How can business owners, investors and institutions improve the world in a fair and sustainable way? That question has been Ronald Beuk's fuel for about a decade now.
The answer in one word reads: covestment. He developed and coined this concept and puts it into practice at Generous Minds, the Amsterdam-based cooperative he founded in 2013.
The basic idea is that experts and financiers invest in a venture together. Those investments are not all about venture capital. Time, advice and a long-term commitment are equally important in the equation.
The cooperative is owned by 29 people, the ‘Generous Minds’ the company name refers to. Being one of the minds, Beuk describes the team as "top level coaches'' in strategy, commerce, innovation, production or finance.
The idea that you should be careful with money is a recurring theme in the conversation with Beuk. The minds that advise enterprises all get paid the same hourly rate: €75 on a freelance basis.
Beuk: "I've come to the conclusion that you don't need more to live a decent life. And if you do, it is probably time for you to downsize and consume less."
An advisor who is hired to raise funding for a client only gets paid if a deal is closed successfully, with a percentage of the deal.
For every hour a mind gets hired to advise a company, they earn a shareholder point in Generous Minds. This way, the ownership balance can change by the hour. In case a mind wants to stop working in the team, they sell their shares back to the cooperative.
Every mind also pays a yearly €1,500 membership fee. This should be an incentive for the owners to deliver valuable, sustainable advice to customers and to stay committed to the cooperative.
Investor and advisor in one
Part of the setup is that the advising "mind" often steps in as a financier.
"If that's a conflict of interest? I get that a lot," said the former advertising man. "I'd say it is the contrary. If our shared goal is to improve the world by making an impact business successful, then what is best for the company is also what's best for society."
Since 2013 the cooperative has helped around 150 Dutch companies raise €15mn in funding. Two examples of ventures are SpeakSee, which is developing a speak-to-text device for the Deaf, and creative agency Makers Unite which brings together locals and immigrants to create sustainable fashion.
A mix of grants, equity and loans
Beuk said that a lot of start-ups are playing by the old rulebook when it comes to running and financing their companies.
"Offering equity or taking a big loan is not always the best idea for a new company. Many start-ups approach big investors too early. Then they lose grip of their business, take big financial risks and tend to shift to ‘profit first’ instead of focusing on their mission. Often a grant or subsidy is a better option in an early stage."
"I also think that a lot of entrepreneurs ask others (investors, ed) for money way too easily. If you want to create impact and do something good, you should be prepared to invest your own time – but also your own money."
The mix of private and public grants, subsidies, equity and loans is something Generous Minds calls integrated capital. Every month entrepreneurs can pitch their projects in the Integrated Capital Lab to discover how to best fund their businesses.
Triodos bank, the municipality of Amsterdam, the DOEN Foundation and the Netherlands Enterprise Agency (RVO) are some of the lab members who serve as advisors and potential financiers.
Rating the expert
Businesses that hire Generous Minds advisors get to rate them on a scale from one to ten after every finished assignment. If an expert scores lower than a six the client doesn't have to pay the invoice. If this happens three times, the expert has to leave Generous Minds.
"Customers basically just send us an email and tell us what the score is," said Ronald Beuk. As social impact is at the core of all Generous Minds clients, a high score should ensure that the Generous Mind advisor acts in line with those ambitions.
Beuk: "Up until now we've never had to let a mind go because of low scores. But the rating system is more a kind of quality control: do our experts deliver? If not, that's a good starting point for evaluation."
Generous Minds has a track record in helping impact companies move forward. But what do they mean by impact and how do they measure it? Beuk: "To be honest, our gut feeling decides. We're asking ourselves: Do we believe in this company and does it contribute to the UN Sustainable Development Goals? We should come up with a better way to monitor this, which should also apply to ourselves as an organisation."
2020 was a tough year for the team and revenue dropped by 20%. Ten owners left due to a personally pressing financial situation.
The cooperative has been planning to set up its own investment fund for years – it is still unclear when this can become reality.
Three deals so far
Despite this, the founder said that Generous Minds expects to close financing deals amounting to €50mn this year. This is a lot compared with the €15mn that it has raised since Beuk set up shop in 2013. Until now, three out of 13 anticipated financing deals have been closed this year.
Still, Beuk is confident that the cooperative's "growing network" of financiers (about 100 investors and financiers) will prove itself. "It also seems as if Covid has created a greater willingness among investors and experts to invest their time and capital to support enterprises that contribute to a better world."