As part of our 10th Year Anniversary, our Trailblazers in Impact Interview Series celebrates some of the partners we’ve worked with over the years in creating positive social and environmental impact. In this edition, we speak with Founder and CEO of BWiz Capital, Takeshi Kato, who has been an Impact Partners investor since 2016.
BWiz Capital has since invested in high-impact enterprises through Impact Partners—namely Krakakoa, a woman-led bean-to-bar chocolate-maker in Indonesia and ERC Eye Care, an enterprise that delivers affordable and inclusive eye care to low-income persons in India.
In 2016, Takeshi Kato started BWiz Capital, an impact investing company based in Tokyo, which targets funding for impact enterprises that are innovating solutions to eradicate poverty and impacting underserved communities and is utilizing his experience, as an institutional investor and familiarity with emerging market, to make a case for impact investing in Japan.
Prior to BWiz Capital, Kato was Managing Director at Japan Industrial Partners, a private equity firm specializing in corporate buyouts. He was also CEO and Head of Investment Banking and Mergers & Acquisitions Advisory at Mizuho Securities India in Mumbai, along in corporate finance and asset management businesses in Tokyo and New York.
- Tell us about Bwiz Capital and why you started investing in impact enterprises.
Awhile back, I spent 5 years in Mumbai advising large corporations on Mergers & Acquisitions. My years in India gave me the inspiration to start something new, particularly after meeting young entrepreneurs who want to solve social and environmental issues. At first, I thought these [social impact] projects were meant only for the World Bank and NGOs—I did not think they had a place in the commercial world. I later discovered the impact investing space, which lies between the development and commercial work.
- What do you look for when deciding to invest in an impact enterprise? What are your key growth metrics?
Because we support impact enterprises at the seed stage, key metrics are somewhat difficult to come by. Right now, we at BWiz Capital believe that focusing on market mechanisms is important. We generally look at smaller enterprises who are still developing their projects. Larger enterprises that are more established can more easily tap into a network of investors. We want to focus on where the need is.
- What convinced you to invest in Impact Partners enterprises Krakakoa and ERC Eye Care?
I worked closely with IIX’s Impact Partners team and their crowdfunding platform, who introduced me to many opportunities. As a result, BWiz made two investments—Krakakoa (Indonesia) and ERC Eye Care (India). At the time, Krakakoa’s main product—chocolate—was in good shape. They had already achieved good sales. Although it may take some time for them to really scale, I am confident that they have a solid product, with a charismatic leader in charge. For ERC Eye Care, I had developed a very good relationship with the Founder, who I found to be very knowledgeable about the space and a great communicator. Overall, I am happy with the investments BWiz has made into these three enterprises.
- What is your investment thesis and which sectors/markets are you looking at closely?
BWiz Capital is a way for me to be able to experience how the impact investing space works. BWiz focuses on seeding impactful startups, particularly young social entrepreneurs who are applying market mechanisms to solve social and environmental issues in developing countries. I primarily look at early-stage Asia-based startups, specifically with operations in India or South- and Southeast Asia. Our strongest focus is on enterprises that are fighting poverty [and we have invested so far in education, healthcare, waste, agriculture and fintech], but we are always open to explore new sectors and to diversify in the future.
- What does your post-investment strategy entail?
One issue we face in the post-investment phase is the lack of a local presence, being based in Tokyo. Although we frequently jump on calls with our enterprises, we have come to understand through experience that early-stage companies, such as those in India, simply need hands-on guidance and input throughout every stage of the process. Personally, I rely heavily on [a co-investment strategy alongside] local investors who have the experience in the specific geography and market. To effectively guide impact enterprises, the first requirement is individuals with adequate experience in finance; this is because in general, these types of companies want advice from venture capital investors and want insights into how companies in Silicon Valley function. Later, once the enterprise has achieved a certain scale and capacity, I would then bring them towards developed markets for further growth.
- What would you advise new investors in navigating impact investing?
My advice is this: while most impact investors in the space are interested in creating impact in developing countries, they should also look into the impact enterprises that are in developed countries, as they are also models to learn from.
- What would you advise impact enterprises when they are raising capital?
Impact enterprises should focus on achieving their promised milestones to investors. Similar to receiving an investment from a regular VC, it is important to perform well enough to successfully raise a follow-on investment from existing investors [and continue to build investor confidence]. Aside from this, when early-stage companies share their 3-year projections, they should also achieve at least 70% of these projections. As a general guideline, it is more beneficial for impact enterprises to be more realistic and conservative about their projections, rather than not being able to achieve them at all.
- What was it like working with IIX?
I would say that IIX is one of the most reliable partners in the region for investors who are searching for a pipeline of impact enterprises. IIX has truly helped me to have a region-wide view of the impact investing landscape. I also have a strong admiration for [IIX Founder and CEO] Durreen Shahnaz. I think we need more people like her to pave the way in creating innovations and opportunities for the underserved.
Takeshi Kato is the Founder and CEO of BWiz Capital.
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