The elea Way - Preview

elea’s FOUNDATION AND OPER ATING MODEL

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founders’ ambition to establish a professional team, they came up with a Plan A and a Plan B. Plan A foresaw that elea would succeed in attract- ing like-minded third-party investors for contributions of philanthropic capital, and who would become a long-term viable philanthropic impact investor, helped in part by reinvesting the financial returns of the most successful investments after exit. According to Plan B, elea would be liquidated after a period of, say, 10–15 years, having exhausted its capital resources and having, hopefully, made a number of socially impactful and financially successful investments. As we will describe in more detail in Chapter Six (Section 6.2.4), when we take a look at elea’s lifespan going forward, we are pleased and proud that Plan A was successfully imple- mented and Plan B was shelved. During the first few years, we did not accept any third-party capital. This was because we wanted to explore, experiment, learn, and adjust our model without putting external capital at risk. Only three to four years after launch, due to the growing confidence in our approach, did we start to systematically look for external capital providers who would become members of our philanthropic investors’ circle. We had three target groups in mind. First, entrepreneurial families with similar characteristics to that of the founding family: a penchant for entrepreneurship, and an appreciation for a professional, analytically driven investment approach to addressing social issues, as opposed to more emotionally based, traditional charitable giving. Another target were foundations with a broader remit who would be prepared to outsource their activities dedicated to fighting absolute poverty to another foundation that specializes in this field. And, finally, companies who would consider a strategic partnership with elea as a meaningful component of their responsibility agenda. Our investors’ circle offering is straightforward: we want our external philanthropic investors to be completely aligned with our investment phi- losophy, impact aspirations, and process. We have, thus, stayed away from forms of cooperation that would compromise our investment philosophy and process. As an example, we would not search for investments for third parties against a finder’s fee without being invested in the impact enterprise ourselves, and we would also not offer due diligence as a service. Moreover, wherever possible, we try to do co-investments with professional partners that we know very well and with whom we share similar investment phi- losophies as well as levels of professionalism and expertise.