Sabine Flechet , Joshua Haynes | Founding Partners
Interview given to Ms Maria Louisa Vafiadaki
-Kindly introduce us to Masawa. What are you trying to achieve through it and how did this idea come up ?
We are not only investing in private companies that are looking to improve the status of mental wellness. Our vision at Masawa is to deal with the mental health crisis that our world is facing, especially during the post covid years, and really address all these factors affecting our society as a whole but also people individually.
For instance, think about climate change, political crises and so on. They are all interlinked with Psychology and the lack of connectedness that we face in today’s world.
We aim to invest in companies that are catalyzing mental wellness. In traditional capital models, there is normally extra pressure added on founders to grow quickly, scale up, make sure evaluations are super high for the investors to have financial returns fast etc. This however has led to the increasing failure of companies which are lacking the financial return needed and/or the social return needed.
Hence, at Masawa we focus on the companies’ founders through our nurture capital approach.
-How do you define Masawa’s authentic nurture capital approach ?
Philosophically, nurture capital is looking at the capital as an important leverage and accelerant to grow a company and make sure that the people inside the organization are growing as well.
Traditional venture capital will help founders and provide value, supporting commercial aspects mostly.
At Masawa, we believe that we can have better outcomes if we also take care of the mental health of companies’ founders. We nurture inner mental health and organizational health. Coaching, leadership and training are provided to improve leadership effectiveness, resilience and adaptation. As a result, founders embark on more smooth entrepreneurial journeys saying “no” to burn out, depression etc…
By nurturing human capital, we build a community of leadership coaches, therapists, executive education professionals to help business founders become responsible leaders with the right development tools to avoid conflicts, mishires, absenteeism and more. This way, they will slow down and we will have more purpose-driven organizations, healthier organizations, with a 30% reduced failure rate and an increased financial return on investment.
-What is the impact of good mental health on a societal & on a business level ?
On the business side, there is a clear correlation between unhealthy and unmotivated individuals and business success. Unhealthy and unmotivated individuals put businesses at risk, as they face less retention, mishires, more conflict, lack of accountability... You have overlap in job profiles. Impact on employees but also you are not successful within your consumer community because you don’t build transparent identity.
From a societal perspective, there are direct costs such as medication, outpatient therapy, cost for probation, hospitalization etc. There are also intangible costs such as loss of productivity, absenteeism, decreased productive, a decreased quality of life. Regarding social costs, we refer to homelessness, crime due to trauma, rehab etc.
-You mention that companies with a healthy organizational culture deliver up to 3x the returns to shareholders as less healthy companies and investing in impact yield higher returns. In what ways does Masawa’s approach build healthier organizations ?
Concretely unhealthy companies are often not in the position to hire what they need, but they hire the first who shows up. There is harassment and a toxic work environment in unhealthy organizations with a scarcity work mode.
A healthy company on the contrary is looking at individual growth and one where each person knows their role, there is a strong sense of belonging, a sense of ownership and understanding how their role leads to the greater mission of the company.
While there is little data on mental health in startups, we do know that 65% of startup failure is caused by human conflict. Therefore, if we solve the human conflict, we can add 1.5x in terms of return on investment.
-One of your key findings is that mental illness will cost global economy 16T dollars by 2030. How do you measure impact and costs when it comes to mental health and illness ?
As an impact fund, it is important to remember that half of the performance fee is tied to social impact which we have to measure. If we have an investment that doesn’t meet the social KPIs that we created with the founders, we have to forfeit a proportion of that money that would be our profit under other circumstances and we would have to give it to charity and not for profit. Therefore, we need to make sure that we are setting the right targets. We first try to get the company to the right product fit and then we co create the social targets together with the founders.
-Can you give us an idea about your funding until today ?
We started fundraising 6 months ago. We are raising 40 million in total and because of our impact-financial returns focus, we target mostly high net worth individuals, family offices and funds that address sustainability & societal outcomes.
We also have good resonance with those who understand what we do for e.g. people with experiences in mental health or whose environment has been exposed to mental illnesses etc...
We might also get support from entrepreneurs who have had a challenging career path and who are enthusiastic about what we are doing.
Other categories of funders include sport and athletic entrepreneurs, health insurance companies, pharmaceutical companies et al…
-In your view, why is Masawa a good investment choice for funders ?
On the financial side, we provide a great approach to secure the “downside” scenario for an organization. In other words, we have less failure. We are able to cover a downside scenario to a minimum return and then focus on the upside scenario. If we take care of the mental health of the founders, human conflicts that will put businesses at risk will be avoided. Team risk is the no1 cause of failure at this stage.
In terms of social outcomes, mental health is underfunded due to the stigma. We work to optimize and maximize the social impact of companies. Any investor who sees that the world is not black and white, is well positioned to invest in Masawa...
Finally, we believe in the authentic approach that we are building. Our nurture capital approach is pioneering in how capital is being deployed. In general, we can say that Masawa pushes for a system change in the world of VCs.
Thank you.