Purpose Driven Investing for Financial Return with Flourish Ventures
It’s great to be back after taking nearly a year off from regular content to build and launch BELLA.
The break wasn’t really planned, but between launching the business, having a son and moving to LA all while dodging COVID, it was unavoidable.
But just because we weren't publishing, doesn’t mean we weren’t going deep on fintech.
The team and I built and launched BELLA in less than twelve months, and we’re aggressively scaling it now.
In the background, I've continued to trade views and break down strategy with the world’s leading founders and investors.
Over the next few weeks, we’ll share some of the most topical discussions we’ve had over the past year, and we’re also working on new content that you’ll start to hear and see.
Right now, we’re especially interested in embedded finance, DeFi, M&A, new takes on traditional consumer finance products, payments, e-commerce, digital investments and, as always, digital banking. We’re always looking to talk to great people in those areas, so please shoot recommendations our way.
We’re still figuring out the podcast schedule, which we expect to be less frequent than weekly. We’ll be increasing focus on our newsletter, especially our premium content. Sign up at rebank.cc/subscribe.
In today’s episode, we’re joined by Tilman Ehrbeck, Managing Partner at Flourish Ventures, a venture firm focused on improving the financial health and prosperity of people around the world. Flourish invests in segments including Challenger Banks, consumer and SME lending, personal finance, data analytics, insurance and financial infrastructure in countries in the Americas, Africa and Asia.
Flourish has invested in companies including Chime, Aspiration, Tandem, Grab Finance and more.
I find Tilman to be extremely thoughtful and a great communicator, and he’s doing hugely important work. This conversation helped me better understand how impact-oriented VCs like Flourish balance purpose with financial returns in the highly competitive venture space.
Thank you very much for joining us today. Please welcome, Tilman Ehrbeck.
Full Transcript:
Will Beeson:
Tilman Ehrbeck, welcome to Rebank.
Tilman Ehrbeck:
Good to be here. Thank you for having me.
Will Beeson:
This is fantastic. I'm really, really happy that we've been able to connect. I'm an admirer of the work you guys do at Flourish, which I look forward to hearing more about. I have a little bit of context, because I connected with one of your esteemed colleagues, Ameya, would have been probably three years ago when I was based in London. I believe he's still based in London. You guys were at the time operating as Omidyar Network.
Will Beeson:
I think you've had a lot of changes, you made some amazing investments and you've done tons of interesting work since then. So maybe you can catch us up. And for those who haven't listened to the first episode so many years ago, introduce us to Flourish.
Tilman Ehrbeck:
I'm happy to do that. Thank you again. So yes, indeed, Ameya is in London. He leads a lot of our Africa work, which has been very exciting recently. We can come back to that later, if of interest to you.
Tilman Ehrbeck:
So we did start out and Ameya was part of that actually, we did start out at the Omidyar Network. The Omidyar Network was founded and funded by Pierre Omidyar, founder of eBay. eBay is still one of the fastest success stories from first code to IPO. It happened in three years in the late '90s.
Tilman Ehrbeck:
So Pierre found himself very early on in a position to think about what other contributions he can make, to make the world a better place. And he quickly realized that a traditional foundation setup was not necessarily scalable, and he felt that he liked investment discipline as a means to an end, we can come back to that later as well. He liked the notion of technology led innovation, to help people capture economic opportunity, improve their lives.
Tilman Ehrbeck:
He saw eBay doing that, and so he set up the Omidyar Network, and I was part of a small group of people who built up a portfolio in financial services as a key ingredient for people managing their lives. And that has gone or did go very well. So after several years, two, three years ago, we decided to spin out the financial services portfolio and team and set up our own firm called Flourish Ventures. And that's where we are today.
Will Beeson:
Pierre is still involved with the fund?
Tilman Ehrbeck:
Very much. Pierre is our sole source of capital. He is on our board and investment committee for the bigger checks, and a very important thought partner to think through how the world could look like and should look like from our perspective, in a few years down the road.
Tilman Ehrbeck:
And with his involvement and with his capital come two things. One is an obligation to actually do good and articulate what good would look like and we can talk more about that. On one hand, so there's obligation to do good. On the other hand, he gives us enormous degrees of freedom.
Tilman Ehrbeck:
So we are not a traditional time bound fund. We have flexibility in our instruments, because we see them as a means to an end, we see investments as a means to an end. We want them to be wildly successful in their own right, but we also want them to demonstrate that new, better, cheaper, more adequate ways of doing business are feasible.
Will Beeson:
So maybe you can unpack that piece, doing good and measuring that. Can you talk about the way you do that?
Tilman Ehrbeck:
Yeah, it starts by having a view of what a fair retail financial system would look like. We have articulated that, we have what we call the Fair Finance Principles. If you go to our website, you can look them up. And there we say, "Listen, finance needs to help real people. It's a means to an end," as I said earlier already. Nobody eats money. Money should enable the things that we all aspire to, shelter, food, better education for our children, managing risks. So finance is a very fundamental thing, but it is a means to a higher end.
Tilman Ehrbeck:
And so we believe a fair retail financial system should help real people in the real economy. We believe that business models need to be built on trust, and their incentives need to be aligned with better outcomes for their customers. We believe in that context, that the question of data and data usage and data control is very important. Nobody's data should be used against them, so to speak.
Tilman Ehrbeck:
We believe that a better functioning, fairer financial system needs an open architecture type infrastructure that lowers everybody's costs and where competition happens at the customer interface. We believe that this needs to be regulated, because we need people to believe in fiat money. We don't want the system to be used for nefarious purposes.
Tilman Ehrbeck:
So we embrace regulation. It should be regulation that harnesses the power of innovation, while minimizing the new risks that are associated with that innovation. We have this view of what a fair financial system should look like at the highest level. And that guides our investment decisions, both in terms of what we are really excited about, and also things that we decided not to be excited about, or that we would not pursue. So that's at the highest level where we start.
Tilman Ehrbeck:
And then when it comes to an individual investment, we are looking at two, three things. The first is, is this investment, is this new idea that we would be backing, is that creating a superior value proposition? Because it somehow uses technology or data or this combination that is now feasible in the 21st century. Does it use these new possibilities to create a value proposition that is vastly superior than what was there before? And because we believe that that A, makes people better off and B, is actually a good and doable investment.
Tilman Ehrbeck:
And then we look at things such as, is the revenue model consistent with the customer wellbeing, in line with this principle that I laid out earlier? But once we have gone through that filter, it's a great idea that has the potential to make people better off and be economically viable, then we look at things very much like a traditional investor, venture investor. Is this a good team? Does it have the right skillsets, et cetera? Because as I always said, we want our investments to be wildly successful in their own right, we want the portfolio entrepreneurs to be successful.
Tilman Ehrbeck:
We often co-invest with purely commercially oriented VCs, so there can't be a disagreement on what is the best course of business. We just have this additional filter upfront, if you will. And as a result of that approach, we do not believe necessarily in a trade-off between doing good and doing well. If you are doing right by your customers, and you have stumbled across a new way of superior delivering value, that will be a very good business, and it will create shareholder value as well.
Will Beeson:
Got it. Okay, so it's basically, you can imagine a venture fund that only invests in Latin America. So their filter is geographically has to be in Latin America, then we apply traditional investment rigor, or financial rigor to identify the best investments. And what you're saying it sounds like is that your immediate filter is it has to do good. And then once it's through that filter, the filter basically defines your universe, after which you apply the same sort of financial investment rigor to the investment [crosstalk 00:12:10].
Tilman Ehrbeck:
That's right. And I would add, we are even more aspirational on the doing good side. That the individual investment does good is a first filter indeed. We also like it when it is part of a theme, where we believe that, wow, if there's demonstration success that this works across a number of geographies, because financial services tend to be regulated at a national level. So if there is demonstration success in similar models against the same theme across a number of geographies, we really want that collective demonstration effect to change the entire system ideally.
Tilman Ehrbeck:
I'll give you an example. We were very early on, we figured that the traditional branch-based cash, brick and mortar approach to retail, transaction accounts, banking, is not going to dramatically improve outcomes. In emerging markets, it's too expensive that way to reach people, who transact very frequently, but at teeny tiny ticket sizes.
Tilman Ehrbeck:
And in highly advanced economies, those old business models seem very entrenched and staid. We bet on challenger banks early on. And what we like is that in the US, and it works in the US, because the interchange fee is high enough, the debit interchange fee is high enough to pay for the system, if you will, for the platform. We like that the challenger banks in our portfolio, Chime, Aspiration, they provide a free banking account, free transaction account. No hidden fees, no overdraft fees, you just can't overdraft that thing, for free. And in the case of Chime, they advance your paycheck. They don't sit on the float like the traditional banks would do for three days or some such thing.
Tilman Ehrbeck:
So this is a vastly superior consumer value proposition. Free transaction account, no minimum balance requirement, no hidden fees, no punitive punishments for overdrafting or any such thing. It's a great investment, because the value proposition is so strong that it has by now 12, 15 million users. I haven't looked at the most recent numbers.
Tilman Ehrbeck:
Now, if challenger banks as a theme become successful enough to challenge the practices of the traditional banking system and make them stop charging these overdraft fees and stacking individual overdraft events in such a way as to maximize the fee income and therefore maximize the penalty on the consumer, if these practices go away, because of the success of our investment at the industry level, we would be delighted as well.
Will Beeson:
That totally makes sense. I'd love to just dig into this filter a little bit to understand better, one, how you think about it, and then two, how you apply it in practice. Because using the simplistic analogy of the LatAm fund, it's pretty clear if a company is a LatAm company or not. I don't know, maybe the holding company is actually based offshore, but the operations are in Latin America, that's probably within the universe.
Will Beeson:
The founders are originally from Latin America, and now they're just graduating from Wharton, and they're actually based in the Northeastern US, but the company's operations are going to be focused on Latin... So that's probably within the universe.
Will Beeson:
But when it comes to the sort of impact and change that you're talking about, I can imagine different groups of people making different determinations about what is doing good and what isn't. I'd be interested to know, I guess the extent, one, to which you, I don't know, model impact, quantify impact as part of this initial filter.
Will Beeson:
Because simplistically, to use the counter example, I'm sure that creative, smart people could explain to you convincingly why payday lending is increasing access to capital availability, to people in times of need, and it's solving real problems. And there are other leading consumer FinTechs. Robinhood comes to mind, which is in the press all the time for, on the one hand, democratizing access to stocks for free. And on the other hand, potentially loading people with margin loans that they don't know how to manage, not necessarily bringing people on the financial education journey that could result in better outcomes. I'd love to hear you just unpack some of that a little bit more.
Tilman Ehrbeck:
The starting point that you have, which is impact is in the eye of the beholder, is a very fair starting point. I totally accept that one. So that's why we put down these fair finance principles. We wanted to be very transparent around what end state systems vision we have, so that entrepreneurs who seek us out are very clear on that one.
Tilman Ehrbeck:
And the core principle from an entrepreneur's perspective is this notion of, is your revenue model consistent with consumer or customer best outcomes, better outcomes at the end of the day? And there's quite a few businesses or business models, payday lending may well be one, even the traditional credit card business, I argue would be one, where we would not have felt comfortable investing. Because the model assumes certain behaviors that is not in the best interest of the consumer.
Tilman Ehrbeck:
So you are paying back not your full credit balance, you are only paying back the minimum amount. You keep having a balance that is rolling over and month after month, you're paying interest on that. That's great for the credit card company, it's not great for the consumer.
Tilman Ehrbeck:
So when we look at an individual business, we look at that. We say, well, as a starting point, we are saying what's the real problem, the customer, consumer problem that's being addressed? What's the innovation, typically tech lead and new data inspired, that helps to address that issue? And then what's the underlying logic of how value is being created? What are the micro economics, if you will, of this innovation? And then are the incentives between the provider and the customer aligned?
Tilman Ehrbeck:
And that you can think through from first principles. And it does lead you to preclude a certain set of investments. And we have not invested in payday lending. We, by the way, have also, we have not invested in, as a firm, we have not invested in Bitcoin and crypto, because we just didn't see how it improves the lives of low and middle income America, which we care about here in the US. Or lower income families often in the informal economy of emerging markets, that we care about internationally.
Tilman Ehrbeck:
So we do believe that by laying out the principles, by checking the incentive compatibility, if you will, of the business model, and then by looking at ultimate mission alignment with the underlying of the team that is innovating in the business that we are investing in, that we have enough safeguards, if you will, to... At least at the outset, we know we are aligned in our aspirations here to do good. And then we try to be helpful and the conscience on the board of our investments to make sure that we follow through.
Tilman Ehrbeck:
Now, in terms of measurement, the systems change is hard to measure. Certainly if there was a change down the road, you couldn't attribute this one-to-one to any action or any investments that we would have made. You could maybe trace some contribution, and we are trying to do that.
Tilman Ehrbeck:
But at the direct investment level, there are actually ways of doing that. So for example, in emerging markets, we have done a lot of investments in alternative data driven underwriting. So small businesses, 80%, 90% of which in emerging markets operate to some degree of informality, typically don't have access to bank credit.
Tilman Ehrbeck:
But now increasingly, their business has digitized, either the supply chain or some of their distribution. The payments are digitizing. That makes new sources of data available. And that source of data allows for an approximation of cash flows and underwriting that previously wasn't feasible.
Tilman Ehrbeck:
And then you can compare what's the interest rate that they are paying, based on these digital alternative lending models, versus what was their source of capital that was previously available to them? And there's a real delta there that can be quantified. And that's true for, whenever you replace an age old informal mechanism, which is by the way, a lot of what's happening in financial services.
Tilman Ehrbeck:
Because people have used financial services forever. It's just typically been informal mechanisms, the rotating savings club, the money lender, the pawnbroker. We often replace with our modern innovations, age old mechanisms, and therefore you can actually compare the cost.
Tilman Ehrbeck:
Where it's much harder is, when you create markets for the first time. It just didn't exist before. Insurance is most important an example. I'll give you an Africa example of an investment that we think is extremely impactful, but it's hard to compare to anything.
Tilman Ehrbeck:
Crop insurance, germination insurance for smallholder farmers. In Sub-Saharan Africa, that's the main livelihood for most people. Historically, what could happen is that they planted, they bought seeds, they planted the seeds, no rain, the harvest failed. They would actually literally go in what they call the hunger season, because they just missed that crop cycle because of the failure.
Tilman Ehrbeck:
We invested in a company called Pula that sells crop germination insurance, with the fertilizer, with the seeds and the fertilizers. And it's parametric, it's rainfall-based. If it doesn't rain in the two weeks, three weeks during which germination should happen, to the degree that was historically expected, there's an immediate payout. So the farmers can buy a new sack of seeds and fertilizer and replant and hope to still catch the same harvest cycle.
Tilman Ehrbeck:
And all of this is only possible, because there is mobile money that can quickly pay out a claim. There is low orbiting satellites that collect the data, that can determine whether it rained or not. There is a stack of innovation that allowed an insurance product that simply did not exist in the past.
Tilman Ehrbeck:
Now, I know it's invaluable, because you just need to talk to the farmers, right? Can I quantify the value of that relative to what there was before? Very hard.
Will Beeson:
I appreciate you expanding on all this, specifically the do good filter that you guys use, because the work you guys do is so amazing. There should be more investors like you guys, there should be more sources of capital like you guys. And so I'm interested in learning how you do it and how it works, and hopefully others listening are also.
Will Beeson:
I imagine one of the challenges that you guys run into, because you're co-investing alongside pure financial investors. If we look at the Chime example, because it's one that most listeners probably know of, I think they've raised something like a billion and a half dollars, presumably a majority of which did not come from Flourish. And I say that jokingly, because I know you can just run down the list of the amazing, huge VCs and growth funds that are involved in Chime now.
Will Beeson:
I imagine that your ownership and therefore influence from a pure shareholder perspective is relatively muted by this point. I don't know the composition of the Chime board, but I imagine that you could easily be outvoted by purely financial investors. And that could drive a company like Chime that has as you're saying between 12 and maybe 15 million customers to go down the route of, "Okay, hey, actually, there's a ripe opportunity for credit cards or payday lending," or some sort of product that doesn't align with your value set, that could be deployed against this now massive customer base, to really monetize and pay back.
Will Beeson:
Depending on the whims of the financial investors that are involved in Chime, depending on what happens, I don't know, in preparation for the next funding round, what happens to the IPO market? What happens to the economy more broadly?
Will Beeson:
I'd love to hear, in a hypothetical situation like that and leave Chime aside, but how do you deal with those sorts of situations? Maybe it's three years after you've made the initial investment.
Tilman Ehrbeck:
We are an early stage investor. And by choice, by mandate and choice, because we want to really be there at the inception. We want to help with ideas that maybe don't attract yet the more traditional sources of even venture capital.
Tilman Ehrbeck:
And as an early stage investor, we do all these things that I described to you at the outset. We are not naïve in knowing that the journey is obviously unpredictable. That's why this notion of incentive compatibility is the most important one, because that's the most durable and if you will, judgment free fact out there.
Tilman Ehrbeck:
The notion then of, is the entrepreneurial team like-minded, do they share our end state vision, those are fuzzier notions, which help matchmaking, but you can't necessarily bank on forever. We try to be rigorous at the outset when it comes to evaluating the innovation, the value that it's creating, and then the incentive alignment between business revenue model and customer wellbeing.
Tilman Ehrbeck:
And then when our investments are successful, and we do have a series of successful investments, they obviously attract later stage investors. We do get diluted and we might lose our board seats, because we have become relatively too small a shareholder, or we might have given it up voluntarily to accommodate somebody else. All these things do happen and they happen to any early stage investor.
Tilman Ehrbeck:
The one mitigating feature in this story, mitigating against what you're describing as a potential risk, which is misalignment down the road, the one key mitigating factor is that later stage investors by definition come in when something has been proven out. They actually want to scale that. They don't want any further experimentation necessarily. They are not betting on some new unproven source of monetization.
Tilman Ehrbeck:
They have an easier job. They look at something, this has proven out, and according to the metrics that we like and the benchmarks that we like and that we understand, this can be repeated 10x time over. Let's give them the growth capital to do so.
Tilman Ehrbeck:
So since we backed mission aligned teams against a fundamental idea that we believe can do good and well, we steered them as part of an early syndicate to that point of success, where they can attract later stage investors, growth investors. We certainly hope and we even typically see that there is an alignment around that proven model.
Tilman Ehrbeck:
When there is conflict earlier, then we are wrestling with that. We have decided not to pursue or follow on with investment of ours, where we felt that the journey was going in a direction that was less of interest to us. So that does happen as well. It's a more gradual thing.
Will Beeson:
Look, that totally makes sense. It's wonderful to hear you explain so simply and so clearly, the practicalities of it. Because you've clearly spent a lot of time thinking about that.
Tilman Ehrbeck:
Let me give you an example from the US, where you would not have thought necessarily that hardcore investors would come in, even at an early stage and yet they did. And they probably came in with a different lens that we had, but there was enough compatibility, if you will, to make it work. And this is an investment in an app in the US that helps food stamp recipients optimize their benefit.
Tilman Ehrbeck:
So food stamps in the US is a big program, at any point in time, 40 million Americans might be on it. It's a federal program, but administered by state. It got put on cards, the benefit itself got put on magnetic stripe cards some 30 years ago. So, food stamp recipients can go to the supermarket and swipe their card, but they don't necessarily know what their balance is. And so it might be denied, which is obviously humiliating at the cashier.
Tilman Ehrbeck:
And so the app, the company we invested in, EBT Fresh started by saying, we just scraped the information for the users and we give them their balance, and then we give them budgeting tools to stretch the benefit. And that in of itself was already valuable to the consumers, the users, because they could stretch the benefit two, three days in a month. That's two, three days over 30 days, that's a 10% efficiency improvement, if you will. That's in of itself beneficial.
Tilman Ehrbeck:
And the fact that they got the information at their fingertips, and they got the budgeting tools, made it so valuable, that they had very viral customer acquisition as a company, at very, very low cost. And the thesis from the get-go was, well, once you have a large user base, and you can go to a supermarket and say, "Hey, 20% of your customer base in your catchment area is on our app, and you could use our app to target your next discount campaign, and make it digital and targeted as opposed to on paper and widespread." We felt from the get-go that there was a business expansion potential.
Tilman Ehrbeck:
And then we felt also from the get-go, down the road, there should be an ability to layer in a debit card type offering, similar to the challenge of bank one, i.e. no fees and no minimum balance requirements, and funded if you will and paid for by the debit card interchange fee. We saw an expansion potential of this business that would help the underlying user base from the get-go.
Tilman Ehrbeck:
And so we invested through our lens. Andreessen Horowitz invested in that company, and they are a traditional VC. They would not say that they are impact oriented, but they invested alongside us from the get-go. And later, when the financial services piece got layered in, there was another New York based investor who came in.
Tilman Ehrbeck:
We all had our different reasonings and we probably had different models on how we thought about it. But there was a commonality around the conviction that if you address a real pain point, and if you create real value for the user, and if you use technology data in a way that it is scalable at relatively low cost, there is a real business to be had, that can do a lot of good and that can be commercially successful.
Will Beeson:
Makes sense. That's a great story. If we take a step back a little bit and think about where the world is today, in the US where I think both of us are based, hopefully, I don't know, we're starting to look beyond the COVID pandemic. But that's definitely not the case around the world, because different countries have different levels of access to vaccines.
Will Beeson:
We've already seen over the past 12 months in the US, this exacerbation of the wealth gap, through asset price inflation as a result of the quantitative easing style measures that were put in place to protect people in the economy, from the fallout of the pandemic. And it feels like we should expect some sort of gap to start to widen globally, or perhaps continue to widen in some cases between countries that have access to the vaccine and those that don't.
Will Beeson:
I'd be fascinated to hear, because I'm sure you think a lot more about this than I do, what your take is on the current state of the world. I guess the themes, whether they're investment themes or they're broader social or economic themes that you're thinking about over the next few years.
Tilman Ehrbeck:
Yeah, I start with the bigger picture social themes. I should immediately say that I have a point of view which I will share with you, but it's hard for me as Flourish Ventures to actually address. I will go big picture and then I go to some of the things that we are doing.
Tilman Ehrbeck:
So yes, you are absolutely right, the pandemic has hit the world in a very differentiated way. And even within countries like in the US or other advanced economies, you have the phenomenon of the K-shaped recovery, if you will. If we ever needed a reminder, from my perspective, that good government matters, that common sense and social cohesion matter, the pandemic reminded us that that is the case.
Tilman Ehrbeck:
There are big, big issues that private sector investment, market-based outcomes alone cannot address. To fight a pandemic, you need a concerted effort and you need good government. For issues even outside the pandemic, big issues such as financial security in old age, health insurance, you need solidarity mechanisms at a community or national level. Nobody, private means don't allow to address all of these issues.
Tilman Ehrbeck:
I'll even go so far as to say, in order to feed a growing planet sustainably, we need all the technology and all the productivity improvement that we can possibly get. A lot of that productivity improvement will come from tech. Tech has network externality, winner take all dimensions that have consequences.
Tilman Ehrbeck:
But I believe you have to get all the productivity gains that you can get in the first place, and you have to accept that that leads to pre-tax higher income inequality. And then you need a societal mechanism, by which you say, how do we rectify that post-tax, post-transfers by making education free, by providing a basic income for retirement so that societies don't fall apart?
Tilman Ehrbeck:
Those are big issues that I have thoughts about, where I believe private sector investments, the way we do it, cannot solve these big issues. We need collective action, societal cohesion, political will. I want to contribute those as a citizen. Hard for me to do that as a venture capitalist with purpose.
Tilman Ehrbeck:
Now, what do we do in the realm that we have control over? There's actually quite a bit. So what the pandemic clearly has done is, it has accelerated trends in our industry that we thought might take years and has compressed them into weeks or months. So, payment behaviors have changed. Shopping behaviors have changed. Entire industry structures are changing.
Tilman Ehrbeck:
We had conviction that that really creates new opportunities to provide better financial services to more people at lower cost, which is what we ultimately are seeking out, in particular in the context of what we would call embedded finance. So platforms have become more important in our lives. Platforms that help us make money, such as gig worker platforms. Platforms that deliver goods and services, like the logistics platforms. Whether we like it or not, because of the pandemic and lockdown, they have obviously become more important in all of our lives.
Tilman Ehrbeck:
They have an opportunity to embed finance, better so than the incumbent industry structure, arguably. Because they have customers, they have high engagement, they have data, proprietary data that gives information. And so you can embed a working capital credit for small businesses in the logistics platform. You can embed savings and insurance for gig economy workers in the gig economy platform that they use to optimize their earnings.
Tilman Ehrbeck:
We have accelerated, and we have made a series of investments in these type of platforms that start with a non-financial service, that makes their customers better off. But that have a natural advantage in actually providing a good chunk of the financial services on their platforms.
Tilman Ehrbeck:
We have invested in a platform that connects smallholder farmers with different outlets for agricultural produce in Indonesia. We have invested in a platform that, a social commerce platform in Bangladesh that connects small businesses with their customers. We have invested in a platform that digitizes the small cornerstones in Egypt. So across the world, in the US, we have an investment in Steady. That's a platform that helps gig economy workers optimize their earnings during a day over a certain time period. So we have made a series of investments in platforms.
Tilman Ehrbeck:
What then happens, these new platforms, which are often non-traditional, non-financial in nature, still typically need to connect to regulated balance sheets at the back end. We need a whole layer of API-based intermediation, tech intermediation. We have invested in a series of companies, again, across regions, that do that type of API-based integration between traditional and non-traditional distribution front ends and regulated balance sheets at the back end. We have invested in a company called Swap in Brazil who does it, M2P in India, Unit in the US.
Tilman Ehrbeck:
Again, I mentioned earlier challenger banks and digital credits. These were our investment themes from a few years ago. Our current investment themes are platforms that can embed finance, plug-in products that use the platform in a very specific way, typically for credit or insurance underwriting. And then plumbing, the folks who connect all that type of innovation with a traditional balance sheet.
Will Beeson:
Wow, wow. Okay. I think we have a lot of similar views about where the greatest opportunities lie in the medium term. I like the way you think, Tilman, you and your whole team at Flourish. You have some great ideas.
Tilman Ehrbeck:
Thank you.
Will Beeson:
And it's clear that they're well deployed against the universe of companies that do good. And you guys have built an amazing portfolio. How many continents are you present in?
Tilman Ehrbeck:
So we are active, continents is probably the wrong lens, because we largely do financial services, which are regulated at the national level typically, as I mentioned earlier. We need big enough markets, so that these innovations can actually get some meaningful scale and create some notion of demonstration success.
Tilman Ehrbeck:
So we are active, and this is a bit unusual because of our heritage, but we are active in the US as the one advanced economy. And then we have investments in Indonesia, Bangladesh and India, in Asia. India is our longest standing and most mature portfolio there. In Africa, we are in Kenya, Nigeria and Egypt. And then we have investments in Mexico and Brazil.
Tilman Ehrbeck:
So some 10 countries or so. 10 markets that are big enough, so that an individual investment can grow, and markets that are meaningful enough that if you stitched together a series of investments across these themes, and if you show some demonstration success across the theme, that we hope can lead to spontaneous replication by others.
Tilman Ehrbeck:
So we would love nothing better, and we actively work actually towards that, we love nothing better when an entrepreneur from Nigeria says, "We really like this innovation in India. Let's take it to our market which is structurally very similar." Obviously, we have to tweak it to fit our local behaviors and cultural norms, et cetera. But we take this kernel of an idea and we apply it to Nigeria, and we are successful. And if then the Brazilian entrepreneur picks it up, or vice versa, nothing delights us more than that.
Tilman Ehrbeck:
We bring our portfolio entrepreneurs together, or we used to bring them together physically. Now, we try to keep them connected across these themes, and they very much appreciate that. Because for the first time, often, they have somebody who's working on something very similar, who is not a competitor, because they are half the world away.
Tilman Ehrbeck:
And the camaraderie and the creativity that you can observe when you bring three, four people together, who are all incredibly smart, motivated, hardworking, and who had been a bit lonely in their home market and can now talk to peers who are working on a similar problem, to see the sparks flying out of that conversation is an absolute delight.
Will Beeson:
I love it. Love it. Tilman, well, thank you so much for taking the time to connect today. This has been an absolute pleasure.
Tilman Ehrbeck:
Okay, thank you again for having me.
Will Beeson:
All right, Tilman Ehrbeck, thank you very much for joining us today.
