Alhough we would like to, Adiuvamus Fonds will not be able to invest in all projects that present themselves to us.
To decide which projects will ultimately be supported, a number of factors will be examined. Together, these factors create the general framework by which Adiuvamus Fonds will conduct its investments.
Factor 1: Social Impact
All our projects should have a minimum of impact they create in the business they conduct, on the community they serve or the employees they hire or, ideally, all together.
Factor 2: Profitability
Although we pride ourselves on our supporting stance, we are not a non-profit. When selecting projects, we will look at the potential revenue a project can generate sustainably.
Factor 3: Risk
Every business has risks, but this can vary a lot per project.
We shall assess the different risks (financial, social, climate & sector inherent) when selecting projects.
Factor 4: Cluster Synergies
We will be investing in clusters of projects within certain defined areas. Part of the determination whether a project fits Adiuvamus Fonds will be how the project can benefit from and rely upon the other projects within the cluster.
Factor 5: Portfolio Diversification
As the economies worldwide behave cyclical, we want to vary the type of projects within one clusters. This diversification can be based on target audience, sector and business model.
As a general rule off thumb: the more diversified, the better.
Factor 6: After exit sustainability
We aim to be a long-term partner for the projects we support, but one day our paths will diverge again. Therefore, we assess whether a project can sustain itself and flourish after our exit from it.
Part of our thesis is based on the creation of geographic clusters of projects. We strive to let these projects benefit from one-another within a cluster. Such synergies could occur in the form of cost savings (e.g. bulk purchases, shared overhead ...) and revenue upside (bundling products & services to generate additional income).
As such, we believe that a strong network of interlinked projects in a concentrated geographical area can reduce (individual project) failure rates drastically and stimulate innovation and new partnerships within the cluster.
This concentration would also allow for a far higher impact within the targeted area, compared to cumulative impact of stand-alone projects. Social initiatives can be bundled and benefit from the same advantages as the projects themselves.
The downside of clustering projects in concentrated areas, is the risk of external factors at play for this single geographical area (e.g. flood).
In the long-term, however, this risk can be mitigated by creating several clusters in different regions.
The projects that Adiuvamus Fonds invest in (through debt or equity), are starting businesses. As this projects are novel - but also because the risk is relatively high - the ticket size per project for a first investment will lay between 5,000 to 25,000 euro where the investments through the right side of the fork will be tranched investments (KPI-based), somewhat reducing the risk.
Follow-up investments in growth projects is possible (custom ticket size), but will require a new round of due diligence and approval by a majority of voting rights. Whereas the initial investment is made by the management of Adiuvamus Fonds.