Risk, Return, Purpose
An article by Jean-Marc Legrand
Advisory Board goal and composition
A core value of TheClubDeal is having a good governance process. It is useful to seek the advice of other experts in the field of strategic action and development of any company.
The Advisory Board of TheClubDeal is composed of the Board of Directors, the Executive Team and the Advisors:
- Mr Marc Speeckaert, amongst other top executive functions, former General Manager at Sofina, a listed private equity firm,
- Mr Freddy Bouckaert, himself Chairman of several private equity firms, and a long standing top executive of the banking industry,
- Ms Joëlle Pacteau, Directeur at Lombard Odier Group (Geneva), Market Head and Membre Comité Executif LOESA, new Advisory Board Member.
The below mission is an extract of the Advisory Board session facilitated and moderated by Ms Kate Antrobus, Global Health & Finance Lead at Univercells, a Life Science company supported by TheClubDeal since 2017. Kate is an experienced executive having structured several international impact investment funds with different purposes.
Transcription of the Advisory Board on the TheClubDeal Fund II’s mission
The goal of the Advisory Board of TheClubDeal was to debate and identify the most sensible and effective purpose & DNA for a discretionary fund to be launched: TheClubDeal Fund II, inception & co-investment fund.
TheClubDeal Fund I track record and achievements
Strong of 4 years of financial activity, including joined direct investment in 9 companies, and an IRR of 19.6%, as an investment club (TheClubDeal Fund I), the Board of Directors has decided to launch a new fund so to accelerate structuration time and further improve sourcing opportunities. Beyond the satisfactory financial results, the Board expresses its satisfaction to have contributed to the creation and maintenance of a local competitive eco-system, as also demonstrated by the ca. 2000 jobs existing in those companies.
TheClubDeal Fund II (the “Fund”)
The Advisory Board debated on the present challenges for the economy, and which added value(s) a new private equity fund should have in order to address them.
- The Fund needs to permanently seek an alignment of interest among all stakeholders: entrepreneurs, investors, managers of the fund and all other stakeholders, i.e.:
- The employees
- The suppliers
- The external community
- In particular, in a post-covid period, where more proof has been given that overglobalization may not be sustainable, the Fund shall maintain a balancing act between UN SDG’s and the need for local competitiveness
- The Fund shall seek to support with growth capital (as opposed to working capital) entrepreneurs who have demonstrated resilience and traction, and are willing to further expand, nationally and internationally (the “daring factor”)
- By providing growth capital, the Fund shall focus on scale-ups meeting some financial and governance parameters which may, indicatively and not exclusively,be defined as follows
- Turnover < €30MM
- Proven competitiveness addressing a growing market
- Track record and complete implication of the entrepreneurs (the “skin in the game”)
- The Fund shall demonstrate its success by delivering a competitive IRR higher than 12%, over a period of 8 years, and with a KPI of high value job creation in those companies supported by the Fund
- The Fund, as supported by an executive team and investment committee with established networks, shall foster bridges and synergies between companies active in three regions that have a strong network of SME’s and dynamic investors: Brussels, Flanders, Hauts de France, Wallonia
- The Fund shall focus on competitive sectors and sub sectors where the fund has experience and conviction:
- Smart Living: technologies and business models, also backed by real estate, that contribute to wellness and eco sustainability.
- Life Science: technologies and business models that contribute to improving global health
- Other sectors: on an opportunistic basis, companies that contribute to higher standards of living
- The Fund managers shall act as “entrepreneurs for entrepreneurs”, actively contributing to the engineering and monitoring of the strategy of the companies they invest into
Transparency and professional reporting: the Fund shall report dutifully and transparently to all stakeholders, in the limit of their interest perimeter, all relevant information for a permanent level of fair and useful information.
The Governance Charter
The purpose of the fund’s charter is to define the moral commitments that govern the relations between the fund, its investors, the project holders (creators, managers, or buyers of companies), TheClubDeal and all of its other stakeholders.
The chart must be known by any stakeholders, no matters his title (individual, corporate, etc), and by any candidate willing to invest or entering into the society TheClubDeal.
1. Loyalty, Respect of our image and the one of the investors, respect of contractors
Each stakeholder commits to behave with professionalism, diligence and loyalty, both towards other stakeholders, partner companies and associations, and towards entrepreneurs, portfolio companies and their shareholders, co-investors and other investment companies and funds. This must be done regardless of the circumstances.
Each stakeholder commits to behave with the constant concern not to do anything that could compromise the image of the company, its stakeholders and investors in general. Within the framework of an optimized and healthy governance, each stakeholder undertakes to respect the legitimacy of the CEO, and to be concerned about the general interest of the company.
Each stakeholder commits to respect the utmost confidentiality concerning the information collected within TheClubDeal, particularly concerning the projects presented and analyzed, and especially when the disclosure of such information could harm, in terms of competition or reputation, the company itself, a project leader or its project, or another investor.
In particular in the context of a search by the stakeholders for additional financing with other investors outside the network, the stakeholders must not communicate any confidential information without the prior written consent of the entrepreneur. Stakeholders shall not use privileged information obtained within TheClubDeal for personal purposes.
These obligations must be respected by the investors for a period of 2 years after their possible departure from the company or after they have become aware of information communicated by TheClubDeal, departure voluntary or pronounced by the Board.
3. Independence, transparency, volunteering
Investors must be able to carry out their activity autonomously, in complete independence and in compliance with the principle of separation between this activity and their usual professional activity. This applies in particular to stakeholders working in the sectors of consultancy and support to entrepreneurs, who will make sure to declare their activity when becoming a stakeholder of the network or TheClubDeal fund.
They will show reserve regarding the activities they carry out, with the exception of the executive stakeholders who have signed a specific partnership with TheClubDeal. Furthermore, the participation of stakeholders in the work of TheClubDeal is purely voluntary and does not entitle them to any kind of remuneration (except in cases explicitly specified by the Remuneration Committee).
4. Conflicts of Interest
All stakeholder commit to inform TheClubDeal of any risk of conflict of interest that may arise between their private or professional activities and their participation in the endeavors of the company.
- In general, all investors (except for executive stakeholders who have signed an agreement with TheClubDeal) must abstain, under penalty of exclusion, from prospecting and selling, for their own account or for the company for which they work, services to project owners whose projects are currently being studied by TheClubDeal (selection process), are in the process of being negotiated by stakeholder investors (due diligence) or have received funding from stakeholders.
Unless the Remuneration Committee gives its opinion, network stakeholders cannot charge for services such as the preparation of a business plan, a project presentation or advice to project leaders.
- In the case of a project that has been financed by TheClubDeal stakeholders, an investor may exceptionally sell a service to the company following a need expressed by the entrepreneur.
TheClubDeal must be systematically informed of this approach.
5. Special cases concerning the selection of projects
- Project brought by a stakeholder with no commercial link with the company seeking funds: In order to preserve the objectivity of the selection process, a stakeholder who proposes a project for selection will not participate in the selection process.
- Project submitted by a stakeholder with a commercial relationship with the company seeking funds: In order to preserve the objectivity of the selection process, the examination of a project submitted by a stakeholder with a commercial relationship with the company seeking funds, in particular if the commercial activity is related to fundraising, can only be exceptional and the project’s inclusion in the selection process will be systematically submitted to the Board of Directors for approval. In the case of a positive opinion, the stakeholder with a commercial link to the company will not participate in the selection process.
- Competing projects: TheClubDeal keeps at the disposal of the project leaders, as soon as they enter the selection process, the list of companies that have received funding from TheClubDeal stakeholders so that they can identify a possible competitive situation. Similarly, TheClubDeal undertakes to inform them of the existence of a potentially competing company among the files under study. The entrepreneur can thus decide whether or not to keep his project in the process. In the case of competing companies, the stakeholders who have financed or studied a competing company do not examine the new file. A stakeholder investor can take a financial interest in a company in direct competition with another company that he has already financed, in condition that he has previously informed the two companies involved.
6. Relations between TheClubDeal, the project leaders, the Investors
TheClubDeal fund’s intervention aims to finance the project and to facilitate the relationship between project leaders and investors. The relationship between the stakeholders, TheClubDeal and the project leaders is “intuitu personae” and based on mutual trust and respect. They are mutually committed to the transparency of their intentions.
TheClubDeal fund does not guarantee the authenticity and relevance of the information provided by the project owners or its stakeholders. TheClubDeal investors, making investments on their own behalf, remain only responsible for their desire to invest, regardless of the work on the projects presented carried out by TheClubDeal stakeholders.
They assume their risk taking and commit themselves after having reviewed all the information they deem necessary. They explicitly renounce any action aimed at involving the liability of TheClubDeal or one of its volunteering or salaried stakeholders.
7. Commitment of information
As soon as an investment agreement is formalized, the partner commits to inform TheClubDeal within two weeks and to provide TheClubDeal with the information requested concerning its investment (including the amount of its investment, the date, etc.), He/She needs to specify the elements that must remain confidential.
8. Compliance with regulations, and no money-laundering
Stakeholders must comply at all times with the regulations applicable to their activity as investors. In particular, like any responsible investor, he must never invest in the capital of the companies he accompanies with money coming from questionable sources or illegal activities.
9. Board Election
The Board members of TheClubDeal commit to comply with the Charter of Board Members of the Belgian Institute of Board Members, which they sign on the date they join the Board of Directors.