Mats Lederhausen is CEO and Founder of BE-CAUSE, a company which focuses on building businesses with a purpose bigger than their product. He is also the force behind Roti Catering and prior Managing Director of McDonalds Ventures, where he drove high-growth global companies including Chipotle and Pret a Manger. Most recently, Mats joined the Impact Engine investor community to support businesses that align with his values. We had the opportunity to connect with Mats via email to learn about his key filters for impact companies, how his personal values and philosophy make him more mindful when making investments, and how business can be “part of the solution” in our society.
You had an amazing and diverse career prior to starting BeCause. Tell us how those experiences informed what you do now?
ML: A love for entrepreneurship and a concern for the state of the world and therefore a strong desire to use business as a force for good. I simply didn’t want to be part of the problem. I always want to try to be part of the solution. And I genuinely think that business has so much more to offer in our society and I want to see more businesses doing well by doing good.
Since 2007, BeCause has been creating impact investments by looking for companies with a “purpose bigger than their product.” What are the key qualities you look for in companies you choose to invest in?
ML: I have 3 key filters. First is purpose. Is the team building this business in passionate pursuit of solving an important problem? I believe big brands always are solving big problems. Products come later as a result of solving problems. The why precedes the what. Second, I look for good people. I only want to work with great people. People who share similar values. Thirdly, I focus on Business Models. What will customers ultimately pay for solving this problem. Some problems are big but have no obvious buyer. Business models are key.
How do your personal “Core Business Beliefs” and philosophy play a role in your investments?
ML: That’s simple. I only make investments that are totally aligned with my beliefs and philosophy. That’s the one benefits of managing your own capital!
Sometimes I make trade-offs. But the point of impact investing in general and my own philosophy in particular is to be more mindful of them and try as hard as I can to forge a fit between what we believe and what I expect in return. I know many people who would concede that what they do at work or how they invest their money is solely to maximize the money side and then they take what they make and do “good” later. That is all fine and respectable but I think the world would be better off if we tried to imbed our values and social concerns into the investment equation and make sure that our money works along side our values. I realize fully that this is not easy and I probably make more mistakes than I am aware of but at least I try my best to be mindful of my bigger purpose.
When I see trade-offs they are mainly about time. If our investment horizon is long enough I think values will drive value. But if you are in it for only a few quarters or a few years it is likely that you can make more money by ignoring your inner values. That’s why I am a big proponent of longer term investment horizons.
Your investments with BeCause have been in sectors such as tech, food, and education, supporting a wide array of social impact companies. How would you encourage other impact investors or potential impact investors to think about their portfolio of investments?
ML: That’s an important question that probably requires more room than we have here. First, I would say that I applaud anyone who is thoughtful and intentional about having an impact with their investment. Just that intention is a good starting point. Second, I think investing in sectors you feel more competent in is a good idea. You can understand them better and probably add more value to the team you are supporting. Thirdly, balancing your time and your risk tolerance will govern how many investments you get yourself involved in. You need some diversity to diversify your risk and you need less activity to focus your time. Only you can decide. Personally, I did too much and too many things in the beginning. But it was something I learned from, and I have think I now have found a more balanced way of being more effective.
Why do you think it’s valuable to be part of the Impact Engine investor community?
ML: I want to do whatever I can to support a more thoughtful and conscious form of capitalism. Impact Engine is a great community in the city I love — Chicago. It’s an irresistible combination and I want to contribute as much as I can to the success of Impact Engine. My dream is for Chicago to ultimately be a hub for purposeful capitalism. Wouldn’t that be fantastic?