Els Boerhof, managing partner and co-owner of Goodwell Investments, approaches impact investing with the same dedication that helped her sail across the Atlantic Ocean twice.
An avid skier and sailor with her own boat, Els Boerhof loves spending time outdoors when she is not working. She often draws parallels between being on the water and navigating her way through the world of international finance.
“In both cases, it is very important to prepare well and have a good plan,” Boerhof, a former banker, tells Impact Investor. “The weather may be stormy; a good sailor will always be able to find a way to sail through it or come back to shore safely.”
In 2016, Boerhof sailed non-stop for 20 days from Malaga, Spain via the Canary Islands to St Lucia, as part of an international team of five. In 2020-21, she went the opposite way, sailing from Bonaire, in the Dutch Caribbean, to the Azores. “They are two totally different routes. The easier one is east to west, while west to east is harder. As a sailor, you want to do both.”
Just like impact investing, crossing the Atlantic Ocean on a sailing boat is not without risk. In both cases, it’s all about solid preparation and “limiting risk”, says Boerhof. “Of course, you can be unlucky and hit a container at night. But I can also cross the street tomorrow and get hit by a car.”
Banking crisis
This year’s banking crisis isn’t the first for Boerhof, who has been active in frontier and developing markets since 1995.
“I’ve been doing this for 27 years, and I have been through a few crises,” says Boerhof. “They come and they go. There are a few constants and ultimately, you just have to sail through that storm. Every crisis is different. But at Goodwell, we have a few anchors that we hold onto, and that is we always diversify well, and we invest in high-growth companies.”
She co-founded Goodwell the oldest impact fund manager in the Netherlands, in March 2006, six months before the collapse of US investment bank Lehman Brothers which plunged the world into a financial crisis.
Prior to co-founding Goodwell with her business partner Wim van der Beek, Boerhof managed the €300m Micro & Small Enterprise Fund ‘MASSIF’ of Dutch development bank FMO.
Boerhof says she caught the impact investing bug when she took a course in developing countries economy while studying Economics at Tilburg University. That course captivated her. “I thought: ‘If we can put people on the moon with a rocket, why can’t we solve global poverty and inequality?’”
Boerhof wrote her final dissertation about rural financing, which involved spending a year in the Philippines and working for an NGO. After FMO told Boerhof she needed at least five years of banking experience before she could work for them, she got a traineeship with Dutch private investment bank Mees Pierson, working in emerging markets.
‘Do well by doing good’
Since its foundation in 2006 with the motto ‘do well by doing good’, Goodwell has raised five funds and currently manages over €310m in capital. The firm provides early-stage equity to high growth, high-impact businesses that deliver goods and services to underserved communities in India and Africa. Its 36 portfolio companies have reached over 30 million households in 72 countries worldwide.
Rising inflation and interest rates have put the currencies in the countries Goodwell currently invests in “under a lot of pressure, more so than in previous crises”, says Boerhof.
“That devaluation is something we have to manage. If we make a forecast for an investment, we assume that there will be a devaluation of 7% per year. So if you are invested for eight years, you already assume that you lose 56% in value. But we invest in companies that grow 50% to 100% per year on average. So they grow so fast that they actually outpace that devaluation,” she explains.
‘Near-death experience’
In 2014, when they were on the brink of a big close of €40m for its West Africa fund which involved a number of development finance institutions, Goodwell experienced what Boerhof describes as a “near-death experience”.
“This [capital] increase was very much needed and would take us through the first initial difficult phase and would provide us with enough scale,” recalls Boerhof. Then one investor decided to leave, taking the rest with them.
Boerhof and Van der Beek regrouped and came up with a plan. The firm borrowed some money from “a group of faithful investors”, so it could invest in expanding its fundraising capacity.
“This worked out well,” says Boerhof. “What we learnt from this is that you have to spread your investor base incredibly well.” Development finance institutions “very often function as a club. Either they are all in it, or none of them are in it. We decided we did not want to be too dependent on one type of investor. Spread well, diversify.”
Take Goodwell’s $70m (€64m) uMunthu I fund, which was launched in 2019 and invests in early growth-stage companies in microfinance, food and agriculture, mobility, and logistics in sub-Saharan Africa. The fund “didn’t even have any development banks at all”, says Boerhof. “I think that is pretty unique. We now have more than 100 private investors across all of our various funds.”
Apart from private investors, Goodwell’s investor base also includes entrepreneurs, foundations, and family offices, as well as development finance institutions, funds-of-funds, banks, pension funds and other institutional investors.
uMunthu fund
At the end of last year, Goodwell launched its uMunthu II fund, which invests in innovative, scalable, small, and medium-sized businesses that improve the access and affordability of basic goods and services for underserved consumers in Africa. The fund has so far raised €50m from investors, with a final fundraising target of €150m.
Although she expects fundraising to slow down somewhat due to the uncertain investor climate, Boerhof is confident Goodwell will be able to raise the remaining €100m in the coming 12 to 18 months.
“The hard-core institutional investors are very conservative, and tell us they are sitting tight,” says Boerhof. “But the more entrepreneurial parties recognise this is the moment to step in. Last month, we had an investor coming in with a €10m investment. Those are parties who have had a long-term presence in emerging markets and who are committed. But people who are weighing up their first impact investment, they will likely be waiting this one out.”
Africa offers “huge potential” for investors, according to Boerhof.
According the latest data from the Africa Venture Capital Association (AVCA), Africa’s 21% year-on-year growth in venture capital deal volume in 2022 was three times that recorded in Asia (7%), the only other global region to record positive deal volume growth.
“It is very important people realise that economic cycles come and go and that this is a very interesting moment to step in,” says Boerhof. “All I say is: ‘Don’t miss the boat’.”
