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Singapore-based Syfe, a robo-advisor with a human touch, raises $18.6 million led by Valar Ventures

Dhruv Arora, the founder and CEO of Singapore-based investment platform Syfe

Syfe, a Singapore-based startup that wants to make investing more accessible in Asia, announced today that it has closed a SGD $25.2 million (USD $18.6 million) Series A led by Valar Ventures, a fintech-focused investment firm.

The round also included participation from Presight Capital and returning investor Unbound, which led Syfe’s seed funding last year.

Founded in 2017 by chief executive officer Dhruv Arora, Syfe launched in July 2019. Like “robo-advisors” Robinhood, Acorns and Stash, Syfe’s goal is to make investing more accessible. There is no minimum amount required to start investing and its all-inclusive pricing structure ranges from .4% to .65% per year.

Syfe serves customers based in 23 countries, but currently only actively markets it services in Singapore, where it is licensed under the Monetary Authority of Singapore. Part of its new funding will be used to expand into new Asian countries. The startup hasn’t disclosed its exact user numbers, but says the number of its customers and assets under management have increased tenfold since the beginning of the year, and almost half of its new clients were referred by existing users.

Other Valar Ventures portfolio companies include TransferWise, Xero and digital bank N26. In a statement about Syfe, founding partner Andrew McCormack said, “The potential of Asia as a region, with a fast-growing number of mass-affluent consumers aiming to grow their wealth, combined with the pedigree of the team and strong traction, makes Syfe a very compelling opportunity.”

Before starting Syfe, Arora was an investment banker at UBS Investment Bank in Hong Kong before serving as vice president of product and growth at Grofers, one of India’s largest online grocery delivery services. While at UBS, Arora worked with exchange-traded funds, or ETFs.

“I could see how a lot of institutions and some ultra-high-net worth individuals who are clients of the bank were using the product, and I thought it was a great tool for individuals, too,” Arora told TechCrunch. “But what I realized was that people are actually not very aware of how to use ETFs.”

In many Asian countries, people prefer to put their money away in bank accounts or invest in real estate. As interest rates and property prices stagnate, however, consumers are looking for other ways to invest. Syfe currently offers three investment products. The first is a global diversified portfolio with a mix of stocks, bonds and ETFs that is automatically managed according to each investor’s chosen risk level. The second is a REIT portfolio based on the Singapore Exchange’s iEdge S-REIT Leaders Index. Finally, Syfe’s Equity100 portfolio consists of ETFs that include stocks from more than 1,500 companies around the world.

Other Asia-focused “robo-advisor” services include Stashaway and Kristal.ai, and Grab Financial also recently announced a “micro-investment” product. Arora acknowledges that in the future, there may be more entrants to the space. Right now, however, Syfe’s main competitor is the mindset that banks are still the best way to save money, he added. Part of Syfe’s work is consumer education, because “it was culturally ingrained in a lot of us, myself included, to keep your money in the bank.”

Syfe differentiates with a team of financial advisors, including former employees of Goldman Sachs, Citibank and Morgan Stanley, who are on hand for user consultations. Arora said most Syfe users talk to advisors when they first join the platform, and about 20% of them continue using the service. Questions have included if people should use a credit card to invest, which Arora said advisors dissuade them from doing because of high interest rates.

“We definitely want to be a tech-first platform, but we understand there is a value, especially as you deal with some of the older audiences who are in their 50s and 60s, who are still adapting to these technologies,” he said. “They need to know that you know there is somebody out there to look after their products.”

While Syfe’s average user is aged between 30 to 45, one growing bracket is people in their 50s who are motivated to save for retirement, or want to create a supplement to their pension plan. Users typically start with an initial investment of about SGD $10,000 (about USD $7,340), and about four out of five users regularly top up that amount.

Some users have tried other investment products, like investment-linked insurance plans, but for many, Arora says Syfe is their first introduction to investing in stocks, bonds and ETFs.

“We’ve realized that a fair number of them are quite well-to-do professionals in their field, in their mid- to late 30s, who amassed a significant amount of wealth but never really had a chance to invest, or the right advice on how to invest,” said Arora. “I think this has been one of the biggest revelations for us and it made us realize we should have a human touch in our platform.”

The platform manages its products with a mix of an investment team and algorithms that help avoid human bias, said Arora. Syfe’s algorithms take into account growth versus value, the market cap of a stock, volatility and sector momentum. To balance risk, it also analyzes how individual assets correlate with other assets in the same portfolio.

Arora said Syfe is currently in advanced talks with regulators in several countries and expects to be in at least two new markets by the end of next year. It also plans to double the size of its team and create more consumer financial products.

During COVID-19, Arora said Syfe’s portfolios experienced significantly lower corrections than indexes like the S&P, so only a few users withdrew their money. In fact, many invested more.

“I feel people have been rethinking their finances and the future,” he said. “As banks cut interest rates across the world, including in Singapore, many of them have started looking at other options.”

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Robinhood raises $320M more, bringing its latest round to $600M at an $8.6B valuation

The stakes keep getting higher for American discount brokerage Robinhood, which today disclosed that it has added hundreds of millions of dollars to its previously disclosed funding round.

Including the $280 million that the company had already announced, Robinhood said that it was “pleased to share” that it “raised an additional $320 million in subsequent closings.” Its now $600 million funding round brings its post-money valuation to $8.6 billion. Fortune first reported the news.

(A detail, but the new capital is part of the same round as it was raised at the same price. TechCrunch reported when the company’s $280 million round was announced, the fintech company was worth $8.3 billion. Another $300 million in capital at a flat share price means that the company’s valuation should have risen by only the dollar amount added. As it did.)

Robinhood has had a good business year, even if some of its practices have come under fire. The company pledged to tighten up parts of its platform relating to more exotic trading after the suicide of one of its users, for example; a topic that TechCrunch discussed at length last week.

What is inescapable is that Robinhood is having one hell of a year. When it might go public isn’t clear, especially as the private company is having no problem raising capital without an IPO. But as its value continues to rise, it becomes an increasingly remote acquisition target.

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Icons: Busy Philipps Helps Spread A Pandemic Of Love

In the face of a global pandemic, retreat is a natural response. Not for Shelly Tygielski – a meditation teacher and community organizer – and Busy Philipps – an accomplished actor and activist for a range of causes. Both are rare examples of how embracing fear and using your platform can lead to big-scale, meaningful change. Pandemic of Love has raised over $21 million in just 12 weeks. It even led to a casual Sunday evening conversation with former Vice President, Joe Biden.

We chatted about the innate human urge to give, how to build a grassroots movement, and why mutual aid communities can be the simplest of human connection in a world of increased isolation.

Brendan Doherty: Welcome to Icons of Impact. I’m really excited today to have two extraordinary people who are teaming up. One is Shelly Tygielski, the founder of Pandemic of Love; she’s also a renowned meditation teacher. And we have Busy Philipps, an extraordinary actor and activist, who has helped Shelly amplify her incredible work. Shelly, I’d love to start with you: we are obviously in the midst of a pandemic, and you took that moment to step back and ask what you could do in response. Tell me about Pandemic of Love? 

Shelly Tygielski: Sure! Pandemic of Love is the culmination of my life as a meditator for the last 20 years. It’s always been a personal practice, and for the last four years, I’ve been a full-time meditation teacher after leaving the corporate world. I wanted to figure out a way to not be afraid of what was coming, to choose love over fear. When we’re afraid we’re in fight or flight mode, but we have the ability to create a new default mode of empathy and action instead. That’s the seed behind Pandemic of Love. 

Doherty: So what’s the model for Pandemic of Love?

Tygielski: It’s a mutual aid community, which is not something that I invented. It’s been around a very long time. Our grandparents, your parents, my parents, everybody used to use the phrase back in the day when people used to live in a community together… when they knew their neighbors. People would know what was happening, but since the Industrial Revolution and the Technological Revolution, we’ve lost that human connection. So, the theory behind this mutual aid community was people are in fear, they’re losing jobs, they need to stock up on supplies. But most people don’t even have enough money to make ends meet at the end of the week, so how do we expect them to now shelter successfully at home? The mutual aid community was designed in a simple way: there are two forms – one where people can “get help” and have their needs met for groceries, utility bills, gas, and other needs. And a “give help” for people who could be donors or patrons, those who have privilege and are able to fulfill those needs. Now we have over 600 volunteers who spend their time just making matches. That’s it, we’re matchmakers, money never touches our organization.

Doherty: Give us a quick stat – to date, how much money raised and what’s the average amount? 

Tygielski: So to date, we are almost at 130,000 matches. Which means, at least 260,000 people have made a human connection. The average transaction is $145. And we’re over $21 million in transactions. We have micro-communities around the globe, everywhere from Australia, to the UK to Iceland, plus in the Caribbean, Latin America, and all across the US. This is a grassroots movement, it really is neighbor helping neighbor.

Doherty: Busy, you must come across so many folks who want you to amplify their cause or get behind it. How did you hear about this, and what drew you in? What resonated personally for you? 

Busy Philipps: A friend of mine, Ashley Margolis, posted about what Shelly was starting to do on her own Instagram. And I’m always looking for ways to help… I’ve been involved in many charity organizations and seek different ways to help communities in need, especially those in my backyard. I know that people can get fatigued and feel overwhelmed by the enormity of the need. And there are different kinds of donors. You have to figure out different ways to reach people and have it make sense to them. A one-to-one connection was something that made so much sense, and I just knew that people really respond to that. For instance, at another amazing organization, Baby2Baby, we started posting Amazon wish lists instead of asking people for monetary donations. There was something that people loved about just like, “Oh yeah, I’ll buy this cute thing, since it’s already on my Instagram.” So that was what drew me to Shelly. I just wanted to put it out there, repost it. There are all kinds of people that follow me, from varying socioeconomic backgrounds, so I just put – “if you can help, maybe this is a thing you want to do; and if you need help, maybe this is the thing you want to do too.” It’s been incredible how people have really responded to it.

Doherty: Shelly, what did you experience after Busy got involved? 

Tygielski: A surge of people coming to the site. I reached out to her on her Instagram and said, “thank you, you have no idea what this has meant.” We can match so many more people now, there’s always three people in need for every one person who donates. Every time somebody like Busy amplifies the message, it goes down to two- to- one for a short while, and we’re able to do more.   

Philipps: I was thinking about this earlier today, we are currently in the midst of the Black Lives Matter protests, and I’m trying to help engage a lot of my followers who are a majority white women — I know that because I get the analytics from Instagram. I’m trying to figure out ways to have them be involved and donate if they’re able. One really valuable thing that I’ve done for years, and advocated for other people who are in a position of comfort to do too, is to think about an amount of money where you wouldn’t blink an eye – to send your kids camp, or to buy yourself a new outfit to go to an event, nice things you’re able to do for yourself or your family —  and match that with a comparable charitable donation.  

Doherty: That also helps folks personalize it. The elegance of Pandemic of Love is that it’s stripped away of all of the fluff, and is really just about how you can connect someone in need with someone who has means in that moment; because that role could be reversed. Speaking as someone who has participated, I was paired with a young mother in North Georgia and after I supported her, we shared a bit. It felt very real suddenly, like I had a little micro-window into someone’s life.  

Tygielski: Yes, that really is the most important part of it, honestly. It’s disruptive. In the business world, we always talk about how companies like Uber are disruptive. This movement is a disruption because it’s like, “Wait a minute, I don’t need this overhead and the staff to get this person help. And I know exactly where my gift is going.”

Doherty: What does this look like post-COVID-19? Is it one of those things that pops up to fit the need and then disappears? Does the model of an exclusively volunteer based organization work longer term given that it can be harder to maintain and relies on generosity of spirit?

Tygielski: Well, being a meditation teacher I live in the present. But I’m thinking about how the concept of mutual aid can be sustainable long after the pandemic is over. After this is all over, something new will emerge. So what does the new order look like? My “BHAG,” my “big, hairy, audacious, goal” is that I’d love to see the institutionalization of mutual aid. Why shouldn’t every municipality have a mutual aid community that’s formalized in some way?  

Then there’s equity. People always have the need to give. It creates that connection constantly. We’re pivoting — like with the Navajo tribe. We’re in Minnesota. We’re in Atlanta. We’ve doubled our efforts. We’ve gotten more donors last weekend and we are allowing people in those cities to select whether or not they want to assist with specifically things like bail money or legal aid. 

Doherty: Busy, with a platform of your size, often there is increased scrutiny. I had  a good conversation with Jameela Jamil about this and about call out culture and cancel culture. I know even myself, especially in this moment, as a white person wanting to speak out and be even more active as an anti-racist … I’m still mindful of not wanting to get it wrong.  

Philipps: You can’t get it wrong if you’re standing up for a thing that is right. It won’t be wrong. Sure, we can always do better, we can always learn better words to use, and we can always own our own ignorance and say, “I’m learning, I’m trying, I will do better.” But the baseline for me, especially if we’re shifting and talking about Black Lives Matter is simply: do you think that racism is okay? If the answer is no, then you think Black Lives Matter. In terms of showing up and using my platform to help the people who follow me use their ears on all kinds of social justice issues, it’s the same thing… there can be a fatigue, you can feel overwhelmed, you can be like “I don’t want to see that.” Well, you know, neither do my friends who live with this daily as their reality due to their skin tone. So I owe it to them to be uncomfortable and upset and own my own place in it and do what I can do in the ways I can do it. I can’t go to protests that are three blocks away right now because of COVID and because I have two small kids. But I do know I can donate, sign petitions, make phone calls. 

Doherty: I also think, given that you have a mostly white female online audience base, that your standing up on these issues and speaking publicly to your audience is bringing new folks in — converting them, making the case accessible and relatable. And eventually, where I came down, is that any ridiculous fear I have of saying it wrong is nothing compared to the fear of being black in America today. So I’m 100% with you.

Philipps: I’m curious and excited to see where Shelly takes Pandemic of Love. I think that she’s right, we’re at a real turning point in our society. Where we go from here is truly up to every single one of us, and it involves both participation and a willingness to be open, to listen, and to know when to take a step back. I would say that the overarching thing — and I know Shelley agrees with me — is that people really do want to help. They do. Most people want to help, they just either feel overwhelmed or they don’t know where to start or they’re worried they’re going to make a mistake or they’re afraid of something. So, being able to strip it all away and just say like, “Shelly, this is Busy. You guys can help each other out”… that’s an incredibly powerful way to move forward. 

Doherty: Thank you both, really appreciate you taking the time. Let’s give Pandemic of Love some lift!

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Some investors turn to cutting fully remote checks while sheltering in place

By March 16, founder Janine Yancey was tired of playing the waiting game. After watching the stock market take yet another unprecedented nosedive due to coronavirus, she called up a potential investor.

“If this isn’t going to happen, let’s call it now,” Yancey said, referring to the close of her Series A round, the first capital her culture tech company, Emtrain, would have accepted in 14 years. “At that point, I put my nose to the grindstone; I didn’t have a lot of bandwidth in engaging in conversation that wasn’t going anywhere.”

She had the conversation on Monday, and the deal closed on Friday. “I remember thinking, ‘this is the only deal that is happening this month,’ ” she recalled.

As lockdowns extend to prevent the spread of the coronavirus, investors and startups are searching for new ways to connect with each other. At this moment, deals are happening between screens instead of over drinks at The Battery or coffee at The Creamery. A number of investors have already cut fully remote checks, saying it impacts everything from the due diligence process, to appetite, to who gets to access capital in the first place.

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What You Can Do Now To Maximize Paycheck Protection Loan Forgiveness

After a bumpy start in round one, the second round of PPP funding appears to be reaching the people who need it. According to a joint statement by Administrator Jovita Carranza and Secretary Steven Mnuchin, 2.2 million PPP loans have been made to small businesses in round two, with a total value over $175 Billion. . That’s already more loans than in round one, with some funds still remaining to be to be distributed. Additionally, the average loan is $79,000, which is $127,000 less than the $206,000 average loan amount for round one. That means more smaller businesses with less revenue obtaining much needed financing. 

But getting a loan is just the first hurdle.  Once business owners get financing, they must then figure out how to use the funds in a way that maximizes loan forgiveness. As has been the case with this program from the beginning, we have some initial rules, additional guidance and a lot of unknowns. As always, we’ll do our best with the information that we have to give some guidance on how this forgiveness will work. 

The current forgiveness rules

Under the Interim Final Rule on Additional Eligibility Criteria and Requirements for Certain Pledges of Loans (Interim Rule 4.14.20), the amount eligible for forgiveness depends in part on what you spend the money on for the eight weeks following your lender disbursing your funds. Forgiveness can be up to the full principal amount of the loan plus accrued interest if the loan funds are spent on the following: 

  1. payroll costs including salary, wages, and tips, up to $100,000 of annualized pay per employee (for eight weeks, a maximum of $15,385 per individual), 
  2. covered benefits for employees (but not owners), including health care expenses, retirement contributions and state taxes imposed on employee payroll paid by the employer (such as unemployment insurance premiums),
  3. owner compensation replacement, calculated based on 2019 limited to eight weeks’ worth (8/52) of 2019 net profit,
  4. payments of interest on mortgage obligations on real or personal property incurred before February 15, 2020,
  5. rent payments on lease agreements in force before February 15, 2020 and
  6. Utility payments under the service agreements dated before February 15, 2020

At first glance, these rules seem straight-forward. Six basic types of expenses count toward forgiving the loans. However, a few actions may reduce your benefit, including: 

  • You spend less than 75% of the loan on payroll costs
  • You reduce full-time employees compared to 4.1.19 – 6.30.20 
  • If you reduce your employee’s salary or wages to less than 75% of the base salary or wages of such employee during the prior quarter 

The rules have huge gaps, and not all of these ambiguities have been clarified yet. My intention is to help you focus on what you can control and navigate the rules the best you can with the information you have. 

What does this actually look like 

Because lenders are the final arbitrators for forgiveness, the process and therefore the results may differ based on your lender. But according to Interim Rule 4.14.20 the documentation you’ll need for loan forgiveness includes:

  1. If you have employees, you should submit Form 941 and state quarterly wage unemployment insurance tax reporting forms or equivalent payroll processor records that best correspond to the covered period (with evidence of any retirement and health insurance contributions). 
  2. The 2019 Form 1040 Schedule C that was provided at the time of the PPP loan application must be used to determine the amount of net profit allocated to the owner for the eight-week covered period. 
  3. Whether or not you have employees, you must submit evidence of business rent, business mortgage interest payments on real or personal property, or business utility payments during the covered period if you used loan proceeds for those purposes.

Let’s break down what this looks like for each business 

Sole-Proprietors with no employees 

This is the easiest case because you’ve already provided the documentation you need when you applied: your Schedule C. You divided line 31 by 52 and multiply that by 8. Let’s say hit the maximum $100,000 threshold. That would result in a forgivable loan amount of $15,385. That amount is presumably automatically forgiven (assuming you apply for forgiveness), since the SBA has not asked for any additional information. So, there’s no need to try to figure out how to pay yourself over the eight week period in order to obtain forgiveness. Keep in mind these rules have been known to change mid-stream so you may consider transferring the forgivable portion from your business account to your personal account. 

In addition to the owner compensation, the Interim Rule says you must submit evidence of business rent, business mortgage interest payments on real or personal property or business utility payments during the covered period if you used with. 

Lastly, sole proprietors must have claimed or have been able to claim these expenses on their 2019 return. Make sure to check the expenses that you’re trying to claim with what you already submitted. 

Business owners with employees 

Things get a bit more complicated for business owners with employees. To be eligible for forgiveness you have to submit form 941s or similar payroll documentation to document what you paid employees during that period. And as with the sole proprietor, you have to submit evidence of business rent, business mortgage interest payments on real or personal property, and business utility payments during that covered period. 

You also have the additional step of verifying you have the same average # of full-time employees (FTE) for the following eight weeks as you did from February 15, 2019 – June 30, 2019 or from January 1, 2020 until February 29, 2020. If you don’t meet this requirement, your forgiveness amount is reduced by the following equation. 

Payroll Costs X FTE 8 weeks from loan origination / FTE from 2.15.19-6.30.19 or 1.1.20-2.29.20

Even if you did reduce your employees during either of your time frames, you can get full forgiveness if you eliminate that reduction by June 30, 2019. You can find an additional support sheet here.

So, if your total payroll costs are $50,000, but you had four employees from both 2.15.19 – 6.30.19 and 1.1.20 – 2.29.20, the amount of forgivable payroll costs gets reduced by 75%. You can obtain full forgiveness again if you bring back the employee by June 30th. According to the most recent FAQs, you can also get full forgiveness if you offered to rehire the same employee, but the employee declined the offer (See FAQ 40). 

This formula works well if you can easily assess your average full-time employees and your workforce was steady for the periods in questions. The formula is more difficult if there is a lot of fluctuation between full-time employees.  

For the reduction based on salaries, you have to calculate payroll costs minus the amount of any reduction in wages that is greater than 25% compared to the most recent full quarter, for any employee who did not earn during any period in 2019 wages at an annualized rate more than $100,000. 

This formula seems much more complicated to determine, but from the language it will be good for you to determine: 

  • The total base salary for or wages for each employee for the last full quarter before the date you received your loan
  • Note any employees whose salaries have been reduced and did not earn an annualized rate more than $100,000 for any period in 2019  
  • Track the amount, if any of reductions in salaries for any of those employees 

As with the restoration of employees, you can obtain full forgiveness if you restore wages. 

What you can do now 

These rules are far from definitive, and we can all hope for additional guidance soon. In the meantime, here are some things you can do right now to help prove and maximize your loan forgiveness process: 

  • Calculate your payroll costs for the next eight weeks.You can find help calculating payroll costs here.  Exclude any amounts of annualized salaries over $100,000. Check those payroll costs against the 75% threshold for loan forgiveness. 
  • Get on the same page with your payroll processor to ensure the amounts you expect are being paid with PPP funds 
  • Figure out your average FTEs for 2.15.19 through 6.30.19, as well as 1.1.20 through 2.29.20
  • Estimate your business rent, mortgage interest and utility amounts that may be used for forgiveness and make sure those won’t be more than 25% of your loan. 
  • Track how you spend your PPP funds and be able to link them back to qualified spending. I’ve seen some people even set up a separate account for these funds. 
  • Keep in touch with your lender and ask for any information they have on forgiveness (they will likely say we are waiting on additional guidance). 
  • If and when additional guidance does come, you can find it here

I know this is a lot of wrangling. I have a couple of final notes. 

Remember, you must apply for forgiveness within 90 days of the end of the eight-week period. Lenders have 60 days from the date you apply to decide whether you qualify.  It’s also important to note that you are not allowed to deduct any expenses you paid the forgivable funds with. Whatever is not forgiven is paid back at a 1% interest rate.

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Talking venture, B2B and thesis-driven investment with Work-Bench’s Jon Lehr

Earlier this week, the Equity crew caught up with Work-Bench investor Jon Lehr to get his take on the current market, and how his firm goes about making investment decisions.
The conversation was a treat, so we cut a piece of it off for everyone to listen to. The full audio and a loose transcript are also available after the jump.
What did Danny and Alex learn while talking to Lehr? A few things, including what Seed II-level investments need these days to be attractive (Hint: It’s not a raw ARR threshold), and what’s going on in SaaS …

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A clarion call for inventors and investors

This is an excerpt from “Hacking Planet Earth: How Geoengineering Can Help Us Reimagine the Future” by Thomas Kostigen, published March 24 by TarcherPerigee, an imprint of Penguin Publishing Group, a division of Penguin Random House, LLC. Copyright 2020 by Thomas Kostigen. When Edward Jenner in 1796 developed the first human vaccine (for …

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Why do large asset managers vote against most climate-related shareholder proposals?

As investors prepare for the 2020 proxy voting season and try to assess the prospects for climate-related shareholder proposals (and decide how to vote), looking at data from last year’s proxy votes by asset managers can help. The 2019 data show that, for the first time, every asset manager we studied …

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How to make ending factory farming irresistible, delicious and lucrative

This is an excerpt from “Grilled: Turning Adversaries into Allies to Change the Chicken Industry” by Leah Garcés. Copyright Leah Garcés, 2019. It is published here with permission from BLOOMSBURY SIGMA, Bloomsbury Publishing Plc.

Grilled: Turning Adversaries into Allies to Change the Chicken Industry, book cover

At the other end of the investment spectrum from Liz [Dee] and Nick [Garin] is Coller Capital, founded in 1990 by Jeremy Coller and one of the world’s leading investors in the private equity secondary market. The firm is headquartered in London, with offices in New York and Hong Kong, and has assets under management of approximately $17 billion. As the firm’s chief investment officer, Jeremy Coller is not exactly a radical activist, and yet he is the visionary behind an organization known as FAIRR — Farm Animal Investment Risk & Return.

Rosie Wardle heads up FAIRR, which studies financial risks inherent in using animals for food. FAIRR focuses on environmental, social, and governance-based risks, including the threat of antibiotic resistance. FAIRR are interested in this because of how risky they believe livestock farming is, and, on the flip side, how lucrative alternative-protein investment is shaping up to be. 

When they first started FAIRR, Rosie and her team sat down to look at what external risk factors existed for investors with regard to the current protein-production model, which is animal agriculture. Like Michael [Pellman Rowland, a financial adviser], she was shocked by what she found: the current animal protein supply chain is exposed to 28 key external risks that can damage a company’s financial value.

“We’ve got things like animal welfare, we’ve got disease outbreaks, resource scarcity, worker mistreatment, climate change,” Rosie says. “There’s a whole slew of issues which have the potential to create financial risks for companies.” These are not necessarily new ideas for investors, but FAIRR are drawing attention to their importance in a new way.

“Most investors were cognizant of these issues, but they were not connecting them with the livestock industry, and were surprised about the breadth of the potential issues linked to this sector,” Rosie says. “They were connecting the dots on some of these things, but they didn’t realize the extent and how it all links back to this kind of livestock production. The other issue was that there was no clear guidance for what investors should do, because when you start thinking about those 28 risk factors, it seems overwhelming.”

FAIRR began to mobilize around these concerns to protect investors. Investors worth a total of $5.9 trillion and growing have signed up to FAIRR’s initiatives, all expressing concern about those 28 risk factors related to livestock production. FAIRR and its investors began writing to major businesses like Kroger, Walmart, and McDonald’s, arguing that it is a material risk to investors to rely solely on animal proteins within their supply chains. As investors, they asked these companies what their strategies were to address this risk.

They didn’t just point out the risk. “We made some suggestions around what the components of that strategy could be,” Rosie says, “whether it’s investing in plant-based proteins, developing own-brand products through internal R&D, or acquiring alternative protein companies and products. We are asking the companies to diversify their protein mix — thereby reducing the amount of animal proteins in the supply chain.”

When a company gets a letter from a large group of global investors worth almost $6 trillion, they listen. Rosie says FAIRR got responses from nearly all the companies they contacted. “Essentially, what we’re trying to do is raise awareness among investors about the impacts of the current supply chain,” she says.

Rosie, Liz, and Michael all see the investment space going in one direction: away from animal-protein production and toward plant-protein or clean meat. While they may be guided by a similar moral compass, at the end of the day they wouldn’t get very far on their path if they weren’t also guided by the bottom line.

Animal activists have made huge strides over the past two decades. We’ve passed laws in multiple states to ban the extreme confinement of farmed animals, persuaded hundreds of food companies to improve their animal-welfare policies, exposed factory farming in the world’s largest media publications, and increased awareness of vegan eating. But it hasn’t been enough to tip the scales of justice.

The sad reality is that most people aren’t going to change based on morality alone. For too long, animal advocates have assumed that if we just provide more information, if we can only get people to understand how bad the situation is, we will win them over. Shining a light on the problem is essential to changing a broken system, but it’s not enough. It has led to some exciting progress, but making animal-free food more delicious, more convenient, and more affordable could be the key to ending factory farming. That’s why I’m so inspired by business and food-science innovators asking new questions to instigate serious change.

Liz Dee started with a simple question: “How can I create the world I want and do good while still running my family business?” Rosie and Michael asked, “How can we avoid material risk while maximizing our investments?” Seth Goldman asked, “How can we make the most delicious burger out there?” But it was the absolutely fabulous Joanna Lumley who had perhaps the best advice: tempt, don’t bully. Make the choice irresistible, delicious, and lucrative. That way, no one can resist.

Source: GreenBiz.com
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Source: Entrepreneur