but I don’t think that I would you would make a difference. And I just think that that is so. Dangerous because. You know collectively if if all of us took me to meet a few. Different choices it would make an enormous difference. And and just what we have at stake is is is is. obviously incredibly important.

 

Mike Winterfield [00:51:50] And then we move that over the financial side. I guess my main message would be. That there doesn’t have to be a tradeoff. I think that a lot of people viewed this space as kind of filled with a lot of do gooders tree huggers and no leader free chocolate.

 

 [00:52:10] I got you… ya… I was thinking there yeah.

 

 [00:52:13] So I mean there’s there’s a there’s a brush that this face has been painted with and there’s been sort of extremist after this. And. You know. And then there have been people who. Have moved into this phase that we’re people that we’re not. You know it’s at the top of their game we’re not the most. You know the highest degrees of talent or what have you. And certain organizations where the bar was lower. There’s an opportunity I think for us to. To have it all right. So if you are an employee I want you to employee if you are a talent you are someone who has. Skills that are important and that are marketable and that are in demand. You have a choice on where you work. I mean that’s just that’s the beautiful thing about having internationals is you get to choose where you work. And so. You know the first. View I would have is choose where you work carefully and it doesn’t have to be working for an employer if the contractor or the gig economy or it could be that you’re starting a business but if you have the skills you get to sort of apply those skills work to the companies that you want to see work and the companies that get the best talent are the companies that are going to win. So pick wisely. And you know go for go work for a company and this is purpose driven. My my hope and I and by doing that. There’s no compromise. You get to work at a company that’s inspiring for you and you go home and you know it’s not just earning a paycheck you. You’re contributing just to something else greater and greater good.

 

Mike Winterfield [00:53:59] If you have money. Then same thing. You can move money into this category whether it be on you know I would have my world but public equity public debt green bonds and geeky apps that are screaming for you know s all right. Yes. E and so on. And they will perform alongside the market. And so. There’s no there’s no consequence there or if you’re more interested in. Private investments. In short the venture capital category or private equity category or or direct investments in small businesses. Again. You can choose where your dollars go and so when you can you can put the request out there and say listen I would like. This level of economic return. And I would like to park my money. Companies that are solving these particular issues. And. That doesn’t have to come with. Financial compromise. If you can choose correctly. So sorry I don’t want to finish off being preachy I guess I’m just saying. I think they’re on on the talent side and on the money side. There are lots of ways to make money so why not make money. Doing things you feel proud of and going to vote. And there are lots of ways to. Be gainfully employed and so why not be gainfully employed. Something that inspires you in a way other than just making a paycheck.

 

Cory Cleveland [00:55:21] I hear you on that and really appreciate it. And I think it’s this has been insightful. What I like about it is. There is definitely a I think there is an avenue and a profitable avenue to be socially aware conscious in the investments we make. And it’s not just about. You know the granola eaters of the world. So yeah I know this is this has been enlightening and insightful. Mike thank you very much for your time.

 

Mike Winterfield [00:55:50] Yeah. Thanks again for having me. Yeah and congrats on the fund and all the best with it.

 

Cory Cleveland  [00:55:55] Thanks for listening to this episode of The Insider’s Guide to finance. If you enjoyed what you heard please share this with your friends and colleagues so they can benefit as well. You can also subscribe and leave a view on iTunes or the play store. You support. There is really appreciate it. For future episodes if there is a question topic or specific person you’d like me to interview. Feel free to reach out. You can connect with me on LinkedIn or through my Web site at Creative return don’t see it.