Beyond Charity: Investing in Sustainable Solutions That Transform Communities Worldwide
“Don’t give a fish. Don’t even teach how to fish. Invest in the fishing business.”
“And if you do that at scale around the world, no one has to leave their home countries to seek opportunities elsewhere.”
Florian Kemmerich with KOIS has a passion to inspire other people to do more than having a job but also giving back to humanity with your day job. His superpower is solving the riddle of how to connect capital where it is most needed and make deals happen where others only see risk and obstacle.
He sees the current environment, despite the challenges, as having great opportunity to unlock value and make an impact exactly because we can’t do things how we’ve always done.
Podcast Transcript
Jacob: [00:00:00] Welcome to impact stories. I’m here with Florian. Please introduce yourself.
Florian: My name is Florian Kemmerich. I’m based in Geneva and I dedicate myself to impact investing, also advisory. Great pleasure to be with you here and tell you a little bit about what we’re doing.
Jacob: at what point did you decide to pivot towards making a difference in the world?
Florian: I studied business administration, international marketing, I got a job at a healthcare group, and then I worked my way up over 15 years. Again, I’ve been focused on growth stages of companies, how to turn them around, the strategies to it, how to increase the perceived value of brands of companies.
Then in 2008, I decided to go and leave my golden handcuffs of a higher gun in a group and to have a much riskier road at a time, with a family and kids was not an easy one. But for me when I was working in Mexico, specifically, we had the typical CSR side where we were giving back. So we work with patient associations, I had the pleasure to create and kick off a continuous medical education [00:01:00] association to support marginalized people in Mexico.
We supported an extramural surgery, which was an OR mounted on a truck to go into the jungle to operate the indigenous people on.
I learned that when you go do something and leave, it’s bad. I had the experience of a child. just by simple surgery, died afterward through an infection, because there is no pharmacy, there is no nurse, there’s no one to treat even easier things. So if you come in helping, showing up, and leaving, you think about yourself and your experience, and you feel so proud, but you don’t put yourself in the shoes of the other one. And that triggered something in me where I said, hold a second. How can I be so selfish and narcissistic saying I’m helping if I don’t understand what’s going on on the other side?
Fast forward when I left my big corporate job I learned about impact investing. That is when I said, hold a second, this is capital as a force for good. If we would have done that, early on probably the child wouldn’t have died. I asked myself, What’s my superpower? And what’s my passion? And my passion is actually to inspire other people to do more than having a job, to think about them on the other side also.
[00:02:00] So the question is not just to have a job, have a family, and an increasing net wealth, but also what’s the contribution you’re actually giving back to the globe, to humanity with your day job.
Jacob: Fantastic, tell me about your organization and how are you trying to make the world a better place.
Florian: Kois we are a company based in Belgium, in Brussels, but we have our team spread in France, in Africa, also Nairobi, and in India, then in different locations, but mostly in Mumbai. What we do at Kois, two things. One is the asset management arm, but that’s not my area I manage as managing partner, Kois Advisory.
Our job is we work between the non-profit or development world and the for-profit world. We can go from very concessionary to very commercial. And what we focus on is the design, structure, and implementation of impact investing. We work to do this for either the NGOs of the multilateral or corporates and then also institutional investors. And in terms of the theory of change, we cover again, we go across sectors and different [00:03:00] themes, but we have a lot of experience in health care, in education and livelihood and very much on climate. And climate can go into nature, can go into agri or can go into the energy space.
Jacob: Investors, especially now, have a multitude of options. There’s no lack of options of where to put their money, even in impact. So if I were an investor, why would I choose to invest with Kois?
Florian: Kois, you would talk from an asset management, that’s very different. If you look at driving change on the ground, if your capital wants to be a force for good. This is where you look at the intentionality of your capital and the additionality capital.
And yes, we have vehicles covering all sorts, but that’s one side. When you work with us on the advisory side, you have an interest in understanding the mechanics of impact investing. How to measure not only the financial returns but also the impact itself. That’s where we can really excel and help you.
Very often when you want to invest, but the risk is too high and there’s a gap between the risk-reward return. That’s also where we can help to [00:04:00] adjust the risk-reward return so that the risk you’re taking is a risk you would be familiar with according to your expectations.
Jacob: On the advisory side, what does an ideal client look like for you?
Florian: Different things. We have structured social impact bonds, or we have also structured impact investing vehicles for corporates. We’ll work with all sorts of corporate foundations to help them double down on their mission. But it can also turn around the other way when your company is driving impact itself through the products and services they sell. We can help the financing perspective directly on working capital solutions and structuring.
When you do this clearly and you measure the impact you are creating as a company you tap into different sorts of investors. And it adds the notion also of the intentionality of the capital, what are we resolving for? And that is helpful very often also for companies on the financing side.
That’s just on companies. Now, if you go into investment space, whether your family office, whether you are an institutional investor and you want to develop a strategy to drive real impact on the ground, that’s another example.
Or if you go [00:05:00] in an organization, which is maybe a non-profit organization, and looks into how to engage with private investors. Right now, a big topic for many in the aid sector as their money flow is being disrupted. This is where we come in with innovative finance to create vehicles so that you’re able to work with private investors or private capital. Historically, either you do good, or you make money, and here’s actually where you can do both things at the same time.
Jacob: Do you have a case study or an example of that that you could share?
Florian: Let’s say, for example, we have set up a vehicle where we are financing refugees in Lebanon coming from Syria. Very often, the misunderstanding is that free money keeps poor people poor. People talk about poverty uplifting, but nobody wants to be uplifted. So the question is not, don’t help me, but give me a chance to help myself. So, we’re looking at economic empowerment. Therefore, you target the ticket sizes and the risk-reward return that you’re able to finance, that in a specific way. That’s one example.
Other examples is when you invest in smallholder farmers, the perceived risk is extremely high. This is [00:06:00] not microfinance, this is a little bit bigger. Usually, they don’t get any financing from local banks, or if so, extraordinarily very high and very expensive. That’s where we adjust vehicles in order to make sure that the so-called missing middle finance is actually hitting the farmers. And if you understand that 80 percent of our lifestyle on food security comes from smallholder farmers. This is not only where you say, I want to do this because I want to support smaller farmers, but it’s helping ourselves in terms of food security.
So these are some examples where we try to risk, return, adjust it so they’d be able to invest. Again, on the intentionality of capital, but also the additionality.
Jacob: It seems like that would have a high due diligence hurdle. There’s a reason why there’s that mid-level financing gap because it’s just harder than doing big ticket. How do you guys overcome that or fit in that space where it just isn’t feasible?
Florian: One approach is where initially the capital you ask, you say, let’s start grant money or philanthropic money, put it to work, you see the results, and [00:07:00] if so you can double down with some more investor money. That’s where you stack it, and build it bottom up.
The other component is that you do blended finance where you use riskier capital to protect a senior share class or senior investors on top of that to actually be protected by the first loss. So therefore they’re not losing their money overall. It’s just the risk-reward return. This means that if you do debt lending you’re not focusing on 9%, which then translates into emerging markets to 15%, 20%, or even 30% or 35%. But actually, you use the non for profit capital component. So this is where you align a different pot of money on the same theory of change and therefore you can address the risk-reward return down, still being a safe bet and the market trend for the investor on top. But it actually being able to invest there. That’s another path to do it.
So when we talk to investors on the institutional investment side, they might start with a pocket of money, which is more concessionary, just to test, and then double down. It’s also another possibility to do so.
Again, to place large [00:08:00] amounts of money, in a more commercial way is much easier and costs less. Rather than doing smaller tickets in a risky environment, that’s really where the additionality comes. Usually, it is where you build the house bottom up.
Jacob: Is that your specialty, figuring out the right financial structure to advise people and ways to solve those problems? It seems more problem-solving than just cookie-cutter financing.
Florian: Absolutely, those structures are not plain vanilla structures. We’re not inventing the components of a vehicle, we’re assembling the vehicles in a way, so it works, on the intentionality and additionality, but also for an investor. Of course, we have to talk more. It’s more difficult to raise. So, indeed, that’s the work. That’s why our work is appreciated by a lot of parties because it’s specific know-how over years being gathered and then mechanisms which actually function, but they are more complex to explain.
Jacob: There’s plenty of things to point to, there’s a lot of difficulty in the market, with the geopolitical situation. What are the bright spots or what do you see as [00:09:00] positive about the industry or what hope do you see in the future?
Florian: My experience also having worked through different turnarounds of organization, that every crisis has something very positive once the crisis is over. You might not see it in the crisis, but after the crisis. Specifically it reminds me, for example, right now what’s happening is that aid funding is being disrupted at scale. And that pushes organizations to reinvent themselves and to focus on how to engage, how to innovate. So, despite being in a crisis, that’s a positive effect.
We’ve seen that already. When you live in Geneva, you watch the city from the lake. You see the right bank where the international organization sits, and then the left bank, after the city, you have the financial sector. And they wouldn’t even talk to each other, they would just co-exist until 2018. Because in 2016, the Trump administration came in and then 18 months later, they changed disrupted and said, we don’t want to give our money. And that’s where a lot of organizations looked into blended finance, into [00:10:00] innovative finance and how to engage with the private sector.
Then, of course, COVID came and the administration changed and that thing slowed down, of course, but now it is going back up. Some people might be really concerned, Which I am too in terms of from a decency point of view, from a humanity point of view, and from a language point of view also.
But on the other side, there is a certain silver lining in terms of innovating and pushing the boundaries to see how can private capital be used. And the humanitarian and the fragile settings not by just giving the money, but actually by investing in it. I see is a little bit of a deja vu from 2018 happening now again.
Jacob: For your organization, what is the hurdle that you’re trying to overcome and what do you need right now?
Florian: The hurdle to overcome is probably the quest of organizations trying to do innovative and blended finance. The first stack of capital and money you need is grant money. It’s not the for-profit money and without the grant money, the for-profit money will not flow. So the hardest part is to make sure that this is given in order to build it up.
So the story between the chicken and the [00:11:00] egg is that you need soft money or non-profit money or concession money to start to attract the for-profit money on the risk-reward return. So that’s the part where we are focusing on and that’s the hardest part to get.
Jacob: What would be an ideal connection for you, in helping to overcome that hurdle? Who would you most want to be connected to, in that space?
Florian: The philanthropic arm of corporations, especially corporations, which care about climate change, care about wealth distribution in a fair way, economic empowerment. And if their CSR or foundations are not just seen as a separate world. I do my business and then I give something back. That’s exactly the first piece to get a blended finance up and then we can either bring other investors in. We can clearly prove that these models work really the CSR slash corporate foundations.
Jacob: If someone were interested in learning more about Kois where would you point them?
Florian: Reach out to us and then we participate on some events. For example, there is in February now in [00:12:00] London, the humanitarian finance event. There’s an easy way to just reach out to us and be happy to have a conversation and try to see how we can align interests and maybe come up with a solution to help people enter impact investing.
Jacob: Any last words before I let you go?
Florian: For me, the most important part is if as individuals, we think how we can make our vocation, our passion you can combine that with our superpower, our skill set, we can individually find very interesting business models and very interesting business to support or sectors to focus on to trigger change by a business as a force for good or capital as a force for good.
Jacob: Thank you so much for the good that you’re doing and look forward to seeing you guys continue to innovate in that space and bring more capital to where it needs to go.
Florian: And thank you for having me with you here and to help spreading the word.
Jacob: Thank you.
Learn more about ISSIMO Story Agency Here