In this conversation, Eva-Maria Dimitriades, CEO of Conduit Connect, discusses the mission and objectives of the organisation, which focuses on impact investing in areas such as climate, health, education, and inclusion.
She explains the investment process, the importance of recurring revenue, and the demographics of their investors.
Eva also highlights the unique features of Conduit Connect, including community engagement and the Generation Impact Academy, aimed at educating the next generation of impact investors.
She concludes with advice for aspiring investors and emphasises the importance of aligning investments with personal values.
Disclaimer: This podcast is a financial promotion for the purposes of Section 21 of FSMA. It is issued by The Conduit Connect FRN: , 826000 an Appointed Representative of Enterprise Investment Partners LLP FRN:604439 , an AIFM as defined by the AIFMD, who have approved it, on [19/11/2024], and who are authorised by the FCA. This podcast is provided for informational purposes and should not be construed as an invitation or offer to buy or sell any investments. No recommendation is made, positive or otherwise, regarding individual investments. Any decision to invest should only be made further to review of an applicable Information Memorandum. Please be aware that we invest in unquoted companies which are non-readily realisable securities and should be considered as high-risk, long term, illiquid assets. We do not give financial or taxation advice. If you are in any doubt about whether to invest, you should seek appropriate professional advice.
Resources Mentioned In This Episode:
>> Eva-Maria Dimitriadis [LinkedIn]
>> WT237: ‘Head 2 Head w/ Louise Hill, Co-Founder & CEO of GoHenry’
Next Steps On Your Wealth Building Journey:
>> Join the WealthBuilders Facebook Community
>> Schedule a 1:1 call with one of our team
>> Become a member of WealthBuilders
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Christian Rodwell (00:02.018)
purpose of Wealth Talk is to educate, inform and hopefully entertain you on the subject of building your wealth. Wealth Builders recommends you should always take independent financial, tax or legal advice before making any decisions around your finances. Today's episode is brought to you by Wealth Builders Membership, a proven step-by-step process that helps you achieve financial security within two to three years. find out more, head to wealthbuilders.co.uk forward slash membership.
Welcome to this week's episode of Wealth Talk. My name is Christian Rodwell, the membership director for Wealth Builders, joined today by our founder, Mr. Kevin Whelan. Hi, Kevin. Hi, Chris. Good to be with you again. You look a little taller on screen. You bought a stand-up desk by any chance? It was a Black Friday special deal. Yes, I've been using a co-working space recently and they've just introduced some stand-up desks and I thought I'll get one for myself and I'm loving it. Yeah, well, I've been using a stand-up desk for
long time I preferred. I know there's a temptation to do that movement just because you're swaying, but it's definitely better and it's better than sitting down all day, that's for sure. Okay, so this week we're talking about investments, Kevin. So of course, regular listeners will know about the wealth builders model is built around the seven pillars of wealth, seven different asset classes you can use to generate recurring income and number three, pillar three, as we refer to it.
is investments. So that's kind of the topic of today. And we've talked before, Kevin, about the importance of investing aligned with your own values. And I think that's really topical for today with our guest, Maria Dimitriades, who's the CEO and managing director of Conjurit Connect. Well, I think some people refer to it as your investor DNA, you know, being clear that what you choose to invest in is aligned completely with your values, with your interests, with
how you want to influence or not influence. And I think Eva's got quite a few things to say about that. And there's some interesting opportunities we'll get a chance to debrief, at least on the thinking. I think it's worth saying, Chris, that when it comes to the world of investing, we never recommend investments. isn't something we ever promote or participate in in any way, shape or form financially.
Christian Rodwell (02:29.816)
Probably worthwhile stating that very clearly right here. Absolutely. Yes. And of course, link to the Conduit Club in London. And we're in London this week with the team for our Christmas lunch. And then we had a networking event for members and non-members. So if you're listening now and you were with us in Piccolino in Mayfair, I hope you had a great night. We certainly did, didn't we, Kevin? We had a good time, yeah. And the Conduit Club is in Covent Garden.
So only a hop, skipping a jump away from Piccolino's on Regent Street. And didn't London look great or resplendent in its light? I do like London when it's its finery. Indeed, yeah, it certainly did. All right then, so we'll be back, of course, with the debrief after our conversation today with Eva Maria Dimitriades.
Hey, I'm pleased to be joined today by Eva Maria Dimitriades, who is the CEO and managing partner of the Conduit Connect. How are you, Eva? Great. Hi, Christian. How are you? I'm good, thank you. It sounds like you're on site. Where are you right now? I'm in the buzz of our office. Yes, we're live from Conduit Connect. And that's in central London? Yes, we're in Hoban at the moment.
Excellent stuff. Well, look, we're going to have a good conversation today. Looking forward to finding out more about yourself and Conduit Connect. So why don't we begin there? Could you share a little bit about how the Conduit Connect started and its main objectives? Absolutely. So the Conduit Connect was born in 2018 and it was set up alongside a really wonderful members club in London called The Conduit. I'm sure you've been or heard of it.
And really, the Conduit was set up as a place that was intended to be where great changemakers and people who wanted to have an impact could meet and not just talk the talk, but also walk the walk and have action. And so Conduit Connect was really, a way, someone described it yesterday as a dating agency for entrepreneurs and investors, but it was really the way to enact the change that people wanted to see and were so passionate about.
Christian Rodwell (04:41.73)
we were set up to help investors and entrepreneurs find each other. And over the years, we formalized our offering and changed a little bit how we do that. I didn't found the business. I came in in 2019. And in 2021, most excitingly, we set up an impact fund, which is a way for people to build a portfolio of early stage investments with high impact. So some of those areas, I focus on the impact areas. They include climate, health.
education and inclusion. So why were these specific areas chosen ever and what makes them appealing to investors? It's a good question. Well, when we first set up Condo Connect, we really were guided by the sustainable development goals and everybody in our community had come across them and could identify with them and was able to summarise their investment priorities in some way in connection to those goals.
But what we found is ultimately, you know, having 17 investment areas is quite clunky and some of them do overlap. And so over time, when we set up the fund, we had a very clear understanding of our investors' appetites and explicit requests of what they wanted to back and what sort of innovation they wanted to fund. And so we really looked at where are the most exciting deals and opportunities? Where is the real technology? Where is the real innovation?
We're also building the fund against the backdrop of COVID. So you can imagine there was lots of hype about education and how can we use tech to better education. Everybody was schooling from home. There was a lot of hype about healthcare, obviously sitting in a global pandemic. We were seeing all the cracks in the system and where there was really so much attention being paid to diagnostics and.
rapid results and that spread across the health ecosystem. But of course, the biggest theme of all, which is not going anywhere anytime soon, was in the climate space. And whether you were looking at how to get to net zero and decarbonize, how to abate sectors, or whether you were looking at the way people eat and the way people move around cities, these were the themes that were so close to people's hearts and wallets. So we just filled it down and we said,
Christian Rodwell (07:05.356)
Here are the sustainable development goals, but if we were to put it into buckets, where do we see the most investor appetite? And it was really around climate, health, education, which is a smaller segment for us, simply because I think it's hard to see true innovation in that space, and inclusion, which is in a way something that spreads across the whole portfolio. And we mapped that onto the deal flow and saw that, in fact, those were the themes where we saw the most exciting.
in investable and scalable opportunities. But also if you then take it into the round with regulation and the general zeitgeist, our society, no one will tell you unless they're really a big climate denier that these aren't important things to fund. So we felt that just from all angles, these were very justified investable areas. so
The way I like think about it is it's sort of people and planet. And in fact, half of our portfolio of investments are climate deals, even though there are four themes. Yeah. And why do you think it's important to people to invest in something that they're passionate about and which aligns with their values? So, you know, why do you see that as good thing? Well, very simply, I think it's good business. There is no planet B. We know the pressures that this
the is under and we've already betrayed several of the planetary boundaries. And we would like a place that our children can live and enjoy the same luxuries that we have and the same resources. And that's not going to be possible if we continue at this rate. So I think people do want to invest with their values because there's an urgency and a critical pressure that's very, very visible to this generation. I like to think that every business is a climate business.
Every business is an impact business. It's just whether that impact is positive or negative. And we invest in businesses that very intentionally think about and measure their impacts on people and planet. And so it doesn't mean that there's anything concessionary about the investments we're doing. It's classic venture capital. It's high risk, high reward, if you get it right. But we're looking for businesses where the
Christian Rodwell (09:26.158)
positive outcomes are in lockstep with financial growth. So if you think about it, you have a sort of an impact P &L as well as a financial P &L. Both of those curves should go up in sequence. Can you explain to us a little bit of the process that goes behind the scenes in order to pick these companies that you choose to invest and work with? Absolutely, with pleasure. I'd say that
For the most part, the big outline of our investment process is very similar to most venture capital funds in that we have a large funnel with lots of deal flow and we go through phases of due diligence to narrow down to the things that we think are most likely to make the return and have the impact that we want to see. So annually, we're seeing about 2,000 deals and we source our pipeline from
universities, accelerators, co-investors, our venture partners, our own team, loads of events that happen in the ecosystem. And the first question is really quite a simple one, which is, does it fit our criteria? Is it of this certain stage, profile? So typically we're backing tech-enabled companies with really smart founding teams. Could be a solo founder, could be a group of founders.
that have great experience and we need to believe that they have a sort of unfair advantage to be able to deliver the things that they're trying to deliver. We're looking for them to be solving a true problem that they have fallen in love with and try to understand. And we want to see that there is some evidence that there's product market fit. So normally there has to be revenue. So it's quite an easy box.
to check or a box that often remains unchecked in the case of our pipeline is you see a lot of quite early deals where there is no revenue yet. And we need to draw the line somewhere. We need to manage the risk of our investors. And so that is one where we say, come back to us when you've proven that there's someone willing to buy this. That doesn't mean that it's not investable. There are pre-seed investors who specialize in that, but that's not our sweet spot. What else are we looking for? We look for diverse founders. That's not to say we won't invest.
Christian Rodwell (11:39.956)
in three white guys, but we believe that opportunities are not equal, but great ideas and implementation are evenly distributed. And so we want to make sure that we have a diverse portfolio. So once we've established that it's a fit and it's within the right range, so we look for companies that are raising over a million pounds, have some revenue, are UK based in the case of our fund, because it's an EIS fund, which we can talk more about. We then go into a
a deeper diligence process where first of all we bring the deal to our venture partner committee, which is an amazing panel of about 16 professional investors, all with different areas of subject matter expertise. And their role is to really knock the idea around, stress test it, ask the difficult questions where there might be pitfalls, what is the defensible moat around the business. If there is interest.
We'll then take it into deeper D.D. and write an investment paper and take that to investment committee. And at that point, we really need to believe that we're quite willing to write a check for that company. So that's the process. It can take anything from a week to three months, depending sometimes on the timeline of the company. And we don't typically need rounds. We work closely with co-investors.
we might really, really like a deal, but if they're raising three million and we're writing a 300,000 pound cheque, a lot needs to happen before we can actually sign on the dotted line. So there are lots of dynamics to the round, but that roughly describes our process and we can move very fast when we need to. Yeah, no, thanks for explaining that. And for anyone listening who perhaps is at the early stage, they're thinking about future investment. You mentioned that you look for some revenue.
Do you need to see some proof of concept already in terms of some sales or might you simply go initially with an idea? So we don't invest at the idea stage. I would say there's one exception in terms of subsector where we might discount the post-revenue criteria, which is in biotech or something clinical in nature, because by definition,
Christian Rodwell (13:54.766)
you don't really get revenues until you start selling a product. And in order to sell a product, you typically have to have gone through some sort of regulatory trials or approvals or testing. And when you've done that, and you've proven it works, you get bought by a pharmaceutical company. So we don't need to exist. So you're taking a bigger bet in those sorts of businesses. That would be the one exception. But yes, otherwise, we're looking to see that there is some sort of sticky, usually recurring revenue, not just a one-off.
pilot, but a client or a set of clients that are willing to pay and need your service to exist. You keep saying things that create new questions in my mind ever. One of them there was the big one, recurring revenue. We talk about recurring revenue being so important if you're trying to become financially secure, financially independent. Why is recurring revenue so important when you're looking at the model?
I mean, well, it's obvious you can rely on it and it grows. The more clients you have, if they're all recurring revenue, then you can see the book of income growing and it's a great forecasting measure. If you're having to recruit new clients, depending on what your product or service is, each year or each six months, then it's really difficult to know how you can compound that and grow exponentially.
And a recurring revenue business is valued at a higher multiple as well. Yes, very much depends on the type of business, that's true. mean, valuation is an art, not a science. There are, of course, market indicators and certain precedents, since you can triangulate across a peer group and you can look at all sorts of metrics, multiples on the last round and the dilution. Typically, you're giving away about 20 % of the company each round.
At the end of the day, it's what are people willing to pay for the business? And we saw some really outrageous valuations back in 2021, which was a sort of peak period for VC. And now there's quite a big recalibration of some of those values. So, you know, having your value hiked up isn't always a good thing if you still have a way to go. Let's move our attention to the investors then. So who are typical investors? Yeah, well, our
Christian Rodwell (16:13.678)
Our fund is a retail fund. So I'll maybe pause and use this opportunity to say that nothing I'm saying in this podcast is investment advice and certainly not tax advice either, but we're a retail fund, which technically means that a retail member of the public could invest, subject to qualifying and meeting a suitability criteria. But we have a really interesting investor base because of our impact.
reputation and credentials, I think we attract a slightly younger audience and more diverse, So about 33 % of the investors in our fund are women. That might also be because I'm a woman and we have female leadership and we have lots of female entrepreneurs in our portfolio. But more interestingly, 50 % of them are under the age of 50.
And I think there are a few reasons for that. One is that it's an impact and sustainable portfolio. And as we've discussed earlier, I people really care about that increasingly. Two is it is an EIS fund. And I don't know how much your listeners know about EIS, but EIS is the Enterprise Investment Scheme. It is one of the gifts of the UK tax regime and one that the Chancellor did not take away in the last budget. So it was set up in 1994.
And it is a method, a mechanism for rewarding investors and private individuals for taking risks by investing in early stage businesses. So it's absolutely not for everyone. It is very high risk. It is likely that you could lose all your money by doing these sorts of investments. But effectively, you're investing in an early stage business. And to compensate you for taking that risk, HMRC, the taxman, will give you back 30 % of your investment.
assuming that you hold that investment for three years and there's no guarantee that you're going to make any money back. If that company fails, they'll give you back a further loss relief, which is your tax rate times the loss that you've incurred. But more excitingly, if you win and your investment doubles or triples or has a 10x return, which we all hope for, then you don't pay any capital gains on the game.
Christian Rodwell (18:33.56)
So if you've invested 100,000 pounds and you've made 300,000 pounds, the 200,000 delta is not taxable, which is course very attractive. And there are a few other things. It's not inheritance taxable. So if you're in the later stages of life thinking about exciting assets to pass on to the next generation, this is quite a nice way to cushion from IHT and a few other things which I won't go into. So it's beautiful and I think very legitimate tax wrapper.
And so for people who have done the right thing and sorted out their pension and they've got a good mortgage or they've paid off their mortgage, they've got their ISA, they've gone through the nice list of asset allocation and feel quite well protected. And there's a little bit of extra money at the end to do something exciting where there's potential for high reward, but there's also the potential to lose it all. This is that thing. And you know that you're having a great impact at the same time.
So our investors are young, they're diverse. They are excited about getting to know the companies that they invest in. So it's very tangible. You could actually use the products or services that you're investing in. You can see the full portfolio. You can meet the founders. You can be on that journey. And so I think people find it very rewarding for more than one reason. Yeah. Let's talk about just how people can get involved. You've got a membership program as well, a community.
What are the unique features make the Conduit Connect stand out from other impact investing platforms? Well, it depends which platforms you're thinking about. No, I do think we have a very unique special source. Well, one is, of course, that we're connected to the Conduit Club, which is a wonderful place to convene. So we have a very, very engaged community. We do a lot of thought leadership. We'll get together and talk about really big topics and not just at a high level. So yesterday, for example, there was a
really interesting event at the Condor, a full day conference on financing the green transition and on the green economy. And I had the pleasure of speaking there and you had really amazing thinkers and speakers coming together. So I think that is one thing, certainly, that the community around us and the ability to meet the change makers, it's not just something passive where you get a report once again. It can be that if you want it to be, but it doesn't have to be. I think it's also our access.
Christian Rodwell (20:58.424)
to deal with. We have such a wide community that we get to see really the best opportunities in the impact and sustainability space. And how can people get involved? Well, obviously, if people are interested in the fund, they can acquire on our website to receive more materials and we can share that process. It's actually an evergreen fund as most CIS structures are. So there are four opportunities a year to invest. We're open for applications now.
But of course, if you just want to learn more about impact investing and how to support this ecosystem perhaps without money, we also run education events. So we have something called the Impact Academy, which convenes twice a year. And it's a way for individuals, whether it's in your professional life or in your personal life or as a family office investor, to learn about how to allocate.
more of your time and wealth into impact and sustainable opportunities. That sounds great. if we could perhaps some of our listeners are interested in coming along to that ever, perhaps we could get together a little special event just for them, you think? Maybe if there's enough interest. Very happy to that. All right. We're definitely getting in touch with us and we'll make sure we reach out to our community because I think it absolutely would be of interest. You're also really supporting the next generation, aren't you? So tell us a little bit more about
the Generation Impact Academy as well. Yes, so that is it. That is the Generation Impact Academy. When I set it up, actually, I told the board that I wanted to call it the Next Generation Impact Academy. And they said, well, I don't think you should call it that because, you know, what if I want to come, says a 65-year-old guy on the board. And sure enough, we marketed it as Generation Impact Academy. And several of our first cohort members were over the age of 60. So it's refreshing to see that.
people at all generations are clearly worried about the existential issues facing our planet and looking at how capital can be used to support that. this is not a, we are not ageist in any direction. But certainly, I think if you are a wealth manager today, you are thinking about how do we engage the next generation? How do we ensure that they come and bring their money here for us to help them preserve and grow their wealth and put it into causes they care about? And so
Christian Rodwell (23:21.634)
There is a little bit of a disconnect currently, and I know lot of wealth managers are working very hard to close that. But one of the ways is through the products that are being offered. And I think the product that we've designed is highly emotive and highly attractive and has all of the impacts that we discussed, which make it really interesting for younger investors who are looking to learn and do more with their wealth. So I think for me,
One of my mission statements is democratizing access to impact. It's not about working only in really high figures. It's about making sure that everybody feels they have a place that they can contribute. And so actually, I'm very happy if someone participates in our course and then goes and invest their money somewhere else, which has that impact because they've just learned about how to assess and diligence opportunities and think about.
the outcome of their money. interestingly, there was a panel yesterday at this conference I mentioned, which was on whether to divest or be active investors in fossil fuels. It was specifically about fossil fuels. And someone made the very good point, you know, from an organization called ShareAction, that we can meet the global energy demand without fossil fuels. And so she was really passionately playing with all of the audience.
to use our voices and our pensions to divest fully from fossil fuels. And I think that, you know, that's obviously not the space we're operating in. We don't do liquid investments. We certainly don't do fossil fuels. But if everybody of the next generation is thinking, okay, I am this, I am invested in listed equities by my pension and by all sorts of other investments. I have a voice. know that, I know that, and I know how to use it. Then.
That for me would be a very great outcome of even something like our impact academy because it's indirectly helping the global flow of capital move into greener things. someone have to meet some minimum criteria to invest? there minimum amounts, high net worth, sophisticated investors? Yes, it is 25,000 pounds minimum tickets. So by no means fully democratized, I'm afraid. There are platforms where people could invest.
Christian Rodwell (25:42.296)
smaller amounts. We haven't adopted such a platform. And there are certainly a number of criteria, which I won't go into here, but it's an FDA regulated product. So our compliance team needs to be certain that investors are qualified to invest, understand the risks, understand that this is not liquid and they may lose some of their money or all of it. So yes, there are a number of criteria and there's a full kind of application screening. But yes, I'll leave that to the small print and to the FDA website.
And just finally then, Ever, is there any final advice that you'd give to our listeners who are considering this path of impact investing? If they're new, anything, final tips for them to kind of take as their next steps? Well, you're putting me a difficult position because I said I wouldn't give any advice and now you're asking me to give advice. But I'll tell you what, if I was giving myself advice, this is what I'd say. First of all, do the right thing.
Make sure you have a pension, look at what you're invested in and try to make it as green and clean and aligned with your values as possible. And that's hard to do because most fund managers will only show you the top 10 of what's in their funds. But you can use your voice, you can ask your managers to divest from things that you passionately don't care about. Secondly, think about tax, get advice, make sure you're optimizing your personal situation.
And if it is relevant to you and you would like to take a bit of risk and it is suitable, then certainly think about EIS. It's a wonderful thing and it's a very exciting way to support early stage businesses. But you do have to understand the risk about it and make sure you come at it from a portfolio perspective. Investing in one company is very unlikely to be a success, but investing in 8, 10, 25 can be very rewarding. Thanks so much, Eva. I really appreciate your sharing today.
And someone to take a look online, have a look, find out a bit more, where should they head to? ConduitConnect.com. next time Kevin and I are in London, we'll let you know, we'll come have a glass of wine at the Conduit Club. Perfect. Love to see you there. All right. Take care. Thanks so much. Thank you. Thank you, Christian.
Christian Rodwell (27:58.606)
Okay, so thanks to Ever there for sharing more about the investments opportunities at Conduit Connect. And before we dive into some of those points that were discussed, Kevin, I'd like to read out our latest review this week on TrustPilot. And that's come in from Haven Services saying it's rare in financial matters to find someone with ethics you have, and more so that you've managed to bring a team together who honor you and them as well.
hats off to you. Yeah, so I know you seem to stumble with that one, but essentially the point is that this person is shining a light on our integrity. And we're very grateful for that. And we appreciate the hats off and I'll tip my hat off to you. And I know who that is. That's a gentleman called Ian, who we very much appreciate his continued trust. And he was kind enough just recently to send a connection our way.
And we love that too, don't we? We probably never a day goes by without us getting some connection or other to either a member or a partner or someone who knows us and likes us well, wants to share our details because of our integrity. So thanks to Ian for showcasing that. I appreciate that very much. Sure. Connections being so important at WealthBuilders, of course, for our members with education and community.
And we've got a whole directory available to our members of all of our professional contacts. So whatever they're looking for, whether it be brokers, solicitors, educators, then we've got the very best people in there. That's our intention is to, you know, keep focusing on providing access to the world's best experts, well, at the UK's best experts. think we can safely say we're not really covering the whole world. But I love the fact that we're able to
really bring those experts because in a who not how culture, it's who you know who can give you an intellectual shortcut, a lesson or two that can prevent you from making mistakes or in most cases, save you money as well because we negotiate either added value or some kind of reduction in price. Hasten to say that we're not talking about that with Ava. There's no added value. There's no price. It's just we believe that we should share.
Christian Rodwell (30:24.17)
knowledge and information that gives people an insight into what they should do. again, we talked about it before the interview, but it's, do you want to repeat it afterwards, Chris, that we're not promoting any individual investment? again, a point we've talked about many times in the past, Kevin, and it's the importance of niching when it comes to business. And today, Ever explained that climate, health, education and inclusivity are their specialist areas.
And that's really where they want to focus. Those are important matters. think what I liked about what she was saying is they're very clear on what matters to them. I think from an impact viewpoint, from a specialism viewpoint, from a minimum investment viewpoint, all of the things I think she was very clear about. And I think that's a lesson for all business owners to be very clear about your niche and about what you're offering rather than
be pulled or pushed in any direction, you know, on price, on minimum value and so on. And I like the ROIs that she was sharing and worth repeating some of those general ROIs for people to understand Chris and put her comments in context. Yeah, well, you've put together a model a long time ago, the five ROIs which we teach to our members. yeah, I would love to hear those again, Kevin. Well, you know, when it comes to
investing, we're all as investors, whatever we're doing in building our wealth, we're investors, aren't we? And we're looking for certain types of return, but they're not always easy to identify. So breaking them down is quite useful. Be interesting to see if anybody's got more than this, but the first and most important one is always the return of your investment. You want to make an investment and more often than not,
Your plan, your deliberate plan, if you're building your wealth is to make sure your capital is as secure as possible. And it's very clear from Ava's points that your capital isn't secure when you're investing in higher risk items and newer startup businesses. And that's fine because when you have got that security, that independence behind you, as she said, can often, when you've taken care of all the important things, you could start to look at how you could make a
Christian Rodwell (32:50.338)
different ROI, which wouldn't necessarily be the return of your investment, but it could be return on it. Because in some cases, as she mentioned, you could many X times your business and very grateful she didn't say how many X because that would be inappropriate. But that's the value, it, of speculative investment. Sometimes you can deliver yourself a handsome return. But I think more often than not, those sorts of returns
you know, come with such a high degree of risk and she didn't shy away from those things and that was great. But I think one of the investment returns, I think, is a return on intellect, which means you learn more about the investment, you understand it more. And I think the degree to which that she was trying to shine a light on the very clear niche, then people can understand what's the value in the world. And of course, you asked the question, didn't you?
do deal with startups and they don't, they want a revenue model and they're touched on recurring income model, which would be useful to pick up on in a moment. But I think that knowing where the investment is going, know what it's trying to do is a good one. I also like the return on interaction. I think in a world where we're becoming increasingly disconnected from our investing, we've talked about this with children, aren't they, that they sort of do everything on tap, so to speak.
and they become completely disconnected from investing. And I think the opposite is true here. What she's trying to do, and I applaud her for that, is trying to get people of all ages, of course there was a propensity, she mentioned, for younger people, more diverse as well, to want to make that kind of social value, but they wanted the interaction of being able to meet the founders, greet the founders, talk to the founders, and that's where having an established venue, a wonderful venue,
in the heart of London is a good thing. And of course, they're meeting in different places and on Zoom and other technology too. But I think the big one is return on impact. I think when people can see an impact, which predominantly, you she talked about the climate being the most positive one, then when you're focusing on that, and she mentioned medical as well, but climate being the main issue, then you can see that business and climate have a very clear interaction.
Christian Rodwell (35:16.974)
So the impact of that can go a long way for people to want to make an investment because they want to be part of that impact. And I think that was very powerful. you know, return on your investment, return of your investment, return on intellect, return on interaction and return on impact are all very valuable and people will move mountains to make an impact. So I think, you know, there's very positive reasons why people would would give what they're doing.
a good look. Yeah, thanks for sharing those again, Kevin. And I always find it interesting, the kind of venture capital is like, how do you value such an early stage business, right? And then some big numbers at times, aren't there? And ever said, valuation is an art, it's not a science. But we know that a recurring income business will definitely value at a higher multiple, which is why we always talk about recurring income being so important, that cash flow as well as those capital events when you're building wealth. I think the recurring income is the most important.
consideration from a wealth builder perspective because the predictability of it, dependency, less dependency on the owner if there's predictable recurring income. The fact that there is a high evaluation even if it is artistic, there is a high evaluation associated with membership subscriptions, automated income than there is with other forms of income because they're temporary, they're transient.
whereas these are more permanent and more likely to be reliable. And in the end, when a business is sold, an acquirer and VC, venture capital companies, always want to make their money and traditionally they want to make it in a very short term, like five years, say. I think we talked about that, didn't we, with Louise Hill of Go Henry a little while ago. She talked about the round of funding and...
what VCs look for and that valuation is critical because if a VC is putting their heart, soul, energy, into helping a business get an exit, understanding how to value that exit is critical to the whole equation. And if you can get a recurring income, it's much more valuable to an acquirer because of the predictability of that. And I wish so many business owners would concentrate on
Christian Rodwell (37:40.3)
spending at least some of their time understanding how much income in their business is recurring as opposed to temporary cash flows that are permanent cash flow. And it's a question I often ask our business owner members as they hopefully transition from having often zero recurring income to 5 % then 10 % and so on. recent budget has left investors looking for more ways to minimize their tax, Kevin, one quite smart way.
talked about there was the EIS, the Enterprise Investment Scheme. All of these things seem to have interesting terminologies, right? We got ISA, we got SAS, we got SIP, we've got EIS, we've got VCT, we've got all sorts of different ETFs, all sorts of different words. And EIS, as she very ably demonstrated, is really an incentive issued by government and as she said,
not withdrawn in the budget, which is a good thing, to encourage investment in younger enterprises really. And it's a reward for taking the risk. And she mentioned what the benefits are, so I don't need to repeat them, except to say, just to be clear on this Chris, EIS is a tax wrapper of itself in the same way as ICE is a tax wrapper.
of their own and pensions are a tax wrapper of their own. So you can't mix and match them. that's the question. So could you use your pension to invest in EIS? saying you can't do that. You can't. You can't mix the tax wrappers up. Yeah. It doesn't mean that in theory you couldn't take your pension and invest in a high impact startup company. But in this case with this company, they're offering it via the construct of an EIS.
You couldn't use your pension to do that. Can't really get a double tax back. It'd nice if you could get double tax relief, it? Get the tax relief on the money going in and get the income tax relief and then the inheritance tax relief and the carry forward of the loss relief. It'd be nice to get all those benefits wrapped up in one little package, but unfortunately that's not the case. Let's not try and confuse people by having them think they could use something we talk about a lot, which is SaaS. You can't use your SaaS money.
Christian Rodwell (40:06.318)
to do that. However, if you're old enough like me and you want to take money out of your pension, tax-free cash for example, and you want to invest in the EIS, you can do. So you could have had some benefit and then got the other benefit. But of course, we must never let a tax-tail wag a dog. You have to be clear that if you're investing, why you're investing, does it fit your DNA? Does it fit your overall lifestyle? Does it fit your overall wealth? Does it fit your risk attitude? All sorts of different things.
have to be really considered before making an investment in anything. And that's why, as I said, we don't promote any individual investment, including this one. that was a good episode and always good to look at different pillars. So we've been talking recently over the last couple of weeks about business, about property, how that's been impacted with the budget. So it's good to focus on more the investing side of things today. And yeah, any other summaries or final points from your side, Kevin?
Well, thanks for asking, but I think in summary, would say that anybody who is serious about building wealth, whether it's in business, in property, in investing or in pensions, has been bashed a bit, haven't they? So it's always good to bring opportunities to showcase that you can choose your own response to how you want to deal with that. so everything's affected. So how you respond to it? Well, it's good to get other people's ideas.
Because often when you hear other people's ideas, it helps you shape your own. It helps you shape and almost cut an edge to who you are and you discover what you like and what you don't like, the impact you want to make and all those other ROI's that I mentioned earlier on. Sure. And if you've got any questions and I'd like to get in touch with us, we're always here. The team's always happy to...
jump on the phone, have a chat. do head to the Wealth Builders website. All the links there will be there for you. And of course, all the recordings of the podcast, we probably don't say this enough, Kevin, but we've got the whole catalog, nearly 270 episodes now all on the Wealth Builders website, broken down by category. So can go there, can filter all the property episodes or the family and legacy or tax or whatever you want.
Christian Rodwell (42:18.414)
and the videos because we record all of these podcasts each week on video. yeah, head to the site and have a look around if you've not been there recently. Well, it's a heck of a free resource, which gives you a rambling wandering through the art of wealth building. what it doesn't do, of course, it doesn't bespoke and create a plan to do that. You need to really connect with wealth builders in a more formal way. And why not have a call if you've been...
looking for a pathway, you know, deep down, you're relying on one source of income in your business or in your job. You're over egged in the stock market basket, let's say, as far as your traditional investments are concerned, then why not have a conversation with us about how you could widen, diversify and create a completely different plan for your overall wealth, not just for you, but of course, the next generation too, which was very important.
course in this as she was talking about even naming it at some point the next generation plan but in the end I think it's still a very powerful thing to include the next generation and why not do that if you're building your wealth you know include the opinions and include the impact that the next generation want to make as part of your overall family wealth plan not just your own individual.
So we hope you enjoyed listening to today's episode. If you did, if you'd like to share it with somebody, then hit that share button on your podcasting app right now. And we'll be back with another episode, same time, same place next week. We will indeed, my friend, and enjoy standing up at your desk. Until then, see you.
Christian Rodwell (44:01.048)
We hope you enjoy today's episode. Don't forget that we are constantly updating our resources inside the WealthBuilders membership site to help you create, build and protect your wealth. Head over to wealthbuilders.co.uk slash membership right now for free access. That's wealthbuilders.co.uk slash membership.