Alex Farcet

Alex Farcet is Founder of Rainmaking and Startupbootcamp, and these are just two of the many hats he wears. Rainmaking harnesses the power of entrepreneurship to help corporate companies implement innovation and impact initiatives, and Startupbootcamp is currently the largest industry-focused startup accelerator in the world. 

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In this episode, Alex shares what led him to starting these companies and what drives him to keep them going. As someone with tons of entrepreneurial experience, he shares his advice and experiences for founders on fundraising, startups, the impact space, and the like. He even talks about the shift from corporate to startup, and why he works with both. Whether you’re a first-time founder or serial entrepreneur, you’ll want to listen to what Alex has to say.

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Alex’s key lessons and quotes from this episode were:

• “There's no secret sauce. You have to be extremely adaptive and aware… There's no formulaic approach. We've evolved over time.” (18:33)
• “We have to work on these problems. We're talking about my kids' well-being here, the planet's well-being.” (40:23)
• “The number one difference I see between a doing well Startupbootcamp alumni and not is how well they know their customer… It's, again, customer discovery, customer discovery, customer discovery. There is nothing else.” (48:42)

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In this episode, we also talked about:

• Alex’s entrepreneurial journey (9:51)
• How to make startup and corporate collaboration work (18:29)
• Mainstream funding for impact-driven startups (35:27)
• How to secure the right investors (46:57)

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Transcript of the episode

Maiko Schaffrath  00:00

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You are listening to Impact Hustlers, and I am your host, Maiko Schaffrath. I have made it my mission to inspire the next generation of entrepreneurs to solve some of the world's biggest social and environmental problems. And for this reason, I am speaking to some of the best entrepreneurs out there who are solving problems such as food waste, climate change, poverty, and homelessness. My goal is that Impact Hustlers will inspire you, either by starting an impact business yourself, by joining the team of one, or by taking a small step, whatever that may be, towards being part of the solution to the world's biggest problems. 

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In today's episode, I speak to Alex Farcet, co-founder of Startupbootcamp and partner and co-founder of Rainmaking. Startupbootcamp is the biggest industry-focused startup accelerator in the world which runs now more than 20 programs across different industries and across the world and has invested in close to a thousand startups. Rainmaking is a company builder and innovation platform and is collaborating with corporates to implement innovation initiatives and also now impact initiatives. Rainmaking has a track record of working with large corporates like Cargo and Shell and has increased its focus on helping incumbents decarbonize and become part of a sustainable future. 

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Alex is very passionate about impact entrepreneurship. We'll talk about his definition of it, and we'll chat also about how early stage founders can learn from Alex's experience of working with hundreds, if not thousands, of startups to scale big and solve massive global problems. So, it's amazing to have you on the show, Alex. Thanks for making the time.

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Alex Farcet  03:01

Thanks for having me. Good job with the intro.

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Maiko Schaffrath  03:05

Thank you. I don't think I'm quite qualified to write up your biography, nut yeah, it was interesting to learn a little bit more about you in preparation, so that was good. But I'd love to give you the space to actually tell your own story as well. I think one thing that struck me when I did preparation for this was how much of your time and your childhood but also in your adult life you spend living all across the world in all kinds of different countries. I spent some time abroad. I'm living abroad now in London. I grew up in Germany, and I think it really shapes people. So, I'm wondering, tell us your story. How did your childhood and your early adult years as well shape you and maybe also how moving from country to country has shaped you?

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Alex Farcet  04:02

Yeah, yeah. It's definitely been a privilege to have that non-usual background. I guess there's two things in there. One is Africa and the other one is the school. I attended this boarding school in England called Summerhill, which was a student-run democratic school, which is very formative. So, yeah, I was born in Spain to a French mother and American dad who was a GI on the way home from Vietnam whom I didn't meet. I grew up with a French stepdad. I have some mixed DNA in there. And then, we lived in Africa. I lived in Algeria, Ivory Coast, Cote d'Ivoire, what was, at the time, Zaire Kinshasa. 

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And then, in between, I was in this boarding school in England called Summerhill where, this is not the Eton, wearing uniform and all that. This is basically a democratic school where the kids have a big say in how things are run. Basically, I didn't go to school for two years, from 11 to 13. I just climbed trees and rode my bike and had fun. And then, just after a while, you just go, "Well, okay, I've done that. What's next?" And if you did go to class, you had to keep going. You couldn't come in now, and I think that's already a first transformative experience, to decide to attend class when you're 13 of your own volition, and it's a kind of empowerment, which was amazing. It just gives you maturity. I'm not saying I was super mature in all ways but this was life-changing, for sure. 

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And then, I went from there to an American high school in Kinshasa. So, yeah, I grew up in these amazing environments and hardly any TV, certainly no social media, did a lot of sports, and yeah, and just experienced Africa on the ground, which is hard to explain. It was amazing, beautiful people. And then, I went to college in the US, studied electrical engineering in Arizona, got an MBA in at Tulane in New Orleans. And then, I immediately went to sleep on a friend's couch in Silicon Valley. I really had to be there. This was the early 90s. I worked for a French-backed startup trying to implement the Minitel, which was the 80s version of the internet that France had. It was a very crappy interface device, but the internet, chat, ecommerce, forums, etc. 

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And then, I was kind of sick of being in the US; wanted to go back to Europe. I do feel European more than anything. And yeah, I had done an internship with DHL, amazing growth company at the time; started working as industrial engineer and then moved to Hong Kong, did that in Asia, got into some line management jobs, did that; wore a suit and tie for 12 years. And then, six or seven, both my son and I had cancer in a span of 12 months. He has chronic leukemia. He was two years old and still has it, but it's under control and well taken care of. 

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And then, I had a close call with a skin cancer, melanoma, that had spread to my lymph nodes. It wasn't an epiphany lightning strike, but it was just very clearly, there was no question of going back to normal. The company car and the salary, that didn't matter so much, and I just had this bug that I've got to go back to being an entrepreneur with the added twist of helping other entrepreneurs in doing so, and discovered TechStars and YC, which was relatively young back then, and just said, "Why don't we do that in Europe?" I met my partners at Rainmaking, and we launched in early 2010, and we were I think the second accelerator in Europe. 

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There was something in London, and then that's a whole story that took off, but no really business plan or idea of what it could become, just this drive to be helpful, have fun building something, because you've got to build a brand and raise money and do all this stuff and deliver value to your customers, the founders, and investors, and just had the best time of my life. That was a joyous moment, that first program. I did that for five years, and the last five, six years has been working, like you said, with the Rainmaking hat at the intersection of corporates and startups where if you can make it work, you can really do big stuff. And then, more recently, in the last year or so, working on impact, and I'm sure we'll circle back to that.

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Maiko Schaffrath  09:00

Yes, well, we'll dive deep into that. Let's talk about some pivotal moments. You mentioned the cancer diagnosis of your son and yourself. I mean, there are these stories out there of people really realizing what's truly important to them under such difficult life events. 

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Is that what happened where you took a step back and were like, "Okay, what am I doing here with my life doing a job that has all these surface level benefits, but I'm not really doing what I want to do?" And then, was entrepreneurship just the first logical choice for you or did you dabble in entrepreneurship before? How did you arrive at a conclusion to then dedicate your life to entrepreneurship in some way?

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Alex Farcet  09:51

I mean, I had the drive to be in Silicon Valley as soon as I could, so that was there, and I got sucked into the corporate world, and you get promoted. I don't know, I probably stayed too long. But I think what happened and to answer your question, it wasn't an epiphany lightning strike, this is the clear vision. What did happen is my definition of risk changed. 

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It's amazing having been in some big risk, I mean, a life risk and other financial risk and all that. Risk is much more scary when you're outside the risk than when you're inside the risk. So, if I tell you, you could have cancer, that's really scary. When you have it, you're just dealing with it like, "Okay, there's a protocol, and here's what we're going to do. Here's what's going to happen." I'm not saying it's a relief.

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 Obviously, I'd rather not have it, but when you're faced with it, I think it's also basic human psychology is we're much more scared of losing things than gaining. We put more energy and not losing things than in gaining things. When you have that framework change where, "I know what it means to potentially lose everything," then all of a sudden, losing salary, or pension, or a company car, or whatever it is, status, we can't go on the same holidays for a while, I mean, let's also keep things in perspective here. I live in Denmark, amazing social network. I could take time off, paid, to take care of my son. 

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Of course, I've paid lots and lots of taxes, but I got him back many times over. I'm very happy to do so. We're well protected, so there's a context here, which allows for more freedom than maybe in other places, let's not kid ourselves, but I took advantage of it. Yeah, it had to be entrepreneurship. I invested in a startup, way too much money in way too fast. It was the first angel investment. I helped these IT entrepreneurs do bizdev, and I just naturally gravitated to it. If you give me a total blank piece of paper you could do anything with, this is the direction I had to go.

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Maiko Schaffrath  12:03

Got it, interesting. I think there [are] some interesting parallels there. I only made it to two years of corporate career, but I don't think because I was so smart to realize that it wasn't for me. I think it was more my impatience to say, "I can't be here waiting for my projects to be approved by 20 boards. I'd rather go and work with startups where we can get stuff done."

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Alex Farcet  12:28

Well, it's interesting, because having worked in corporate, if you're lucky, and you're in the right projects, and all that you get to do things with a level of resource that only a unicorn in the startup world ever would, like you're deploying a program across Europe where 200 people are going to be trained on something and you've got a massive budget and you get to do things at scale and with a level of professionalism, etc. It can be very, very interesting. You get to see the world. I got to live in Hong Kong and see all of Asia. I mean, that was my dream actually was to be in Asia and to travel. So, you get to do things that you will only very exceptionally get to do within a startup, if you hit unicorn status, and you're deploying something really big. So, it has value. 

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But yes, there are lots of barriers around inertia and politics, etc. I always say the stress in corporates, if there's a friction or a stress, it was always around people, your boss, the politics, careerism, etc. And the stress, once you're an entrepreneur, you tend to work with people you like and you have more choice on them, but you stress about money. I never stressed so much about money when I was a corporate, whether you have your own money or the company's money or whatever. So, there are always constraints, but you have more choice on people. I mean, the best thing that I love about what I do is the people I work with, so I would choose that anytime. I'll take money, stress and have the people choice.

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Maiko Schaffrath  14:05

So, you took some time off, you took care of your health, of your son's health. And then, ultimately, you did, as you said in the beginning, you observed what was going on in the US and started Startupbootcamp and then I think later on Rainmaking, right?

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Alex Farcet  14:22

Yeah, so Rainmaking was founded by four serial entrepreneurs, and the ethos was there was a studio before; there was a name for it, but the idea was to have a repeatable process to do startups. More importantly, the ethos was sharing the ups and downs. It's a very lonely journey, and you can have a big loss or a big win, and the idea was to share those and pool them, and then I think it quickly evolved from we can almost have a repeatable process where actually every startup is very different; it needs its own culture and team etc., so the partners started working on one or two startups at a time themselves and a little bit of a back office on finance, etc. 

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And then, I became one of those projects like, okay, Startupbootcamp was one of the 30+ startups that have been launched by Rainmaking, and we hit a nerve. I mean, I was in Copenhagen going around to sources of funding, went to the corporates and said, "You could get to engage with startups," and it was a big blank silence of, "We're not interested in startups. No, we have R&D. This is Denmark. It was super innovative. We don't need any of this." 

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Obviously, that completely changed, the whole open innovation movement, and we were funded by investors. The first program we found very quickly, at least for us, what made sense was to be backed by corporates as we verticalized the program, so we started having themes, we call them verticals, insuretech, fintech, etc., and then the corporates and professional investors, VCs came in. 

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And then, eventually, we started saying, "We'd like to start a boot camp, but can we have our own bespoke program doing some other things?," and that became Rainmaking Innovation, which is Rainmaking, which is 100+ people with presence in offices in Copenhagen, London, Dubai, Singapore, and this is the vehicle through which we work with big corporates. We do venture building internal, external innovation and other things. It was a catalyst for a bunch of things, but no idea what it could be at the beginning. It was just like, this is amazing, and I get to work with entrepreneurs, and I love entrepreneurs. I mean, I just love hanging out, being helpful.

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Maiko Schaffrath  16:45

Same here. Love it. Yeah, I think you were talking, and I watched a talk of you talking about Startupbootcamp, and maybe initially, it wasn't really the plan to go down the corporate route to partner with corporates. But then, I think now, Startupbootcamp is known for that, these corporate partnerships in specific industries. I've spent close to two years in a corporate accelerator, in Wayra in London. I've seen it a little bit like a tiny bit of experience compared to yours, obviously, but I think the challenge, definitely with corporate innovation and corporate accelerators is that it's really hard to make it work. I think there was this period where there was a lot of hype around it, and every corporate opened an accelerator and there was almost, I think, from my perception, this period where it was fancy to talk to some hip people into some hip office and assume they will change the tire company, and it didn't in most cases. 

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So, let's talk briefly about that and how hard it is to actually, I guess the rise of corporate accelerators came as corporates came under pressure to go on a digital transformation journey and struggle to do it themselves, in some ways, wanted to partner with startups to do it. What's your view on that, on startup and corporate collaboration, especially through accelerators or programs that you're on at Rainmaking? Why is it so hard? And what's the secret sauce to make it work? I guess, a hard question.

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Alex Farcet  18:29

Yeah, it is hard one. I think the first answer is there's no secret sauce. You have to be extremely adaptive and aware of the specific corporate culture, where they are in their innovation journey, what they've done and not done, what's going to work in that context. There's no formulaic approach. We've evolved over time. Startupbootcamp 1.0 was 100% focused on founders, so it's mentorship, mostly first-time founders within 12 weeks of basically teaching them to avoid mistakes that have been made by others, exposure to invest, etc., and then pivoting that to satisfy two customers. 

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Now, as a founder and a corporate, that's difficult, and we've evolved more and more to less of the 1.0 mentorship and much more on pilots, proof of concepts, something that's valuable to even scale up. What do scale ups want? They want investments, they want market traction, visibility, proof of tech. And so, if you can build a mechanism that does that very efficiently, we were doing semi-remote programs before COVID, just to be able to attract mature startups in a very efficient way. 

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And I think back to your question of how does it work, I mean, accelerators are, in many ways, imperfect, but if you're aware of it, there are two kinds of benefits, and I have this slide on this where you have the intangible soft benefits of doing one, like culture change, the fact that you can expose 40 or 100 of your people to startups, like look at what these "kids" are doing in 12 weeks. Why does it take us two years? I mean, that's very valuable learning. There's recruitment, there's PR. It's very difficult to quantify the value to the CFO, but it's real value. 

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And if the corporate is aware that that's their objective, they can buy in, "I am getting that value. I can't tell the CFO what it's worth, but I'm definitely getting value." And then, there's the other side, which is, "I'm looking for specific solutions to some process challenge we have," or, "We want to do something more efficiently," or, "We want to launch a new product or service," so you have you always have this picture where there's intangibles, tangibles, soft and hard benefits. 

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And then, the question, the discussion to have with the corporate is, where is your pendulum, in that, if you're straight in the middle, you want a bit of both? And accelerators are actually not bad. It will give you some of the intangible. If you're lucky, you'll get some proof of concept, etc. It's imperfect, but it's not bad. If you're super hardcore on, "We need proof of concept, implementation, etc.," then don't bother with an accelerator. You don't need to accelerate; you just need to have a structured engagement with external innovation, whether it's a pilot program or with scale ups, which we're much more likely to be ready to implement. 

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So, we've been around the block enough times to just know that, and that was that was the challenge. Often, we were selling Startupbootcamp like, "I need this program funded," as opposed to, "Okay, Mr. or Mrs. Corporate, where are you in your innovation journey? Actually, you don't need an accelerator; you need something else. Maybe you're ready for venture building? Or maybe you should really focus on an internal program." So, we have become much more consultative, not that I necessarily like the work, but just adaptive, not selling one solution, just saying, "What do you need? Where are you in your journey?"

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Maiko Schaffrath  22:09

Got it. So, the activities you do can be quite a range of activities, so it could be corporate coming, saying, "We need to explore where we're going to build the future of our business. Can you build some ventures for us?," almost, but it could also be taking all kinds of different shapes, because basically consultancy, as you say, or it's bespoke projects, so to say to implement, or how does it work?

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Alex Farcet  22:36

Yeah, one picture I have is a narrow funnel or a broad funnel. If you think of a funnel where there's an intake of innovation and it comes out and then implementation, a broad funnel would be working the first time with IKEA where they said, "We have three high level problems: affordability, accessibility, and circularity," just very high level themes. "We don't know what we're looking for. We're open. Show us what you can," so then we get 1,200 startups to apply. 

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And then, you might have, working with masks, saying cargo pilferage, people breaking into containers is a €100 billion problem, stealing stuff, and what security solutions or anything innovative from any industry would help solve that, that's a very narrow funnel compared to a broad funnel, and the program you design to solve, to maximize the value of those funnels is very different. So, again, no formulaic, "This is the way to do it." It's what works for that corporate and these startups if the startups are the way in this particular instance, given the culture of the company, given the leadership, given their objectives.

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Maiko Schaffrath  23:50

Hi, it's Maiko here. I want to interrupt this episode briefly to make you aware of two exciting things that are going on here at Impact Hustlers. First of all, if you are a founder solving social and environmental problems, and you're looking to connect to like-minded founders like yourself, you're looking to learn from some of the most experienced entrepreneurs, experts, and investors in the world, and you want some support and actually fundraising for your startup, we've built the Impact Hustlers Community. 

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We are now about 100 entrepreneurs and founders, and we're growing every month, with more founders from all over the world joining us, and we're really here to support each other. Our goal is to build the most supportive ecosystem for impact-driven founders. So, if you're a founder, head to impacthustlers.com/community to learn more. 

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And if you're not a founder, but you want to work for impact-driven companies, we have also recently launched something really exciting for you, and that is the Impact Hustlers Talent Collective. This is a group of some of the most ambitious and talented individuals in the world that want to use their talent to make a difference in the world and work for some of the most innovative impact-driven companies. If you're keen to join the Talent Collective, this is all free of charge, obviously. You can submit your application to the Talent Collective on impacthustlers.com/jobs, and what will happen as a result is that companies will start approaching you through our Talent Collective and share job opportunities with you. 

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We'll also share our Weekly Jobs Update with you where you see relevant jobs in the field of impact, including from all the previous podcast guests, so you will actually see opportunities from companies that have been covered here on the show and also companies that are members of our Impact Hustlers Community. So, go to impacthustlers.com/jobs If you're looking for a job, or if you're a founder and need some support, go to impacthustlers.com/community. Okay, let's get back to the episode now. 

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Now, listeners to this episode may wonder, "Okay, why are these guys talking so much about corporate startup collaboration, obviously, because this is what you've been doing for so long, but the reason I wanted to have you on is that my personal belief is corporate startup collaboration and partnerships, investment acquisition is really one of the biggest keys to creating social and environmental impact and solving really big challenges in the world. That's my personal belief. I guess, the way I talk about it is, obviously, we've had a digital transformation going on for the last 10-15 years or longer. 

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And now, in the last few years, we are really focused on the impact transformation in some ways where, at least with topics like climate, but also of social factors, companies really need to adapt, not just out of pure legal requirements, even if they don't particularly care, so to say. I think there's a massive pressure from investors to make the transformation to be a business that puts social and environmental impact at the heart of what they do and moves away from business models that rely on destruction of the environment, etc. 

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So, let's move a little bit towards your focus more recently, where you shifted your focus more towards impact. I know you've developed actually a new program with Rainmaking when making impact, so I'd love for you to talk about that. But also, first of all, maybe what got you to shift your focus towards impact and how do you define impact for yourself?

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Alex Farcet  27:53

Yeah. So, I think the very high level answer is just like I had to be working with entrepreneurs 10 years ago and liked being helpful, that gives me purpose is moving the needle with these individuals, I think. And you could argue, this was true 30 years ago, but I don't see how we've all got to be pushing in the direction of solving climate change. We have an economic challenge now, but our grandchildren and children have an environmental challenge in a big way. There's no way I could not be working on this. And it's, frankly, an obligation and an opportunity. It's where it's all happening now, so this had to be. Where did we start? 

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The UN Sustainable Development Goals are not a bad place to frame human activity, if you will, and we looked, and we said, "Which of the SDGs are meaningful for us?" You can move the needle as an individual consumer or citizen, and we do some of that, and then there's, "What are we good at? What makes sense for us?" We're not an NGO. We're not good at international relations or framework agreements, etc. We're good at entrepreneurship. We're good at industry, corporate, and so we looked, and I looked at the sub goals under each SDG. And so, three SDGs emerged very quickly, 7, 11, and 12, basically, sustainable energy, sustainable cities and communities, and responsible consumption production. 

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And if you look at the KPIs under those, those are ones that we collectively, entrepreneurs and corporates, could move and some others we couldn't. So, that was one starting point. One of the first things we did was we mapped over 2,000 startups across those SDGs and just said, "Where are their whitespaces? Where are their opportunities?," and then we use that to do some roundtables and got a lot of really cool conversations going. Where I ended up relatively quickly, again with my Rainmaking hat on, was in 10 years of working with corporate innovation and startups, I never had a Head of Sustainability across the table. I've always heard either Head of Strategy, Head of Innovation, sometimes maybe a CFO or Bizdev, never Head of Sustainability. 

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They just were not in general at the table when you spoke about innovation and transformation, and I was hoping that would change quicker. It is happening. We're seeing projects where the sustainability team and the innovation team are working on something together, or even better, where sustainability is one of the top innovation themes, and that is happening, but frankly, way too slowly. And so, when I looked again, looking, "Where can I move the needle with my skill set and our capability in Rainmaking?," I was like, "Okay, well, let's look for projects where this is happening, and where there are budgets." 

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Even today, it's still slow. If you know scope one, two, and three, so the corporates are still very much focused on scope one, but as you know, the action is in scope three. That's the hard part. And so, they're focusing on, "Well, we're going to just optimize what we do our use of energy and our process, and they've been doing that for a long time. I mean, obviously. So, with that in mind, we're like, "Okay, well, what about circling back to Startupbootcamp?" It took us 10 years to get to a thousand startups. We, at best, only had runway for a single program for three years and 10 startups per program, so 30 startups. That's the most runway we ever had when I, for example, had Startupbootcamp digital health in Berlin. 

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A few months ago, I ran into my now co-founder, Alan, who also worked at TechStars and Startupbootcamp. We'd meet at his family office and we said, "What can we do? Can we do four programs on four continents, lots of startups?" And luckily, and this will go back to advice for entrepreneurs, we did some customer discovery. We spent two months talking full-time to impact entrepreneurs, so impact being tech-enabled, B2B, probably around energy circularity, decarbonization. Again, we're not strong on the social side, so we looked where we're good, and a very clear pattern emerged. 

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One is, nobody wants another program. There are lots and lots of very good programs, but what we call the program overhead, and I had the same problem when I was running a program. I'm worrying about getting bums in seats and for demo day, which has an indirect impact on the startups, but it's not the same as moving the needle on a single startup, and they have the same problem like, "I've got to go meet all these entrepreneurs," etc. and my number one problem, especially for impact entrepreneurs, is fundraising. It's always been hard. 

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It's harder for impact entrepreneurs for obvious reasons. They have maybe longer pathways to profitability from a classic VC point of view, at least, financial profitability; they tend to have more hardware. Many of the founders of non-traditional, maybe they're from a social background, NGO, engineers, scientists, so it's harder for them, big learning curve. 

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I mean, if you've been an entrepreneur yourself, you find yourself doing 80% of your time fundraising, and that is not why you started a startup. You started a startup to solve a problem. And now, I'm going around with my hat, trying to get money. We're building a hybrid approach, which is neither a program nor fund, but in short, we become temporary team members/co-founders focused 100% on fundraising for some months, especially focused on the first VC round with the twist that we put in our money. 

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When we approach VCs and say, "Look, we're putting our money in. You lead the round, but we've done our own due diligence. We're ready. We have our angel syndicate who wants to join us," and that's a very different level of referral than, "Oh, I've been an angel. I have skin in the game now. Please extend the runway of my startup." And also, on the founder side, everybody else who helps fundraise for startups wants cash. They want a retainer, and they want 5%-7%. 

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We don't believe in taking cash out of startups. We take a tiny bit of equity. We're in line with the investor idea, the founders, and we aligned with the VCs, because we also put in cash. It's a hybrid program. We just we just did our first case, and we're not going to go live with a syndicate, and we're getting a very good response. Again, I'm not an engineer. I'm not going to solve cement and sustainability or steel or whatever. What's in my toolbox, it's accelerating entrepreneurs very sharply on fundraising. It's raising money for and with them, and it's deploying those funds and helping them accelerate faster, scale faster.

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Maiko Schaffrath  35:27

Great. So, yeah, you're putting your own money in, which is a striking argument when you're putting these startups in front of other funders. Do you feel that there [are] other things that still need to change with mainstream VCs, mainstream funding that isn't quite built for impact-driven startups? [Are] there some hurdles that you feel need to change? Or is it all about just positioning little startups and supporting them a little bit extra as you're doing now?

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Alex Farcet  36:03

Yeah, so I mean, for sure, the classic VC, if there is such a thing, is looking for a highly scalable SaaS model, with very well understood metrics, where I put in a euro of investment, I get two euros of growth. With impact, in the broad sense of the term, it takes longer. There are different kinds of risks, so there's a big learning curve. At the same time, you see most VCs, not all, are starting to say, "Look, I have pressure from my LPs, my own investors. I have ESG pressure. 

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It's getting harder to fundraise on purely on financial return," so they have to get there. We all have to learn where the opportunities are, and it's not a coincidence that many of the early startups and impact are focused on measuring carbon, for example, or the digital aspects, and then the hardcore carbon capture or next generation steel, that's much harder; it's going to take much longer, and there are groups like Breakthrough Energy, and the Gates group, and some others who have who have the patience and capital to make really long bets. 

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We all have that learning curve, and VCs do, definitely. Impact entrepreneurs still get more nose than regular digital internet entrepreneurs, because they're coming with business models and solutions that traditional VCs are just wary of. There was also a lot of bridge-burning or finger-burning in the previous climate tech or previously under the Obama era, so that turned off a lot of people, but now, I think it's where the action is. It's where the opportunity lies. It's where we have an obligation to get involved. We have to do it. If that means we have to be more patient, then so be it.

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Maiko Schaffrath  38:14

Got it. So, you're mainly supporting at the moment with funding. You're funding yourself. You say you're running a syndicate, but have you have you set up a traditional fund structure as well or is it mainly the syndicate at the moment?

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Alex Farcet  38:30

No, so I don't want to be a VC. We have users and customers. Our users are the entrepreneurs, and the customers are the VCs, if you will. I mean, maybe one day, if we want to grow, because what we're doing doesn't scale on purpose. We're being very, very selective. Maybe one day, we have a fund, but no, I've just spent a lot of time in the weeds on this. 

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In Europe, you can't do anything; an angel list, unless you have a US vehicle, you can't do, but there are others working on solutions. We're working with Odin which has figured out a process which is UK-based with a nominee deed, it's called, where basically, we're adding one line to the cap table on the startup, but we're able to aggregate small checks without prospecting. 

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We're basically co-investing with friends, but we aggregate that investment through a nominee deed structure, and we can get in the weeds if you want on that, but there is there is a solution. We can have investors from anywhere in Europe investing in any startup in Europe. And so, I think we've cracked that thanks to the good people at Odin, and there are others. 

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And so, now, I think the challenge is this. I don't know how accurate these numbers are, but I did something called Angels Bootcamp a while ago, and we looked into it. There were something like 300,000 active angels in Europe. There [are] at least three million families who have the means to invest. They're in the stock market, or they're buying arts, real estate, whatever. 

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Again, I don't know how accurate these numbers, we have something like 10% market penetration on the capital that could be deployed to help solve these problems. At the same time, a lot of these people, and especially on the family side, they're getting pressure from the next generation like, "Guys, we have to work on these problems. We're talking about my kids' well-being here, the planet's well-being." 

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And so, I want to be a conduit to redirect some of that money and ride that wave, if you will, so that we can just fuel more startups, and all of that money that's going in other places. It's still hard in Europe. There's still a lot of friction. We want to remove that friction, make it easy to fund really awesome impact startups.

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Maiko Schaffrath  40:57

Amazing. And do you have any plans to bring in the corporate startup collaboration partnership element into this in the future or anything you can talk about on it?

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Alex Farcet  41:08

Yeah. Again, going back to the theme of what's in my toolbox and what are we good at Rainmaking is we obviously have very good relations with Fortune 500, if you will, and we know how to speak their language. We say we're bilingual. We speak startup, and we speak corporate. Those are different languages. 

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And so, we're building a network, for lack of a better word, which will be a slack community to begin with, where we have CTOs, co-founders, angels, individuals who have the interest and potentially means to be investors and will add value to our very few select startups. And there, we will invite some corporates, but we'll be very, very selective. I just spoke to someone this morning who said there's a lot of frustration on a founder side who, when they meet corporates, usually, it's the corporates who are sucking the information out of them. It's a one-way "Educate me on how to do this and this," and there's not enough going the other way. 

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And yet, bizdev in B2B  is very difficult. That is an art and a science, and there's a lot of learning to be done on how do you sell to, I don't know, Siemens or IKEA. And by the way, if you're a B2B startup, you have to be great at that, because that is going to be your lever to have big impact. There are some good connections to be had,. We just have to make sure there's value going both ways, and we're building a very exclusive, we don't want 1,000 people. We're trying to be very selective about who we bring in, but that would be a value add to our startups, yeah.

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Maiko Schaffrath  42:50

Got it. Amazing, I think, yeah, time wasting is definitely a challenge, and by being selective, that can be eliminated, not getting the wrong corporate that are maybe not quite ready or just trying to get as much information as they can, and then move on.

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Alex Farcet  43:12

I mean, yeah, they can be super valuable. They're amazing people, but it's not focusing on the logo, but focusing on the individual and their ethos and how much they're willing to put in terms of time or expertise or making connections. But, our thesis overall is that we're not going to do much B2B, B2C, or we may do some B2B, B2C, but the big levers, if you're a startup, one of them is just to go and move the needle via industry, if you will, via the corporate world, at least, that's our little niche that we're good, not little.

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Maiko Schaffrath  43:59

A really important one. Got it. So, is there an easy way for startups to apply to be part of this, or are you just reaching out to startups proactively? How can a founder get your support if they listen to this?

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Alex Farcet  44:20

It's a hard one, because we're trying to be the anti-program and "Please apply," and we've all played that game, where I want a lot of applications to give myself choices, and also VCs, lots of inbound; that's why they have layers of protection before you get to the partner. We're only doing outbound basically. We're finding startups we're excited and talking but, of course, our sweet spot, again, is just before VC, so we want as advanced a startup as possible that isn't on the VC radar. You really don't get that many shots with VCs, so we want to be helpful in that one shot that you have, at least that first VC round, whether it's pre-seed or A; that's a fluid definition anyway. 

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And yes, by the time you go live with this, we're Rainmakingimpact.io, and we'll have a box somewhere where you can put in, as the first piece of advice we would give to anybody fundraising is do not put your details randomly on a contact. Get an intro. Obviously, that's what we're going to be good at doing on behalf of entrepreneurs, so it's not a great way, but having done what I do and lots of others, we have daily inbound. It's not a great way to go. 

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You want to go through an intro or somebody you know or you're going to find some angle to stand out. But once you do, then it's about the right timing previously. The way we describe it is we want to help make the jump from amateur money to pro money. Amateur money is, in general, angel and friends and family. The first pro round, when you're in the pro leagues, you're trying to get into the NFL or whatever, it's a very different game, and you really only get one shot to be recruited, so you have to do that well and be well prepared. So, it's that sweet spot that we're looking for.

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Maiko Schaffrath  46:23

Well, we're almost out of time, or we're pretty much out of time. If you have a few more minutes, I'd love to ask you one or two more questions. Yeah. Alright, so one quick question I would still have is, for founders listening to this, of course, if they get the privilege to be part of your offering making impact, that's great. But beyond that, what do you think especially impact-focused companies should do to set themselves up for success in terms of fundraising?

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Alex Farcet  46:57

Well, so in terms of fundraising, it's a lot of what we spoke about. I think more generally. I think we're still, surprisingly, probably 90% of the impact startups we speak with don't have a clear answer on either theory of change or what impact measurement framework are you using, and I don't blame them. It's really, really hard. It's a jungle. 

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But I think at least if you're approaching impact VCs and have an opinion and maybe a roadmap on, "This is the impact we actually will have. These are the outcomes, beyond finance, of course, that we're going to have, and we have an idea of what we're going to measure," just like you're doing market or customer discovery and getting early traction on payments and revenue, then what kind of early traction and KPIs are you getting on impact? And do you have a path where, we've met a few impact VCs who we're saying, "We're looking for giga coins," so giga level reduction of CO2, which is, that would be amazing. 

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So, if you can be smart about, what is that VC looking for in terms of impact? What is their theory of change? What are their LPs looking for? What have they promised? And be adaptive, because all too often, we go to the money. There's my business model. And of course, you need to have that, because you need to be financially sustainable, so that's really hard, and we want to get stuck in on that and have an opinion also for our founders on what makes sense. And then, the other thing is, literally, I mean, it's so generic feedback or input, we just did it. I told you, we were about to launch an accelerator and do this big thing, and we just spent two months talking to our users, and we came away with something very, very different. 

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The number one difference I see between a doing well Startupbootcamp alumni and not is how well they know their customer. It's incredible how detailed they have an understanding of, it's a 35-year-old woman, she has this title, she has this budget, this is her buying cycle. It's, again, customer discovery, customer discovery, customer discovery. There is nothing else. 

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Maiko Schaffrath  49:11

Got it. Yeah, absolutely. One last question I have is, what is your big, I guess it's called big, hairy, audacious goal, in that sense, in terms of the impact program or the impact space in general? Do you think our vision should be, "We want to create the next Google, Amazon, and Facebook of impact?," just that they're solving these massive problems? Is that the model that we need to go and let's just pour as much money into the most promising most scalable solutions? Do you think the model is a little bit different? What's the future of solving these big problems in the startup space?

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Alex Farcet  49:55

Well, so first of all, the first thing that springs to mind when you ask the question is I think as a European, I said, I'm European, I think for the first time in a long, long time, Europe has a unique opportunity to be a global leader in something related to what we do, technology, innovation, impact. We can absolutely be global leaders, and we must do everything we can to double down on that, so both from an investment, regulatory, talent-building, supporting entrepreneurs, making sure that the corporates are getting the support they need. In the next 10, 20, 30, 50 years, we can just be absolutely leaders, tons of job creation, tons of innovation, and tons of movement on impact that we have to, that is so exciting. We've been behind a long time. 

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We're always a few years behind Silicon Valley or behind China in some ways, so that's super exciting. I think Africa is where it's at. And a lot of the challenge, as you well know, is that as these developing countries catch up to our living standards, can they do it sustainably? Because we've burned the carbon budget on behalf of everybody, so proving things there with Africans from Africa. We have a program in Africa that has amazing startups, amazing entrepreneurs doing amazing things, and that's just one; there should be hundreds. 

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So, that's super exciting, and then me, more personally, I think Alon and I with Rainmaking impact, we want to be the best referral of, we want to be the best deal flow generator for VCs in Europe and Africa, and we want to deploy hundreds of millions of this angel money that isn't being deployed today, where we think it should be deployed in the next few years.

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Maiko Schaffrath  51:48

Can't wait for this vision to come to life and maybe catch up again in a couple of years when it is coming to life. Well, it already is. You made your first investment. You're working on it. And yeah, perhaps, there [are] a few listening to this now that will get your support at some point. Thanks so much, Alex, for joining. It was really inspirational to hear your journey and to hear what you're up to now. Thank you.

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Alex Farcet  52:14

Thank you, Maiko. I appreciate the time. This is all non-rewarded mostly for you, and you've been slogging at it for a little while, and I'm sure you're having impact through this as well. So, I appreciate the platform.

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Maiko Schaffrath  52:28

I really hope you enjoyed today's episode and learned some valuable lessons from today's guest. I want to share two things with you. First of all, if you're a founder and you're solving a social or an environmental problem with your company, there is something that we've launched recently to support founders like you and to introduce you to more founders that are like-minded and that are solving very difficult problems in the world, and that is the Impact Hustlers Community. 

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It is a community of over 100 founders that solve problems like climate change, education, the crisis in health care, and really pushing the boundaries on what's possible. And what we do as a community, we connect to each other, we run mastermind groups where you can connect to other entrepreneurs and founders. We bring experienced investors, entrepreneurs, and experts in to run workshops and ask-me-anything sessions, and you can also connect to others in our online community. And we have something for those of you that are actually fundraising. We have an investor matching tool where you get introduced to relevant investors based on the startup that you're building. 

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But, it may be the case that you're not a founder, and you just want to be part of the change, and you want to join some of these companies that you've learned about here at the Impact Hustlers podcast, and we've got something for you as well. We've recently launched the Impact Hustlers Talent Collective. 

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This is a group of some of the most ambitious individuals in the world that want to make a change and an impact with their careers, and you can join the Talent Collective, obviously completely free of charge. You can apply to it, and we will introduce you on a regular basis to companies recruiting people like yourself. You'll get access to exclusive job opportunities from companies that have been on the podcast but also beyond that. 

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So, make sure that you go to impacthustlers.com/jobs if you're looking for jobs in the social impact space. Even if you're not actively looking right now, you should still sign up and be part of our Talent Collective. And if you're a founder, don't forget, go to impacthustlers.com/community. Okay, thanks very much for listening and bye. See you at the next episode.

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