ColivingDAO Insights: The Web3 Path for Regen Living

Pathways to Impact: Transforming Investing with Damian D'souza

• Daniel Aprea & Gareth Thompson • Season 1 • Episode 32

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Unlock the secrets of impact investing with our special guest, Damian D'souza, a distinguished venture partner at the IESE Impact Fund. You'll gain invaluable insights into the transformation of traditional fund management as Damian shares his journey from strategy consulting to leading a student-driven impact fund at IESE Business School. Explore how passionate founders drive impactful projects and how this passion becomes a key factor in selecting ventures at IESE. Whether you're a seasoned investor or a newcomer, this episode offers a fresh perspective on scaling positive outcomes across larger communities.

Discover the pathways to success in impact investing with practical advice on supporting early-stage startups. We highlight the importance of building relationships with academic experts and leveraging talent from premier business schools. If you're curious about starting your journey in impact investing, we discuss opportunities ranging from large funds to grassroots initiatives. Finally, learn about innovative approaches like ColivingDAO, which are revolutionizing investment paradigms with a focus on social and environmental victories. As Damian shares his personal experiences and future plans, we encourage listeners to stay informed and explore the evolving terms and concepts in this dynamic field.

Daniel:

Welcome everyone to yet another episode of ColivingDAO Insights. This is your co-host, daniel, and I'm joined today, as usual, by my co-host, gareth, as well as our special guest of the day, damian De Sousa. Damian is a venture partner at the Yeze Impact Fund, a student-led initiative at Yeze Business School that empowers MBA students to manage an active impact fund. Before pursuing his MBA, damian spent over five years as a strategy consultant at Oliver Wyman in Dubai, where he advised clients on large-scale projects across multiple industries. He began his career as a director for the ISAC Australia, dedicated to developing leadership and community building experiences for university students. Welcome, damian. Thank you so much for being here.

Damian:

Hello everyone. Great to be here. Thanks for having me, dan and Gareth.

Gareth:

Over the last few years, impact investment has really gained a lot of traction because of sustainability issues and climate change, in particular, companies looking to see how they can invest and use the power of business to make a better world, and we love that. That's what we're all about here at CoLivingDAO. So if we start there with the impact investment space, can you tell us a bit about your background and interest there?

Damian:

Sure. So I think my interest, starting all the way back from when I had my first job as Dan had mentioned was for ISAC. That's where my eyes really opened to the fact that no matter what business, or even if you're a nonprofit, there has to be an element that is focused on profit, and then that's what leads to also the impact that you can have on people, because ultimately, helping one person is fantastic and important, but helping 10, 15 or 100 people requires a sort of level of scale, and that's sort of progressively increased my interest in the space of investments as well. And then the term impact investing and I was doing a little bit of research on this was coined just in 2007. So not too long ago, by the Rockefeller Foundation.

Damian:

But I think now we're in this day and age, and even though I haven't been in the space of impact investing for a really long time, what's interesting to hear is it's getting muddled up with everyday investing and there's no such thing as a social enterprise or for impact focused company. I think all companies have to make it a mandate to impact people or planet in a positive manner, and I think that's one of the most interesting things about the impact investing space, because now you also have traditional fund managers getting involved in it, and our fund, which is a student-led initiative here at ESA, is run by a bunch of MBAs that are focused on creating value through financial investments and also strategic partnerships. We're small. We don't write large ticket sizes, but what we focus on is enabling early stage founders to really solidify their ideas and using the resources of the school to make sure that their vision is realized and they can cause positive impact on the society.

Gareth:

Yeah, you covered a couple of really interesting points there. First of all, you've noted that we shouldn't really be talking about impact investing or social entrepreneurship or environmental entrepreneurship even Really. Impact investing should just become investing and sustainable business should just be business right? Can you tell us a bit more about some of the projects that you're looking at in the SE, any?

Damian:

that are of particular interest to you. Sure, so I can talk about one of the investments that we're trying to finalize. I won't release the name of the startup just yet, but we're working with this very young, very energetic co-founder based here in Barcelona. He's Spanish by nationality, but he also is of Indian heritage, and he's looking to build a medtech-focused business that will enable people with chronic healthcare conditions to manage their care better, communicate with their service providers and doctors a lot more efficiently, and why we were interested and excited to invest in this business besides, you know the founder and his vision was because he had a very strong connection to the cause as well.

Damian:

He himself suffers from a chronic disease at a young age and he struggles through it, but he works hard to manage it, and I think he wants to create some sort of platform that can help similar people or people with worse conditions live a better life, and I think that's really exciting to get involved in. And because he's a young founder and he's very intelligent, there's still a lot of things for him to learn, and this is where our MBA students, who have been in the workforce from anywhere between five to 10 years, have great backgrounds in investment, banking and consulting can come and help him more. On the business side, we definitely can't match his passion and his vision, but what we can support him with and we're working with him is how do you run a good, sustainable enterprise? So this is one of the projects that we're working on, and besides that as well and maybe we can touch on it a bit later, gareth is we're trying to work with some of the larger funds here in Barcelona and Spain to enable their investments as well in an exciting way.

Gareth:

Fantastic, yeah, so you can really see. You know it's so interesting when people have life challenges. They then turn to the solutions mode mindset and use the power of business and entrepreneurship to address those personal challenges and you see these like really passionate founders that want to address, you know, difficult things that are quite, sometimes quite challenging for traditional business to try and address. But if you have a really burning passion to solve something that's difficult, then that is a recipe for great entrepreneurship and it's cool that you get to align with that and come in and help and assist with the expertise that you have from consulting. On that note, you kind of touched on that already. But do you look for impact projects where you see a lot of passion in the founders or the startup teams, or do you look for other criteria and impact projects? How do you at ESE choose who to work with?

Damian:

Yes, passion is definitely a huge thing which, unfortunately, you can't see on paper, but you can sort of understand the more we meet with them. And, as I mentioned, because we're a small fund and we write small ticket sizes, we do have to count on investing in ideas that are at a very nascent stage. So, passion is something and the connection to the challenge that they're trying to solve is very important for us. But beyond that, from a professional standpoint, we do look at the market opportunity. I think it's important for us to understand, through the founder, the size of the market that they're trying to jump into and hopefully capture, to make sure that it is profitable, investable and large enough that there is going to be a financial return down the line.

Damian:

I think it is important for us to know if the area that they're working in is fragmented, atomized or you have certain large players dominating that market, because then it also helps us better assess whether or not this particular founder or group of founders are well-equipped to play and compete in the space and, at the same time, if there is an MVP already started up, if there is any sort of prototype of their business that is up and running, if they're revenue generating even better. That just strengthens our conviction if we have to make an investment, and just in this case of the startup that I mentioned that we're going to be investing in, they were already showing us letters of intent with a number of potential customers to take on board their software as a service once it was up and running. So we do look for these concrete examples in order to solidify our investment decision.

Gareth:

Brilliant, and then in terms of the support you provide. Just one more question, and then Dan, I'm sure, is keen to jump in Do you take equity so that you have a long-term relationship with those startups? It's kind of it was great to hear that you're kind of smart money right. You're bringing in the expertise, not just the cash, not just the money. Do you take equity in the startups that you assist?

Damian:

Yes, we do take equity and at times we either start through a safe note or a convertible note which eventually converts into equity once they get to a later stage of funding. So we look at both options, but beyond equity as well, we also look to at least have a board observer seat and at the same time they have access to us and me as a venture partner and also my other venture partner to contact us at any given point. We try to have more regular touch points on a fortnightly basis with a set agenda, usually with the founder and maybe someone from the core management team to go through. What are the milestones that are being focused on? What are the risks that they're dealing with? Is there any contingencies or dependencies that they aren't able to see? So that is more sort of on the, let's say, weekly or fortnightly support that we provide.

Damian:

Besides the equity and on top of that, I think, the access of being one of the leading MBA schools, we look to also connect our startups with some of our professors who are experts in various fields. So that's almost sort of pro bono consulting support that they get in addition to our support and at the same time we look to involve them in our events, look for talent within our campus as well, either through interns or full-time positions. So these are just a few of those things that we add as an extra, given that we're attached to one of the best business schools here in Europe and actually globally.

Gareth:

Great. It's really great to see that long-term relationship building with the startups as well, and not just a short-term support where you come in and patch things up at the beginning. But this is much more building a relationship with those impact investment recipients. Dan, do you want to jump in there?

Daniel:

Yeah, it's very interesting to get these insights, damien, to see how you really select the projects in the first place and how you can provide value. I know quite a lot of people in our audience have a passion or an interest in impact investing and therefore I'm sure they're getting quite useful pointers here. But if we wanted to just share something specific for all the people that have an interest in impact investing but they haven't really dipped their toes or started anything yet, how can anyone get started in this space?

Damian:

That's a great question and also it has multiple layers. I'll try to provide a simplified answer as much as I can. So in the space of impact investing, you either go for some very large traditional funds, for example, such as BlackRock, which used to have a big focus on ESG, scaled it back. Now they're getting back into it again, so you have these large fund managers that put money into listed equities. On the other side, you also have traditional venture capital, which is now getting more in the space of focusing on impact. So, just to give you an example, there was a fund here in Madrid called SIA just very recently this year raised 300 million euros focusing on climate tech. Right, this is a traditional VC. They don't label themselves as an impact VC in any regards, but this fund is going to be focused on investing in business that can support the energy transition and that is impactful, and I see a lot of VCs heading to that. So I see VC as a really great opportunity for people to get involved in this space and generally, it's one of three reasons why you would get hired by a VC Either you come from a background to just investment banking, corporate M&A, something that you're good with numbers and financials, because a lot of those skill sets translate into the day-to-day work of a VC.

Damian:

That's one. The second thing is you're an operator. You either worked in a social impact-focused startup or company, Maybe you were a mid-manager at some place like Patagonia or IKEA, which are very exciting companies that do a lot in the space of sustainability. That's a second way. And the third is you're either very well connected with a group of investors or very well connected in the startup space. So these are three of the ways that you would get hired as a VC and for me, I think this is probably the most exciting and clear-cut path towards being involved in the space of impact investing or, dare I say, value creation through financial investing and also within a VC. You have investor roles, but you also have roles such as chief of staff or portfolio management, where you're not involved in the financial side, but you're working more with the portfolio companies to enable them to become better and grow bigger.

Daniel:

Great yeah, that makes a lot of sense and I think it's very useful for everyone who's listening to hear such a clear-cut action plan. Effectively, there are different ways for people to use a structured approach to potentially make an impact by joining an impact investing team. Now, if I put myself in the shoes of a slightly different profile potentially someone who does not intend to become a full-time impact investor, but maybe on a smaller scale they still want to make a difference. They still have a little bit of spare money, maybe some savings that they want to deploy, or maybe some family money or anything that they have that they don't necessarily need immediately, and they want to invest, partly as an investment but, at the same time, an investment that is aligned with their personal values. What are the ways someone can quote unquote become an impact investor on a smaller scale?

Damian:

I'm very happy to take your money, dan, if you're giving it away. But aside from that, I think, yes, to be honest, there are a bunch of universities in Europe, in the US as well, that do have student-led impact funds, and I think that is a way for people who are connected to these universities to deploy their funds towards supporting a good cause.

Damian:

Just as an example, oxford Seed Fund, which, for me personally, is the benchmark of student-driven funds in Europe. They made 10 investments just in the last year. I think their fund size is easily over a million and they are run very professionally. So if you're connected any way, if you're in London and have a connection to Oxford, I think this is one way to go, besides being a traditional limited partner in smaller funds that have an impact mandate.

Damian:

Alternatively, if you're willing to put more time and effort towards supporting these startups in a non-financial manner, I would say try to find out where are these impact-focused startups working in. So, just to give you an example, here in Barcelona just in the last year, there was this massive co-working space called Norsken House that opened up, and Norsken House that opened up, and Norsken House is supported by Norsken VC, which is a Swedish-based fund, and this co-working space is massive and it's nothing like WeWork in the sense that it actually looks sustainable and it's housing so many different young entrepreneurs and digital nomads that are looking to build businesses, who are also looking for a lot of mentorship and guidance. So I think, besides money, they are looking for this professional support, or be it even through marketing their ideas and services through a podcast such as this. I think these are some of the ways that you can already sort of start to get involved in if you are really passionate or wanting to support entrepreneurs in this space.

Daniel:

Brilliant. Yeah, that's definitely a few more very useful pointers for the audience. So I'm sure quite a few people will take on those. And we know that there is a very specific interest in our audience about regeneration. And now when we talk about impact investing, it's a broader spectrum and when we go a little bit more specific, we realize that regeneration is definitely one category of impact investing and many of the people in our audience have a specific interest in refi. I mean, we ourselves focus a lot on refi as well in our project called Living Down. So what can you say specifically about refi? Is it one of the areas of interest personally for you or for the organizations you work with? And what do you think? Is there going to be a shift towards regeneration that is going to happen in the next few years?

Damian:

I think and correct me if I'm wrong here, but the way I saw what regenerative economy's definition looks like, it's almost quite close to sort of the circular economy, right With now the four R's instead of the general three R's. If the question is, do we see the world and different industries moving towards that, I would say absolutely so. For example, coming in from the Middle East, that's becoming a big focus there in ensuring that there is, for example, sustainable practices within the construction industry. You know there's a lot of construction happening in places like Dubai and Abu Dhabi and the government is taking a proactive approach in ensuring that all the new developments are built in a manner that is environmentally friendly. At the same time, they're also working hard to make sure the existing buildings are more eco-friendly as well, be it through introducing district coding systems or even enabling energy services companies to come in and change the light bulbs to LED and having timed lighters and electricity in rooms when people are not there.

Damian:

So if that's part of the regenerative economy, which I know is focused more maybe on using raw materials for different things, I think it is moving there. Am I interested in it? To an extent, I think my focus is more sort of on how tech is enabling a better economy and a better society. At the moment, I think regenerative economy is exciting because there is a physical aspect to it. Again, I had a friend who worked at IKEA over the summer and they're obviously trying to do some fascinating things with reuse of furnitures. So I don't think it's a trend that's going to die down anytime soon and it's going to become mainstream in a lot of different industries, in my opinion.

Gareth:

Great to hear, damien. You said something before that was related to this, actually, and it really caught my attention where you said there was a VC fund who is investing 300 million euros in the climate space. But they're not necessarily. They don't label themselves as an impact VC fund, and so what we're seeing is evidence that mainstream investors are moving into the impact space without calling it impact so effectively. Mainstream investment funds, like VC funds, are becoming impact investors almost by default because they see the need for investments in these new markets and new spaces that also have social and environmental benefit.

Gareth:

I think the way that we see the regenerative economy and regenerative finance investing at CoLivingDAO is that it's kind of like impact investing 2.0. And if you look at regenerative finance as the inspiration point, what it aims to do is embed social and environmental benefits into every business transaction and that way you can wire it into the economy, and so we suspect that regenerative investing is going to be kind of a new part of an impact investing. For those that really want to go out and look at the really progressive edge and look at the paradigm shifts, like the circular economy that you mentioned, is a huge opportunity, right, because at the moment we use so many materials across the world. We take, make and waste in the linear economy. But the circular economy means that you can reuse materials on a massive scale and use more biomaterials, which is much better for the environment, much better for human wellbeing. So yeah, really good to get your insights on where that regenerative space might sit. Thanks very much for your comments there.

Damian:

Yeah, no, and it's a great point you make, Gareth, and I think this is one of the areas that, globally, europe is still sort of a leader.

Damian:

All right, and just the fund that you mentioned, why they don't label themselves an impact investing is they're from Spain.

Damian:

Spain, 50% of the energy is almost through renewables, so it's kind of part and parcel embedded into daily business life, and that's how the VCs also see it, and I think Europe, as in when they put further regulations in space, that now it goes beyond the circular economy and also there are regulations that businesses have to do well for the people involved, both for their employees and for their customers and for their suppliers. You know, I think that's when it gets more exciting, more interesting, and then it'll start to spread out globally. Then it'll start to spread out globally. So I'm looking forward to seeing what comes out of Europe, and that was also part of why I wanted to come and study in Europe to figure out what the rest of the world thinks is very new and groundbreaking has been established in Europe for long periods of time in order to ensure that we're going towards a cleaner, greener energy future 100% agree and, yeah, it's so good to hear that it's becoming business as usual.

Gareth:

Impact investing is becoming business as usual and hopefully in the near future, in the next few years, regenerative investing will also become business as usual and make its way into impact funds as well. Dan, should we talk a bit more about co-living DAO and how that connects to regenerative impact investing?

Daniel:

Yeah, absolutely, because it's very pleasant to discuss about potential for investments or simply backing causes, backing projects that have an impact, not only financial, but also an impact for the environment and the people involved, and when we talk about planet and people, we often have this expression the triple win profit, people and planet.

Daniel:

So what we're doing here at Colvin Dow is, in a way, partly answering one of the questions, as well as in how can people get involved and start making an impact, and one of the reasons is, once you imagine a federation of co-living community and community starters that will need fund to effectively start their communities, here's there's an opportunity to back a series of projects that have a common denominator in the federation itself utilizing circular economy principles to ensure the benefits of all the stakeholders, being the residents of the community, being the, the investors themselves, being the operators or community starters, as well as the planet and nature, and as well as everyone else who's involved, such as partners, the local communities and and so on.

Daniel:

So definitely, what we're doing here at Koldovin DAO is very much in line. So it's a pleasure to have a conversation like this, because I feel that the more we get together people that have a similar shared set of values, the stronger we all become and we can all work together towards this. Gareth, any thoughts on this become, and we can all work together towards this.

Gareth:

Gareth any thoughts on this? Yeah, I think, um, yeah, you've covered all the main points here, diana. I think, with the main thing we're looking to, to build at co-living dao is a regenerative community enabler, right. So if you've got a group of co-living communities all wired on the same system and that system is regenerative by design, which is the way we've designed it, we're putting circular economy principles in there. We have a strong multi-stakeholder legal structure and a decentralized decision-making structure structure. All of these things enable a social and an environmental win with every business transaction, which is the very definition of regenerative finance. So we're going super ambitious on this, damien, and we're looking to make the paradigm shift and build communities on this new regenerative fabric. And it would be great to talk to impact investors to see how they would like to get involved to back the vision and if there's any contacts or communities that you see as being relevant, that would be amazing if you can send them our way. But that is where we're headed and that's the position we're in right now.

Damian:

Yeah, that sounds very exciting, a new way to approach sort of syndicate investments, and I'm sure there would be none come to mind, but maybe we can take this conversation offline as to which funds would want to look at it as an almost different asset class in this space. But kudos to both of you and wishing you a lot of success.

Gareth:

Thank you Really appreciate it. Yeah, we can take the conversation offline, for sure, more of a general conversational piece, but yeah, and so if you were to sum up where you think the future of impact investing is going to go in your own career in that space, is that something that you think you really want to align with over the medium to long term? Do you see yourself as being at the forefront of impact investing in the future, or do you have alternative ambitions there? Where do you see yourself going?

Damian:

I mean I'd love to say a hard yes, but, given the stage in my life and also some personal responsibilities, I will be heading back to the Middle East and to Dubai to continue on my consulting career, but I think I'm not going to stray too far away from the focus on investing, be it through advising the ESA impact fund for a minimum of at least the next three years fund for a minimum of at least the next three years, and, at the same time, deploying my own funds to become an angel investor and again, I'm not going to call myself an angel impact investor.

Damian:

I'm going to be looking for opportunities around value creation, be it for the society, be it for a group of people or to address a challenging topic, and I'm excited to see what kind of opportunities I can invest in. And I think one of the benefits of being in the Middle East is also being quite close to India, where there's a lot of exciting things happening. You have a lot of young, hungry, driven entrepreneurs who are building businesses that are solving the problems just in the communities, and that in itself is impacting millions of people. So that's what I'm excited for and that's what I'm currently planning my career towards.

Gareth:

Fantastic. India is a really exciting space and you know loads of opportunities for renewables and circular economy initiatives in there as well, for sure. So that, yeah, we wish you the best of luck in that. And awesome that you get to continue your journey with the ESA Impact Fund while you do your consulting work over the next couple of years. It's a great combination, so you can thread those two things together.

Daniel:

Yeah, damon, this has been very informative and very insightful as well, so really appreciate your input. Just before we wrap up, any final thoughts that you want to share or anything in particular you'd like to share with the audience.

Damian:

I think one thing that I think is interesting is I feel the term impact investing will die because some of the professionals I've spoken into the space that I've been there for a lot longer of a period than I have they're shying away and moving away from this term of being impact investors. So what I'm excited to see is what this terminology becomes. Maybe it becomes something around regenerative finance, like you said, gareth. Maybe there's a new terminology that will be coined, something around value creation. Maybe that's where my bet would be. I think that's what's exciting, and I think it's a space that no one can ignore and people should try to read into it, listen to amazing podcasts such as the ones you gentlemen are running, and just reading as much material as they can to align their careers in this space. I think those are sort of my parting words. I don't want to hop on too much.

Daniel:

Brilliant. Thank you so much, damian, for being here and share your very valuable insights, and thanks Gareth, as well, and thank you so much everyone who's listening, as usual. If you're not subscribed yet, don't wait and just make sure you subscribe now, because we will be back very, very soon with more inspiring conversations. So make sure you share this podcast with your friends as well and with anyone you believe is going to find it interesting, and we will be back very, very soon, as usual. Thanks everyone you.