LUMO Labs is planning to support tech companies that make a positive contribution to society in areas including social care, education, climate and sustainable living.
LUMO Labs is launching a new fund to invest in European tech companies that make a positive contribution to society. LUMO already has commitments of about €25m and expects to raise about €100m within a year. This will make the new fund one of the largest Dutch impact funds.
Among others, the Brabant Development Agency and Oost NL have pledged money. The investment company of the Brabant entrepreneurial family Van Ettro and project developer Tom Bakkers are also stepping in. LUMO reports that it is still in talks with several other parties, including Dutch and foreign pension funds.
Larger amounts
LUMO was founded a little less than a decade ago by two software entrepreneurs who had sold their businesses. Andy Lürling and Sven Bakkes initially invested only their own money, but in 2020 they launched a fund in which others could also step in. With that fund’s €20m, they invested in more than 20 tech companies.
Now LUMO is launching a second fund, allowing them to put larger amounts of money into companies. Co-founder Lürling said: “Experience shows that quite a lot of companies we invest in can continue to grow. We want to be able to continue supporting those for longer.” Whereas investments from the previous fund amounted from a few hundreds of thousands to just over €1m, LUMO can now invest up to €5m in companies. Lürling expects to fund a total of 30 to 35 companies.
Profit based on impact
LUMO is one of the few tech investors that focuses explicitly on impact. Lürling added: “Many funds are tech first, impact second. With us, the two are equally important. Every euro our companies earn must make a positive contribution.” A basic condition for this, of course, is that the companies must also be financially healthy, Lürling emphasises. “Otherwise, your impact is never long-lasting.”
LUMO mainly focuses on the social themes of care, education, climate and sustainable living. Lürling said: “We believe that further developing technologies such as artificial intelligence and blockchain can ensure that we as a society can take steps faster in these areas.”
He pointed to a company he invested in with his first fund, Healthplus.ai. That company can calculate the probability that someone who needs surgery might contract a hospital infection after the operation. If a patient is at high risk, the hospital can take preventive actions. Lürling added: “This prevents someone from being at hospital for longer, and lowers the cost of care.”
Not only the companies in which LUMO invests must have a sound ‘impact case’ to be eligible for financing, LUMO’s partners are also judged on achieving their impact goals. Half of what they earn from any sale, their carry, depends on how the companies score on impact indicators.
Tech on the shelf
According to Lürling, there are quite a few companies in the Netherlands that fit the picture they are looking for. “When it comes to artificial intelligence, we will have to put up with the fact countries like England or France are ahead of us, but we’re not doing too badly.” What could be improved, according to him, is the speed at which technologies are brought to the market: much of the research by knowledge institutions remains on the shelf for too long.
Dutch institutional investors could also learn something from foreign funds. Many Dutch institutional investors, including most pension funds, want to invest in strategically important technologies and make a positive contribution to society. But they often do not know how to deal with the relatively small impact funds. Lürling added: “Abroad you can therefore see that some of those types of investors setting up separate vehicles that can then invest in smaller funds.”
This article originally appeared in Dutch business newspaper FD on 9 July 2024.
