Seed Capital From Angel Investors: Lewis Hower, Executive Director, University Impact Fund (Part 6)

By guest authors Irina Patterson and Candice Arnold

Irina: But you will clearly be looking for some returns, right?

Lewis: Absolutely, yes. We view this space from [the point of] recognizing that there are strong business models and strong opportunities that if and when applied to the right sector and segment, there is the ability to get a considerable financial return.

One of the things that we’ll have to obviously keep in mind very closely and navigate as we continue to develop our fund is the exit potential and what that space looks like. But yes, we will be targeting returns for our investors.

Irina: Do you have projected numbers, like 10x over five years or any other numbers?

Lewis: No, we don’t have anything projected right now. Again, it’s a bit of a diverse space. But certainly the way that we approach it, from a philosophical standpoint, is that we look for opportunities that are in a space that has great market potential and is scalable.

But a lot of times in this space, these investments and opportunities are very risky. So, we’re looking for a risk-adjusted return that is consistent with and similar to the traditional venture space because we are looking at deals that are in emerging and frontier markets.

The models are new approaches to [creating] solutions of both environmental and social need. Again, it’s a nascent industry; therefore, the risk adjusted return has to be adequate with our fund needs.

Irina: How about companies in the United States, do you invest in those?

Lewis: Yes. We actually have been working with a couple entrepreneurs who based domestically and their programs and projects are domestic. Again, we seek to find the social and environmental impact that is really shining through. And then there are a handful of those that we have worked with, and I’m sure we’ll continue to find more in the United States.

Irina: Could you tell more about what they do?

Lewis: One of the organizations that we’ve been working with is a Utah-based company. They’re called EcoScraps and are a company started by a handful of college students here in Utah. They take expired expired food and vegetable waste from Costco, grocery stores, and so forth, and they turn it into a completely green and organic soil amendment.

Think Miracle-Gro, but it’s fully green and fully clean and not chemical based, which is what Miracle-Gro is, and it’s packaged and bagged and sold at nurseries and Home Depots and places like that. The benefits of their product is that compared to competitors’, it’s a much stronger product. So, they’re an example of an environmental return because of their composting and capturing of this waste into a usable product.

I think they say that one bag of their product is equivalent to parking a car for an entire week [in terms of] reducing greenhouse emissions.

And they also are an interesting job creation opportunity because they do employ people in their production facilities and plants who are out of work and seeking work and provide them with an opportunity that would otherwise not be there. So, they’re a good example of both social as well as environmental impact. They’ve been around for about six months and they’re already operating in the black and doing very well.

Irina: What did you do for them?

Lewis: We have helped them since the early stages of their planning and analysis. We did a lot of market analysis for them, recognizing who else is out there in the industry, who are their competitors, what are some of the keys to their success. We also have done some financial modeling and assistance on how they view their growth platform and model. And that was all done by our student teams that were being supervised by Patrick Mullen, our principal, and others.

Irina: At what stage of a business’s development do you usually prefer to invest in?

Lewis: Again, it’s hard to say. There’s not really one broad, sweeping perspective. I think, again, if it’s an opportunity in an organization that is at the earlier stage, we definitely need to be comfortable and confident with both their team and the market that they’re entering and their ability to execute on that, whatever their specific thesis is.

This segment is part 6 in the series : Seed Capital From Angel Investors: Lewis Hower, Executive Director, University Impact Fund
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