Carolina Mônaco | Pymwymic
The investment analyst from Pymwymic explains why the Dutch agrifood fund promotes gender diversity while investing in companies with social and environmental impact
Food and drink investors say people’s health, the environment, and profit are top investment priorities, so when Carolina Mônaco of Pymwymic tells me the Dutch venture capital fund invests with social and environmental impact at its core and gender diversity in mind, impact investing takes on a whole new meaning.
Pymwymic, short for ‘Put your money where your meaning is community‘, is Mônaco’s first experience in the investment arena, and she’s loving working for the agrifood fund. Hailing from São Paulo, Mônaco moved to Amsterdam in 2017 after a six-year career as an M&A lawyer – a job that never fulfilled her. “Deals were more about extracting value from the ecosystem rather than adding to it,” she says.
In the Netherlands, while studying for a master’s degree in law economics and psychology, she came across the fund and reading about impact investing immediately connected her with its ethos. Pymwymic’s community of investors pioneered impact investing, becoming the first B-Corp in the Netherlands in 2013 – it received EuSEF’s official quality stamp as a professional impact fund in 2018.
Today, Pymwymic manages a fund of almost €30 million, investing globally in Series A rounds of profitable companies with a social or environmental impact embedded in their business activities.
“We have eight portfolio companies and are eager to make more investments, but it’s hard to find companies that fulfil our criteria,” says Mônaco, noting the investment thesis puts diversity among important criteria for prospective companies to meet.
The notion of impact investing with diversity stems from Pymwymic being a B-Corp, and because its team believes that diverse backgrounds, particularly at the decision-making level, contributes to better performance – Pymwymic’s team counts seven nationalities and 50% female in a team of eight.
To that end, Pymwymic has developed assessment tools, which Mônaco says are available for any investor to use. “Pymwymic is a community of investors. It’s like an open workshop. We actually want others to use our tools so that impact investing and gender diversity becomes the norm.”
The company is also a member of FundRight, a movement initiated by Dutch venture capital investors aimed at ensuring a more diverse ecosystem of investors and founders. As the FundRight community grows, it tracks the progress towards its goal of seeing 35% of women in the ecosystem by 2023.
FundRight gathers data from investors and founders who join the platform. Currently, 16% of Dutch venture capital firms invest in companies with a female founder – and data shows that 6% of partners at Dutch VC firms are women.
FundRight released this year its bid book It’s time to #FundRight with data collected from 2018. “It revealed that in the Netherlands, only 2% of investments were made in female-founded or co-founded companies. This shows how behind we are despite being an entrepreneurial, forward-thinking country,” says Mônaco.
Pymwymic: An agrifood portfolio by choice
Electronics company Fairphone was Pymwymic’s first investment. A social enterprise based in Amsterdam, it sells long-lasting smartphones built with a modular design using reusable or recyclable materials, which are sustainably sourced. Pymwymic’s second and third investments, InspiraFarms and Trapview, steered its capital towards the agrifood space – seven of the eight portfolio companies are in it.
“After Fairphone, we invested in agriculture companies, a sector where the Netherland is very much ahead in terms of efficiency,” says Mônaco. She explains the decision to focus more on agrifood was made when the team gained more and more knowledge and network in the industry.
September saw Pymwymic participating in the €7.5 million venture round for Yooji led by Danone Manifesto Ventures. A French company, Yooji makes easy-to-prepare and additive-free baby food with locally sourced organic ingredients. The company’s social and environmental impact is through waste reduction plans, sustainable packaging, 100% renewable energy sources, and responsible employment.
Mônaco says portfolio companies are added to the FundRight database, and they are committed to promoting gender equality in their workspace.
To the point
Why do you think gender diversity is so important?
Women are 50% of the population, so there shouldn’t be another reason to have gender diversity in companies other than that.
Some people need convincing, but the advantages of it are not the sole purpose of bringing diversity onto the table.
We know diverse teams lead to an average of 30% more returns to shareholders than homogeneous teams. If we want our companies to bring returns to investors and create more impact in the world, we need them to be successful, and diversity is key.
What data do you have to prove gender equality generate better returns?
We have taken data from McKinsey & Co, Fast Company, and Harvard Business Review, as well as FundRight. McKinsey’s data shows companies in the top quarter for racial and ethnic diversity are 35% more likely to surpass peers, and those in the same bracket for gender diversity are 15% more likely to do the same. The likelihood of better performance with ethnic and gender diversity combined is 25%.
FundRight data shows that in 2018, 7% of management teams were female, and 67% were male – 420 companies out of 600 had decision-making teams made up of men. So, it’s only one half of the population making business decisions, influencing a lot of what happens in our society.
What do you say to people who argue there are not enough female founders?
The FundRight data showed that of 2,362 founders, only 12% were female. There’s a social issue we need to consider, which is women are more risk-averse. Still, 12% doesn’t represent the population.
Even if we accept the argument of risk aversion, you should have more women in management anyway – women work. We ask our founders what recruitment channels they use, and what they are doing differently to attract more women to the company.
Funds that are aware of the issue still have a high percentage of male-dominated management in their portfolio companies, that’s why is so important to join FundRight and talk about this. By knowing the numbers we can see the issue as a reality and solve the problem.
What are the tools Pymwymic use to assess gender diversity?
Our diversity assessment is incorporated in the due diligence process, which is applied through five stages, from the screening to the signing and closing. We also look at the hiring policies and the channels for recruitment to identify potential bias.
We are aware that the companies in which we invest are at an early-stage and may not fulfil the criteria now, but they commit to placing their best efforts to it.
We aim to have diverse management teams, trying to keep its same gender composition at the limit of 65%, allowing 35% to be from the other gender. The percentage limitation provides a significant voice to both genders in decision making.
How do you make sure companies meet the criteria after they get the investment?
This methodology is not bullet-proof – all our tools are being perfected and are evolving as it goes. Companies can include a diversity commitment in their HR policies and provide their data to FundRight so we can monitor their status.
Mônaco says the team at Pymwymic is aware of the challenging task gender diversity presents to its portfolio companies, and it tries not to burden founders too much. “We also have the impact KPIs, financial return targets, and so on. Keeping diversity in their agenda is already much more than what they have been used to. Hopefully, this will bring the change that’s needed,” she concludes.