The elea Way - Preview

elea’s FOUNDATION AND OPER ATING MODEL 93

place of convertibles, thereby avoiding unnecessary legal complexity as well as the placement of a burden on our investee’s balance sheet.

The guiding principle according to which elea chooses the amount and structure of an investment is based on a balanced perspective about the future development of an enterprise. We are not focused on short- and medium- term interests as an investor but rather on the long-term ones. We, therefore, do not seek to leverage our trusted relationships with the entrepreneurs to achieve unreasonably low valuations, nor do we recommend overloading the balance sheet with excessive debt (including repayable grants), because this could jeopardize future fundraising rounds. We look for fair arrange- ments in the spirit of an aligned partnership with the entrepreneurs in favor of social impact and long-term financial viability rather than in the spirit of an overly greedy approach that emphasizes maximum upside. elea has never had to take an entrepreneur to court (nor has it been taken to court by an entrepreneur), and we will continue to do our best to avoid this in the future. However, we do insist on comprehensive con- tractual frameworks with three benefits in mind: contracts help define collaboration mechanisms (e.g., in the form of supervisory board seats or other advisory roles), enable solutions to protect minority rights (e.g., against financial dilution or the dilution of social purpose), and allow thinking through alternative scenarios for future development (including different exit options). Impac t value creation Often, already during the due diligence phase, and certainly after the closing of the investment agreement, strategies for maximizing impact value creation are discussed between the entrepreneurs and the elea team. Adding value to an investee company beyond providing financial capi- tal has been a core principle at elea since inception. As our experience with individual companies – as well as within our investment sectors – increased, impact value creation initiatives evolved beyond the debates at board levels and began involving our junior talent as well. Currently, we dedicate substantial and growing resources to elea impact value creation, or, as we call it, eIVC. To ensure effectiveness and continuous learn- ing in this field, elea regularly organizes internal eIVC luncheons, where