Serial social entrepreneur Verloop, founding partner of Rubio Impact Ventures, explains her approach to identifying and investing in entrepreneurs with potential to generate systemic change.
CV
- Rubio Impact Ventures, Founding Partner, 2014- present
- Social Enterprise NL, Founder, 2011-present
- Netherlands Advisory Board (NAB) on impact investing, Founding Chair, 2019-present
- War Child Holland, Founder and Executive Director, 1994-2009
- Willemijn sits at the boards of several companies and organisations including Tony’s Chocolonely, Anterra Capital and V-Ventures.
A quick glimpse at Willemijn Verloop’s curriculum explains why she is well-know for being a serial social entrepreneur and one of the driving forces behind the Dutch social enterprise movement.
Verloop’s interest in taking action to make change happen has been evident from the start of her career. At the age of 23, a visit to Bosnia during the war led her to found international peace organisation War Child, with the aim to provide psychological support to children trapped in armed conflicts. Under her 15-year directorship, the organisation improved the wellbeing and resilience of 1 million children living in war zones.
Since her War Child days – she is still a member of the organisation’s supervisory board – Verloop has worn many hats, all with social entrepreneurship and impact as a main focus.
In 2012, she founded Social Enterprise NL, a membership body that connects and supports social enterprises in the Netherlands. A year later, along with co-founder Machtelt Groothuis, she established venture capital firm Rubio Impact Ventures.
Formerly known as Social Impact Ventures, the firm was born in response to the lack of growth capital available for impact-focused entrepreneurs.
“Dutch [social] entrepreneurs had to move abroad to find growth capital and there was an urgency in the market,” Verloop says. A lack of investment funds focused on making impact and returns equally important was another reason for launching Rubio. “For me, it’s really important to drive mainstream capital into impact, and to do so we need to prove that these models are commercially viable and also have great impact.”
Rubio’s approach to impact investing centres around identifying and backing new “champions of change” on the premise that the most valuable companies will be those providing solutions to humanity’s biggest challenges.
Fundraising
Rubio first fund was launched in 2014, raising €40m at final close. Their second investment vehicle was launched in 2020, closing a year later after having raised €110m with an expanded geographical focus to Europe. This year, the team will start fundraising for their third fund which will also invest across Europe.
“In hindsight, the fact that I’d never raised a fund before played to my advantage. I was naïve about how challenging raising a fund was going to be. I just thought it was a good idea that needed to exist, and we went for it.”
Verloop believes that her War Child’s credentials and impact background, alongside Groothuis’ long career at McKinsey and in private equity, helped them gain trust from investors.
“We were a first-time fund and a first-time team with a seriously different investment proposition, so I am very grateful to the people that were willing to put trust in us.”
Investors in both funds include the European Investment Fund (EIF) and a range of institutional investors, family offices and entrepreneurs.
“It is a great combination of investors – from the more institutional to the more entrepreneurial. With their knowledge and experience they help you professionalise your operation when you are still small.”
Impact themes and methodology
Rubio invests in “world-changing” entrepreneurs offering solutions that are both impactful and commercially scalable, across three main investment themes: circular solutions, people power, and healthy systems.
Over the years, the firm has developed its own impact methodology and ‘theory of change’, adapting frameworks developed by peers to meet their specific needs. Verloop mentions pioneer impact investing firm Bridges Fund Management as a source of inspiration, in particular regarding impact methodology.
“We took a lot of learnings from them but when it came to defining our impact model we wanted to take it a step further. For instance, we added in a component regarding systemic impact.”
She adds: “If we invest in a company, we need to believe it has the potential to generate systemic change and it is not just an incremental impact step in a value chain. If we don’t believe [the impact] is potentially systemic, we will not invest.”
A recent study conducted by Esade’s Center for Social Impact on transparency and best practices in impact management and measurement (IMM) highlighted Rubio as an example of an impact fund where impact and ESG responsibilities are spread across the investment team. The report also mentioned how an independent, external impact advisory board has to approve the impact metrics set by Rubio’s investment committee, which determine the carried interest targets.
“100% of our carry is linked to impact targets,” she explains. “Setting targets is complex but you also need someone judging whether they are the right impact targets, if they are ambitious enough, or if you are setting them too low.”
Her team only invests when business models and impact are aligned. “If the business grows, the impact has to grow too. Our impact advisory board gets involved in our pre-investment process too, so even before we sign a deal they validate whether we have picked the right targets.”
According to Verloop, this validation process is unique in Europe. “We have not come across any other funds taking validation as seriously. Ours is a two-step process: our external impact advisory board validates pre-deal, and our LP committee validates both impact targets and ongoing impact performance post-deal, and links it to our carry.”
In its 2021 impact report, published in April last year, Rubio states its first fund overperformed (117%) its impact targets. Overall, the firm’s portfolio showed an average revenue growth of 62% in 2021.
Portfolio across themes
To date, Rubio has invested in 31 companies offering solutions in one or more of three main impact themes.
At the end of 2021, companies under the ‘circular solutions’ theme, represented nearly 50% of the investment pipepline and 41% investments made. Companies in this group include Sympower which provides cost-effective and sustainable balancing services to the electricity grid, and Olio, a platform that allows users to share unwanted or surplus food.
Investments in the ‘people power’ theme include SkillLab, whose AI software solution enables people to turn their skills and past experience into careers, and employee engagement platform GoodUp.
Incision, a company that uses technology to improve surgery care, and OpenUp, a health tech venture focused on making mental health care accessible to everyone, are examples of investments under the ‘healthy living’ theme.
Impact beyond exit
Verloop believes that the current political and economic backdrop, and the many crises we face have resulted is a renewed sense of urgency around the need to invest for impact.
“The market is really growing and I am excited to see new funds being launched that we can work with. Entrepreneurs can choose between funds and that is a good thing – the impact investing market is no longer in its infancy.”
“Our theory of change is very much aimed at the fact that we need to foster and support these young, new ideas that are bringing change, and what we have seen from our first exits is that there are a lot of big, strategic players that are eager to buy these companies” she adds.
In 2020, Rubio exited GoodFuels, a provider of plant-based biofuels for the heavy shipping and transport industry. “This was one of our first investments and it grew really fast, producing sustainable biofuels which they then sell to the Ikeas or Heinekens of this world that are prepared to pay more for getting their goods shipped across the ocean in a sustainable way.”
At the time of the exit, the buyer, fuel distribution company FinCo Fuel Group, committed to continue tracking the same impact targets and reporting them back to Rubio, something which they still do today.
“They wanted to make it clear to us that the impact aspect of this acquisition was very relevant to them. And that’s the best practice model for me – a new owner who is willing to pay a good price for the company but they are also equally incentivised by the same impact targets.”
