Seed Capital From Angel Investors: Lewis Hower, Executive Director, University Impact Fund (Part 9)

By guest authors Irina Patterson and Candice Arnold

Lewis: We are co-investing alongside the existing funds that have been successful in doing this in this space, and we really do rely on them to be the drivers of agreeable terms and knowing what is best for the investment, which ultimately is best for our prospective outlook.

Irina: Do you have any interesting stories?

Lewis: Yes, there are a handful of them. There’s an organization in Nepal that we’re currently working with that is seeking to create systems and structures for hydroelectric power creation, building hydroelectric dams in Nepal.

It’s an interesting collaboration between and NGO called Choice Humanitarian, which has been in Nepal for more than 15 years now and knows the community, knows the landscape, and has strong and deep relationships with the people in-country, and then a group of individuals who are based in the U.S. who have partnered with some of the engineers in another organization who are saying, “Look, this is something that’s very important to Nepal as well as to our ability to help these communities.”

Currently in Nepal, I think they run on an average of 16 hours a day with no power. So, there’s a huge demand and a need for more localized and affordable power. The government in Nepal is all for supporting people who are coming in to do that.

Again, appropriate financing, systems, and structures need to be set up, so we’re working with these organizations to both explore the market but then also do some financial modeling and planning different scenarios of what types of investments they might make and what some of those investments would end up looking like from a return profile.

Irina: Do you have any advice for entrepreneurs?

Lewis: In the impact space – and I kind of touched on this earlier – in the impact investing space, I would encourage entrepreneurs to be as fundamentally rooted in the core business principles as they possibly can and focus on making an impact from a scalable perspective of, How do we make our organization as strong as we possibly can so that we can make that impact as a result of having a strong institution.

Don’t forget that having an efficient revenue stream and having an understanding of what financials and cash flow and those types of things are for your business are critical. That’s not to say that the mission of the social and environmental cause that they’re working on is not important.

It clearly is important, but we want to make sure that they’re approaching it in a manner that they can be doing this for a very long time and that they’re not having to scramble every year for donor funding or not having to totally reinvent their wheel if one of their major donors or supporters ends up changing her mind and is no longer supporting that cause.

Irina: What do you think funding sources could do to increase their impact?

Lewis: I think a couple of things: really fostering that entrepreneurial mindset is important and allowing for dialogue. As I mentioned before, with such a nascent industry, there needs to be open dialogue and assistance provided to these entrepreneurs to say, “This opportunity is still a little bit too risky for us for right now, but here’s somebody you can work with. Get yourself to a point where you have established yourself and then come back and we will explore an investment.” Being open to creative ways to support and finance and cultivate the entrepreneur in the industry.

I have a friend who’s trying to start a new social venture that does asset mapping of making connections for people in the space. He really needs to hire one more technology person to be a software guru, and he’s trying to make that as part of a bigger round that he’s trying to raise.

But in this space, it’s a chicken-and-egg type of situation where you need the software guru to develop your platform and technology so that it’s a proof of concept and you can go show people that it actually works. But you can’t necessarily do that until you have the model and the system up and running. So, finding creative ways of approaching an angel or foundation and saying, “Look, instead of making a big-ticket investment, just give me enough to pay this software guy and get him on board. We’ll develop the product and then we’ll come back and then we can go seek others for investments.”

Being creative in how they approach it and fund it I think is important, as is requiring the quality of the business to be there. Don’t get too caught up in the social side of it. Let’s go focus on building strong businesses.

This segment is part 9 in the series : Seed Capital From Angel Investors: Lewis Hower, Executive Director, University Impact Fund
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