Aline Vedder isn’t your typical investment manager. She got her PhD in Neuroaesthetics, and even wrote a book on the neural perception of art in the brain. However, Aline says she’s always been interested in new ideas and innovation, and that’s what led her to work at Rocket Internet.
She later joined Munich-based Acton Capital Partners, and now she’s an investment manager at Ananda Impact Ventures – a European VC that invests in startups addressing social challenges in areas such as education, health, and ageing. Though she comes from an academic rather than financial background, Aline says that her knowledge of psychology serves her in the VC world – helping in the assessment of teams and founder personalities.
Below we interview Aline about impact startups, her advice for founders, and the importance of diversity in the startup world.
What is your background, and how did you become involved with Ananda Impact Ventures?
I joined Ananda Impact Ventures as an investment manager last year. Prior to that I was working for Acton, a Munich-based growth fund. My interest in startups and tech was first sparked when I joined Rocket Internet shortly after its IPO in 2014 and worked with its portfolio of early stage ventures across different industries.
At Ananda we’re investing out of our third fund in impact businesses across Europe with a focus on DACH and the UK. Our investees address social challenges in vital areas such as education, health, sustainable consumption, future of work, and ageing. We typically invest in seed and Series A rounds.
What is the history of Ananda Impact Ventures, and what sets it apart from other VCs?
Ananda Impact Ventures is one of the leading impact investors in Europe, and was founded by Johannes Weber and Florian Erber in 2010. Back in the early days when they started to raise their first fund, investing in impact businesses was a bold and new idea. Over the past decade they have paved the way for entrepreneurs and other investors and proven that the returns of impact investments can compete with traditional returns.
So far, we have invested in more than 20 impact businesses. We strongly believe in the power of market-based, sustainable and scalable models with positive impact at their core. Our active portfolio comprises impact pioneers such as Auticon (IT consulting by people in the autism spectrum), IESO Digital Health (online psychotherapy) and Company Bike Solutions (e-bike leasing programs for corporates).
I believe that impact investing is going to be the new normal for investors in the future. For companies it’s increasingly important to be transparent about their impact. Therefore, impact investing is an absolute future market.
Can you give us some more examples of your recent investments? What is an ‘impact’ startup, and what is your criteria?
Impact businesses generate both profit as well as social or environmental impact. For us, the impact has to be part of the business model: the higher the revenue, the more social impact.
Our most recent investment was in the British company Open Bionics, which produces 3D printed affordable bionic limbs. Their bionic hands are small enough to fit children as young as nine years old, and affordable enough to be covered by national healthcare systems in major Western markets. Its a great example of a tech solution redefining markets and societal perception of disabilities.
We also invested in Talea, based in Berlin, and HomeTouch, which is headquartered in London. Both companies target the inefficient and problematic care market with innovative, technology-based solutions.
Together with Creandum and Spark Capital we also invested in the Berlin-based caregiving platform Careship. Ageing is a field that we’re very interested in and likely going to see more deals in the future.
The future of work startup MobileJob is breathing fresh life into the commercial job market, in which temporary positions are prevalent and often lead to discrimination. The company is active across Germany.
The UK company Raremark offers better information, treatments, and quality of life for patients with rare medical conditions, many of whom are children, by collecting and analysing patient data.
“Your level of success will boil down to your storytelling abilities”
How is the landscape changing for impact startups – have their numbers increased? What problems do they solve, and what sectors are they innovating in?
The European impact investing market is definitely picking up speed. A growing population, paired with changing consumption patterns creates significant pressure on health, wellbeing, the natural environment, and labour markets. Impact startups address these challenges in new ways.
Besides an increasing number of companies, we can also see a shift in founders’ attitudes towards impact. A recent study highlighted that 87 percent of millennials believe that the success of a business should be measured on its impact on the world.
Overall impact investing is still in its early days in Europe. But the number of institutional investors who want to invest in this asset class is growing. At the forefront in Europe are the European Investment Fund, Big Society Capital and Unicredit.
We believe that the impact investing market will grow significantly in the next 5 to 10 years. More players will enter the market, including governments, foundations, and even more institutional investors.
If you look at the private equity industry you can already observe that investors are assessing criteria such as sustainability, impact and diversity when they evaluate investment opportunities. Major funds like Blackrock increasingly allocate substantial parts of their resources towards impact investments and are quite vocal about their interest in this asset class.
What are the main things that you look for when investing in a startup?
I look for outstanding entrepreneurs who want to change industries and create a positive impact on our society. I’m not interested in niche topics or companies that fall into the field of venture philanthropy.
I look for market-oriented, sustainable and scalable business models with a strong value proposition and mission driven founders.
Typically, we invest in early stage businesses, between €500k and €2 million and up to €7 million. We mainly invest in B2B companies which have first revenue and a business model in place.
You mentioned that your background in psychology helps you when assessing a startup and its team. Can you expand on that? What kind of qualities do you look for?
We look for balanced founder teams, ideally founders complement each other. It’s always a bad sign if you have a meeting with a founder team and only one team member is speaking and leading the discussion. Being aware of certain personality traits and patterns of behavior early on can be quite helpful, especially if you invest early stage and mainly in the person who’s sitting across the table. Founder risk is one that you don’t want to take.
What is your experience like as a woman in the male-dominated VC world?
I’ve been lucky to work with and learn from exceptional colleagues. What has changed over the years is the growing awareness about the lack of diversity within the industry. I believe this is the first step in the right direction.
I’m especially happy that our portfolio at Ananda consists, to a large part, of female entrepreneurs. To give you some examples: Open Bionics, Raremark, Careship and Repositive all have exceptional female founders at the top of their organisations and a great understanding of today’s more diverse consumer.
Nevertheless, unconscious bias is real. Melinda Gates pointed out that VC firms tend to leave money on the table by not investing in women-led businesses. As investors we consistently have to push ourselves to make the best investment decisions possible and this entails actively challenging our implicit attitudes and patterns of thought.
This is certainly not yet a standard within the industry, but a variety of firms already do an exceptional job in investing in, promoting and hiring diverse individuals. The number of women-focussed networks and organisations is growing steadily. Ultimately, there’s no doubt that a diverse team benefits company performance.
I find it important to highlight that diversity is not only about gender but also about different ethnicities, socio-economic backgrounds, and age. Different ways of thinking bring different perspectives and an eye for different opportunities. This is especially crucial when it comes to new markets and ideas.
What advice would you give to startups who are looking to raise funding?
Know your story and tell it well. Owning and sharing your story is crucial on many occasions. As a founder you talk to a multitude of different stakeholders and you are in charge to forge the external and internal perception of your company. Your level of success will boil down to your storytelling abilities. Are you able to convey your mission and vision to a wide array of audiences? Being a good story teller will drive your ability to attract talent, acquire customers and ultimately also investors.