Courageous Capital Stewards – Praful Shah

 

Stephanie Gripne: Welcome, my name is Dr. Steph, and this is just a conversation with what we call Courageous Capital Stewards. And I’m super excited to sit down on this beautiful Sunday and have a conversation with Praful Shah.

Praful, we have known each other, now I don’t even know when we first met.

Praful Shah: One of the early portfolio gatherings you came to.

Stephanie Gripne: It was yeah.

It was that’s where that’s the second time I met Wendy Burkhardt. I think that was probably 2015 2016. You’ve been on this impact investing journey for a long time, but just to give our listeners a brief background about you, tell us a little bit more about where you were born and what your life was like growing up.

Praful Shah: Oh well, I want to make sure I get this done in 15 minutes. So yeah, I grew up in a small village in India, finished high school there, came here for college in New York City, studied chemistry and spent my whole life as a scientist in pharmaceutical and biotech companies. I started my career at Pfizer — which I’m sure you heard of with the vaccine -— and ended my career at Gilead Sciences, which had the antiviral drug. So I feel pretty good about it. I retired in 2007 and have just been helping our startup company since then.

Stephanie Gripne: That’s an amazing life journey. Do you want to tell us about when you were a little kid what you thought your life would be like when you were four, five, six years old.

Praful Shah: Oh, my life now, has been beyond my imagination.

Where I grew up in a small village, the only interaction or the connection I had without the whole outside world was the newspaper. Because we did not have electricity or running water, I was voracious just going to the library and reading the newspapers. Fortunately, our school started about 10:30, 10:45 in the morning, so I didn’t have time in the morning to go to the library. The library was not any bigger than my dining room. We just had one table that had three newspapers and had a small cabinet with maybe 100 books or so. So there was a side — just imagine what it would be like to be out there. And I just dreamed about it, and somehow the opportunity came about to come here.

Stephanie Gripne: And tell us a little bit more about how the opportunity came about for you to go to school in New York.

Praful Shah: Unfortunately, my parents passed back when I was in high school. My mother passed away just when I was finishing up, and when I finished, I had a brother in New York City. So I wrote him a letter saying, “I’m here by myself. I don’t really have much plans to do anything. So if you can send me a ticket.” Of course, he was kind enough to not only send the ticket but let me stay with him and took care of my visa and got me started here. So thank you. And of course, as the karma has it, he passed away, and his two daughters — my nieces — have moved here to live around here.

Stephanie Gripne: Thank you. They’re extraordinary women too, which is an even a greater story. I’m reading a book by Malcolm Gladwell called David and Goliath right now, and he talks in there about near misses. I lost my parents in my 20s and text a lot about people who lost their parents at 15 or younger. And almost a little bit like we do have a near miss, sometimes a near miss can destroy somebody. And sometimes it can actually launch somebody to do extraordinary things because it gives them courage.

So, how did you go from being a scientist in pharmaceuticals? I mean that path… you can follow that logic, but how did you get to Colorado? And describe your first ever investment you made. How did you get on this track of “I’m going to be an investor”?

Praful: So I came to Colorado to work for a biotech company in Boulder. And that company did not survive. So I worked for a second other biotech company that did not survive. The third biotech company got acquired by Gilead Sciences, and I had a chance to do something different. Having my parents passed away in their 50s, I was in my 50s, and I said, “This is an opportunity for me to do something different.”

As for the investment, it was sheer accident. A couple of my friends said, “Oh, you should invest in this company which is internet but faster.” Moving company, it can do fantastic and I just knew I had to worry about money or retirement and I did not know much about it. I did not know the word “angel investing”.

So I invested in this fast Internet speed company. And it was based on the fact that we are here in Boulder, and it takes nanoseconds to create or execute the orders and Wall Street. And how can we expedite that? Turns out, within a few months, I came across this other company called Bhakti Chai, which was founded by a woman, divorced, with her two year old twins, and she had learned about making this chai from India. So I’m going to make so much money in this security internet company as well, so should I help her out. And turns out with this internet company — I lost everything. But this woman I was helping out — Bhakti Chai — she did phenomenal.

So I learned my lesson fast: that if I try to make money, I lose it. If I try to help out, I do well. So ever since then I’ve focused on helping out.

Another thing which I learned after a few more investments is the fact that I feel really bad if I was investing to make money versus if I’m investing to help out. Because if i’m helping out, it’s great. It’s essentially offered as a charity. So I’m just helping out. It doesn’t feel so bad. So I’ve probably held eighty-five or so investments now over the years in the world.

Word of mouth, basically, I don’t exactly go out soliciting any investments. All the wonderful people like you and other clubs around here send me all the wonderful deals.

Stephanie Gripne: They do. We do. I actually started a company called Lead Lemmings, and when I think of a “lead lemming” I think of you, Praful — of the person who goes in first and others that follow after them. There’s that saying “doing well by doing good”, and it seems like you’re kind of flipping that script a little bit. You’re like, “I’m going to do good and I’ll do well”.

Praful Shah: I’ve been incredibly fortunate to just run into all these wonderful companies that are amazing and, of course, I have a lot more companies founded by women. And that came up little after I had a few investments, when I noticed the big gap on how the companies were doing, what was going on, and I realized that not only are they doing amazing work and making money but, sadly, they do not get enough investment, enough help.

So there was another incentive for me to help them out. I tell all my investor friends that the main reason for investing in female funded companies is to make money. They take the least amount of money, and they return the most.

Stephanie Gripne: I love that. The women-led companies take the least amount of money for investment, and they make the most money. That’s super well said. Of your 85 companies you have Praful, what percentage do you think are women-led versus not non-women-led or impactful versus non-impactful?

Praful Shah: I will say about 85-90% are impactful. 10-15% are just friends, friends of friends. Like the very first company I was telling you about — the Wall Street security — that was not impactful. That was just a friend’s friend. A couple of other companies — one is in Australia, one is here – which are just friends’ friends. But I will say almost 85% are at least impactful. They must have impact.

Stephanie Gripne: Let’s talk about the scene in Colorado for a minute. You know we met in 2015. First let me thank you publicly for donating – which we call a -100% financial return investment into Impact Finance Center. You are one of our annual donors for three years, for I believe $5,000, a founder circle member. And I know that’s typically not the type of investment you do, so I was very grateful for your support because I remember thinking at the time it wasn’t like we could say, “We’re going to do like what they did over in Minnesota or what they did in Massachusetts or they did in California.” It was really this kind of unknown journey that we are going on. When you think about what’s happened since 2015 to 2022, a lot’s changed in Colorado. What are the things that most inspire you and the people that inspire you? Because I know for, of the 150+ investors we’ve helped activate to become impact investors, I would think a good 125 of those are based in Colorado. So what do you think about the last seven years? What’s happened, and what inspires you?

Praful Shah: Well, first of all, you are an exception to whom I actually donated the money. And just because I invest so much in startup companies, impactful companies and of course, those are impact investments, but also know that they are not much more likely to make some money. And you know, if I get my money back, I’m really happy.

So when you came along and talked about the concept, I said, “This is fantastic. That’s exactly what I’ve been looking for – something like that.” Before Impact Finance Center, there was Impact Hub in Boulder, and again, there, it was set up as a company. But it was more of a nonprofit, and their concept again was somewhat similar – just bring in the impact-oriented people. I think you have taken one step beyond not only just thinking about it but actually bringing literally hundreds of impact-oriented companies together and exposing them to people like myself. Thank you.

What has changed in the last seven years – the biggest thing is investors are actually investing in women-founded companies. I feel just fantastic. That message is finally getting better. And of course, it took so many years to show the successful outcome.

The other one is the understanding of impact. Just because they are an impact-oriented company doesn’t mean they’re going to lose money, doesn’t even mean that they’re not going to make money. In fact I was just thinking about some of the winners I had in the last few years, including the one big early last year, a company called TeamSnap. And it became the internet for sports and sports club but it really started out, when I talked to the founder David Du Pont, was to help out the divorced parents. I did not realize how complicated it is for the divorced parents to keep track of their children’s sports and games. What’s going on when one child is doing this and it was-

-at least when they started, this back in 2009, 2010, it was a pretty complicated problem. There wasn’t artificial intelligence. There weren’t many Internet-savvy folks, and he came up with a simple solution where both divorced parents can keep track of the child’s games – where it is, how it’s changing, what time they should be there. And the company moved on to do a lot more things, and they were acquired for substantially over 100 million dollars.

I’ve been very fortunate that part of the reason I can continue to do what I’m doing is that along the way there are enough winners that provide me incentive and capital to help more companies.

And some of them I don’t really waiting for the exit. Another company, about 10 years ago, was providing capital for small businesses to have solar panels. Of course, it’s a lot easier now, but back then, it was a big deal to get the capital for them to get the solar panel and to get them taken care of and they were basically intermediary time to get the funding from investors. They did really well. They’re still in business. When they were raising series B round, it was oversubscribed, and they’re doing phenomenal. So I just said, “I’d like to sell my shares so I can help out some more companies.” And they understood that this is exactly what I do. I was one of the first guys to write their checks, and this is what I wanted to do. So I got out, and with the money, I was able to help at least five or six companies from that. And I’m so thankful to that company.

Another one, which was a college kid out of CU starting some travel company. And I thought that there were enough travel internet companies that there was basically no market for it, but I liked how enthusiastic and intelligent he was. So I said I basically wrote a check thinking I’ll never hear from him, and I didn’t hear from him for a while. But all of a sudden, he calls me up and says, “this is my bank information,” because they got acquired! It was a reasonably small check – maybe $10,000 – and I made like 5, 6 times the amount of that.

Stephanie Gripne: How big do you think your portfolio would get? Do you feel like it just gets bigger and bigger and bigger, or do you think of it like, “Okay I’m gonna have like 85-100 companies, and then I’m going to wait until others are acquired and recycle it and get others”? How do you think about that?

Praful Shah: That’s an interesting question. I have not thought of it. As long as the money comes in, it just goes out. Of course as an accredited investor, I have to maintain some cash. So that stays out, and everything else just recycles. So as long as I have the wherewithal to keep track of them mentally, I should be doing it for probably another five years, maybe, if not more.

Stephanie Gripne: That’s great. So with Colorado Impact Days, it was a three year pilot, and so we used to do 70 events every 18 months. We were doing events. Impact Boulder was doing events. Social Venture Circle was doing events – which used to be Investor Circle before it merged with Social Venture Network.

Praful Shah: It’s ASPN now, but the Investor Circle name is back on again. So we are Investor Circle, as part of ASPN.

Stephanie Gripne: How important do you think it is having people doing events like that and hosting events in communities – in terms of getting the investors together, the social ventures together, what you did having Impact Hub going? I know a couple firms that even moved to Colorado because we have such an exciting impact investing scene. How important is it to have those events going on?

Praful Shah: I think it’s very, very important, and that’s why I wrote the first check at Impact Hub. I made a small donation to Impact Finance Center. As the communities grow and people meet each other, unless there is a specific place for like-minded people to get together, it doesn’t expand. It’s as simple as that. If you’ve got a baseball stadium or a basketball arena and i’m going to come back to that in a minute. Basketball arena, or something that all of a sudden people see that, somtimes we are the kids and want to go in and just play in them,

It’s the same thing with the impact-oriented places. Maybe if I had the time, money and the spunk – the spirit – to move forward, I would give people like you some kind of impact arena, where everybody in the Boulder, Denver area can learn about impact. We just go there. If Impact Finance Center had a place with an impact arena, we could bring a lot more people into it.

I think it’s awareness. I think you may have talked in the past about awareness. You need to get a lot more people aware: talk about impact or just angel investing in general. Less than 3% of accredited investors are actually doing angel investing.

So we have 97% of the people who are very well off. They don’t do angel investing in their lives and that’s one issue among the people who do angel investing. Only less than 5% actually do impact investing.

Stephanie Gripne: That makes complete sense. I don’t know how many accredited investors there are in Colorado. If you look at how many millionaires there are, it says we have, I believe, 158,000 millionaires. Imagine if we had 1% of our wealth in Colorado to invest in Colorado, it would be $5 billion.

Praful Shah: Definitely. And it would just be helping out. We have enough capital to help out all the people who need money.

Stephanie Gripne: I didn’t realize this at the time. Like you, I was a scientist who tried to solve a problem, and that’s where I saw the problem that there are a lot of great things to invest in but there aren’t enough investors. And so our focus was on how we grow more investors and then how we convene and bring them together in a marketplace. And so, for people who are familiar with accelerators, we would say we’re an investor accelerator. If Techstars is an accelerator that identifies, educates, and invests in entrepreneurs, Impact Finance Center identifies, educates, and activates individuals and organizations to become impact investors and then co-invest with people like you, Praful. I think that the last two years I’ve been really fortunate. Randy Welsch led a social enterprise with his son called Jibu. And at one point when he was transitioning from an active leadership role with Jibu, I said that Randy should come and run Impact Finance Center or join the team, and he ended up talking me the other direction to be in a peer group called Vistage, which is a group of CEOs. And so I’m in a group with sixteen other CEOs. And this week they’re actually going to announce I was selected as the top CEO for our business group, and then I looked at it as the top CEO for the state of Colorado for 1-3 years. So I’ll be announcing that award coming up this week. And what I love about this message is I feel like it makes being a CEO a team sport, so there’s now 16 other CEOs that I help out, and they help out me. It’s really helped me learn how to become the CEO. And there, one of my colleagues and friends is another CEO, Jessica Daniels. One of the social enterprises she’s launching is called Success Collective, and this is essentially a Vistage for solo entrepreneurs. So I think of my amazing massage therapist, Allie; or Josie, the amazing esthetician who cuts my hair. And they’re just going through the same journey to become CEOs of their small businesses and grow, and I think the importance of having peer CEOs to learn from is just so important at whatever stage you’re at. From that perspective I’m super grateful for having the system that we do. We’re really fortunate in Colorado to have so many impactful people doing so many impactful things. The other thing that’s great about Colorado is, if somebody wants to set up a meeting with you, it’s possible. Like imagine if we were in New York City or San Francisco.

Praful Shah: Yeah, and there’s nothing like meeting people in person. And my days typically are fun, booked with the startup CEOs and making connections. I typically see or hear pitches from at least a hundred companies per year, if not more, so I can’t invest in all of those companies. But at least I talk to them and ask the questions that will be asked again, again, and again and help them provide some answers.

Stephanie Gripne: Good Praful, as we’re kind of closing down this interview – this first of many interviews – what advice do you have for people that lead with their heart, that have some resources – whether they’ve inherited them, they’ve earned them over their career, or they sold a company – and they’re just dipping their toe into this impact investing? What’s your advice for them as they’re getting going on the journey?

Praful Shah: First and foremost philosophy to keep in mind is that, when you die, you’re going to leave everything behind. That’s a tough, tough fact that we must keep in mind, so why don’t we just do something good with it? If they’ve already decided they’re going to do something good with it, then they’re already there. And then it’s just a matter of convincing them to do impact investing. So awareness is the biggest factor. Then the next thing is to get education. I’m always available for anybody who wants to do it. Going back to your earlier question about having the gathering for impact investors – it’s very helpful, especially when you’re starting out. Because, once you make an investment, typically it’s going to take at least 5 – more like 8-10 – years before you see the returns, and you don’t really have time to learn all the lessons. So one would be wise to get in touch with people like myself who have made all the mistakes. We don’t have to make the same mistakes.

Stephanie Gripne: So well said. And you are so accessible. And that’s what’s great about Colorado – you’re only one or two meetings away from the governor. And people are still really available and willing to help out and help connect people, help people through the time, their treasure, and their talent pool. Thank you for spending this time with me. Thank you for all that you do. Having you in my life has been a great joy. You know I I haven’t thanked people like you enough. You know Impact Finance Center is on track to grow triple digit growth this year ourselves and have potentially three sources of annual recurring revenue, and we’ll be announcing that we’re also going to launch another for-profit company, which is the first independent trust company in the world. And our working title on that is called Trustworthy. So it’s an independent trust company focused on impact investing. So Impact Finance Center will be under the Trustworthy Foundation as a social enterprise. We’re super excited about taking the good work we’ve done in Colorado and going on to expand that. We’re doing a huge project nationally with climate and forests. We’re doing a ton of work in Massachusetts, in New England, and also in California. And of course our work with our Native communities with Oweesta Corporation, so when I think about what you do – you plant so many seeds and so many seeds. And you get to watch as these seeds grow into incredible social enterprises and have impactful things that helped so many people, so thank you for everything you’ve done.

Praful Shah: Thank you.

Stephanie Gripne: Thank you. Good night.