"Many impact startups are underestimated"

Ina and Ingo Dahm want to enable private investors to invest in sustainable start-ups. But does that even make sense?

The founding couple Ina and Ingo Dahm have made themselves comfortable, it has to be said. Their start-up Capacura is based in the middle of Cologne's old town, just 100 meters from the Rhine. From there, they and their team search for promising sustainable start-ups, invest in them and then want small private investors to participate. But critics warn that such investments are associated with a high risk for small investors.

Mr. Dahm, you want Capacura to have a sustainable impact. Why is that so important to you?

Because we want our investments to contribute to a good future. Many people like this approach, but are worried about poor returns.

Quite often, people ask us how much return they will have to forego if they rely on Impact. I then always ask the counter question? Are you investing in porn, or child labor, or land mines, or drugs? It's clear to us that these are very lucrative businesses from a purely financial point of view. Then most of them say to me, completely indignantly, that they don't do that. Then I say to them: And that's why you should invest in impact. You do have an inner compass, an inner value system. It's about investing in what you think is good. That's where we wanted to create a remedy, on the one hand for the impact startups, so they can get funding better and are better off than startups that don't follow that value system. On the other hand, we wanted to help everyone who would like to invest in startups but can't participate in this club business because they lack the large sums of money.

If startups can't find money, it may be because an investment is simply unattractive.

Of course, that can be a reason. But many impact startups are also underestimated. That's because the numbers suggest that investing capital in impact startups is much more stable in value than traditional startup investments. We can think about how crisis-stable e-commerce or marketing startups are. When a company is doing badly, it can usually save on three blocks: Marketing, personnel and material costs. So marketing startups suffer a lot as a result. Conversely, if we have a startup that advances education for children, then it doesn't matter at all what the stock markets are doing.

At what point is a start-up an impact start-up according to your definition?

There are the United Nations Sustainable Development Goals (SDGs) and it has to fit one of those goals. For us, it's also important that it makes a difference in the areas of health, education or the environment.

You advertise very aggressively on your site that you would invest in the "best" startups, which for you is a mix of opportunity, return and impact. What makes you so sure that you really find the best startups?

We have a different screening model than many other investors. Most business angels manage to look at maybe one potential startup a day, so manage a maximum of 300 to 400 a year. We look at over 4,000 a year using an algorithm. This helps us classify the startups and basically consists of a data octopus and a time machine. To train the octopus, we looked at 100,000 startups from public sources and enriched them with other accessible data. In the next step, we let our program filter out all the information that would have existed at a certain point in time, at which an investor would have gone in. Today, we know whether these companies would have been attractive. In this way, we can subsequently evaluate investments and then make predictions about current start-ups. Of course, this is not a promise for the future, because we use data from the past, but this process makes us very confident. Moreover, this digital process saves us a lot of time and manpower. For us, the initial assessment of whether we even want to take a closer look at a start-up takes 39 seconds.

Among other things, you are invested in start-up Everwave, which fishes plastic out of the sea, where the impact is very clear to see. But you are also invested in the digital piano playing teacher Skoove. Why does that also fall under Impact for you?

You have to remember that Skoove is also active outside Germany. There are many children around the world who don't have access to piano teachers because their parents can't afford it.

Is the piano more expensive, or the teacher?

It can also be a keyboard, and that is certainly cheaper than a piano teacher in many countries. And on the other hand, we are already of the opinion that ABC and mathematics are not the only points that count towards education. Musical understanding is a super important point. The fact that we can make it possible for many people around the world to learn the piano is something I think is very important.

You differ from traditional venture capitalists because private investors can participate in your investments through profit participation rights. How exactly does that work?

We are an operating company that invests in start-ups. If someone now says that they would also like to participate in the economic success of a start-up, they can come to us. For example, if we invest 100,000 euros in a start-up and a private investor would like to invest 2,000 euros in various start-ups through us, then he will get exactly these shares. Then a profit participation right is created, which is cut in the same way that he is paid out according to his investment when a distribution is made. So if we later get paid out one million, the private investor receives 20,000 euros.

Of course, this also works in the other direction. If the start-up valuation does not increase, the private investor makes a loss with you.

It can also be that he loses his invested capital. And it can also be that he loses his capital if Capacura goes insolvent. This is what we are pointing out. Start-up investments tend not to be the foundation for a secure pension. But if a private investor has money left over and wants to do something positive, then a start-up investment through us may be just the thing for him.

How much money does Capacura invest itself?

We usually invest between 250,000 euros and 300,000 euros. We have identified a gap there. It is usually too much money for a business angel, but still too little for a venture capital fund. We then make 90 percent of our investment available to private investors. We hold ten percent ourselves. If no private investor is interested, we simply continue to hold our shares. And that is also the reason why we focus so much on sustainable start-ups. The business model has to be so good that we would go through with our investment on our own.

Thank you very much for the interview.

Personal details: Ingo Dahm did research and a doctorate in machine learning and artificial intelligence. He worked for Microsoft and Deutsche Telekom, among others, and became a professor of technology and innovation management at Bad Honnef University of Applied Sciences. Together with his wife, he founded Capacura in 2017.