You might imagine ethical investments are going to be less about returns and more about feeling good about yourself – but the truth is far from that, entrepreneur and TRINE CEO Sam Manaberi tells RISING
You Don’t Have To Choose Between Profit And Purpose When Sam Manaberi left Bosch to startup TRINE, the online investment platform, he was used to dealing with investors who had outmoded thinking. ‘The people in the ‘old growth’ space go: “OK, it’s profit here and purpose here, and you have got to choose.” Then the tendency is that they go off and get rich from land mines and oil, and they expect their children to become philanthropists – we’ve seen a lot of that.’ Manaberi says that for TRINE and other startups to work, it has to be possible to have both profit and purpose, and for there to be no acceptance of lower returns. ‘With TRINE we have to have the right return and risk level, the same trust level, and the only thing that matters is happy investors.’
With solar power we are already beyond the tipping point where it makes sense
The Tipping Point Is Already Here TRINE’S model is to use their digital platform to connect investors with solar energy entrepreneurs in Africa, who use this funding to scale up their own pay-as-you-go solar panel projects, currently providing 183,000 people with electricity. ‘As long as solar is cheaper than kerosene and diesel then it’s fine – there will be continue to be lots of technological innovations coming in the next 5-10 years in storage systems and payment solutions but we are beyond the tipping point where it already makes sense,’ says Manaberi.
Digitisation Is Democratising Investment Solar energy is particularly suited to digitisation, something TRINE has used to enable a new investment model. By digitising funding, it can handle as low as a 25-Euro investment, rather than the thousands a private market fund would ask for. ‘I really don’t care if it’s many people with 25 Euros or a few people with a lot, it doesn’t matter. And that’s a powerful thing that is truly enabled by this. It’s democratising investment and also consumption of solar, so both sides – it’s very magical,’ says Manaberi.
There’s Pent-Up Demand In a world of super-low interest rates, it can be hard to find a good place to put your cash, which is fuelling interest in new ways to invest. ‘You have all these people who if they were offered the chance to put money into this, instead of a regular high-risk stock or a bank account with zero interest rate, they’d be genuinely interested. But there are these massive layers of banks and institutions that get between us,’ says Manaberi. Platforms like TRINE (which have campaigns with expected returns of 5%-7%) have been enabled by the emergence of alternative finance and advances in tech.
Go To The Source Investing in an alternative finance project can seem like a leap in the dark, so Manaberi recommends doing your research first. ‘Originally we had no idea about the data for solar energy access and investment in Africa, so in order to do that we literally went to the source. I slept in the field and I am going down too Nairobi again in a month – you need to understand the fundamentals of the business. If you want to invest in something and you can get access to the source then that’s the top priority – we literally have had investors who have visited the projects.’
Balance Out Your Risks The benefit of running your own investment portfolio, rather than paying someone else to do it, is that you get to decide where your money goes. But you also shoulder all the risk. ‘If you are going into this space then you need a strategy for how much you are going to put into each portfolio, and as much as you can have completely uncorrelated risks with independent risk profiles,’ says Manaberi. It’s a big ask to build a massive risk model, but Manaberi says it will pay to even just think in these terms. ‘Solar energy in Africa is likely a much more different risk profile than lending to somebody in the UK, and therefore those could be good balancing points.’
If you want to be agile then that means 100% data, and 0% prestige
Data Doesn’t Care About Your Prestige Much like the alternative finance projects themselves, you need to be agile in a changing landscape, something Manaberi learnt as a founder. ‘Things change quite dynamically and with that comes 0% prestige. If you want to be agile and successful it means that you have very strong convictions but they are loosely held because otherwise sooner or later it’s very hard to see the difference between my personal prestige of being right, versus what the data is telling me – if the data tells us this is right, then that’s right. It does not mean ‘I think’ or ‘I want’ or ‘I should’ or ‘I’m a founder’ – forget about that. It’s all about what we can prove and then we can be quick.’
You Are Allowed To Feel Good Manaberi says that it’s a sign of a world gone made when we talk about ethical investment – to him it should just be investment, because to be economically viable in the long term, it needs to ‘do good.’ But in the meantime there are real, tangible positives that ethical investment can achieve beyond profit. ‘Energy poverty is a phenomenon – one in five people on the planet don’t have access to electricity You have kids studying every day, right now, using kerosene for light and inhaling the equivalent of two packets of cigarettes per day. But solar is cheaper so they just flip and everything changes for them – it’s very powerful,’ says Manaberi. He also reports that the constant pinging of his phone telling him TRINE has more investors ‘is the antithesis of Donald Trump’s Twitter feed. Every day I see more individuals are deciding to actively invest in People, Planet, Profit. And that makes you a very optimistic person – it’s hard to beat as a dopamine kick.’
WHAT NEXT? Got 30-seconds and ever wanted to be able to invest in sustainable energy, but be able to review your investment’s performance and data in realtime? Then you might want to see how Trine works…
Advice is for information only and should not replace financial advice or recommendations. Investments can fall in value as well as rise.