The Good Spice

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It is with great pleasure that we can announce that FARE Capital has invested in The Good Spice.

The investment was pursued in conjunction with inventory finance provided by Invest International.

So far, the spice trade has been somewhat of an uncharted territory, in particular as far as sustainability is concerned. Lengthy, opaque supply chains and razor thin margins for local farmers are typical for this type of trade. As a result, many farmers turn to the use of pesticides and monoculture, in order to create sufficient volume and try to make ends meet on the short-term.

Subsequently, many spices are spending 2 years or more at sea or in storage, before making it to our kitchens. Given all the industrial treatment involved to extend that shelve life, you can imagine what this process does for the quality, the flavour.

Iona Mulder envisioned a need for chance and founded The Good Spice.

The Good Spice goes out there, sources the most flavourful and responsibly grown spices. The Good Spice engages directly with farmers, paying a fair price, thereby effectively eliminating the middlemen, saving time, preserving quality and flavour.

FARE Capital and The Good Spice have joined hands in developing a roadmap for setting specific impact goals and embedding this roadmap in the terms and conditions for the duration of the investment. As a result, the interests of both the investor and corporate are aligned and both are committed to stay the course as far as sustainability is concerned. If you are interested in learning more about this process, please let us know.

Matthijs Snijder (FARE Capital): “At FARE Capital we are looking for small, inspiring, yet sustainable businesses. When it comes to food-related investments, it is not just about the end product, we try to take the entire supply chain into consideration. Iona Mulder, Claudia Brown and Charis Heising make an excellent team. That, in combination with an honest (and flavourful) product and tremendous dedication, makes for a very relevant, yet appealing investment.”

Iona (Founder TGS): “It’s been two years since I first met with Matthijs and FARE Capital. This was in a very early stage of The Good Spice, however they saw the potential of it and my determination to make it happen. It was soon decided that FARE Capital would sponsor my trip to Hungary in search of the best paprika powder. This early confidence has been a huge help in building The Good Spice, which is why I’m so happy we’re taking the next step in our partnership!”

WHISPP – Company visit

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Yesterday, Whispp and FARE Capital were happy to welcome InnovationQuarter and ROM InWest at PLNT Leiden for a company visit to the Assistive Tech startup.

A wonderful opportunity for Joris Castermans to explain the vision and technology designed to (literally) give a voice to people that are suffering from speech disorders.

There was also an opportunity to try the technology out, through the whisper-to-speech set-up, as used for demonstrations during CES 2023 in Las Vegas in January.

Thanks for listening…..and whispering!

My Life Technologies – Company visit

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Thursday December 1st 2022, MyLife Technologies and FARE Capital were happy to welcome PGGM Investments, Stichting Pensioenfonds ING and ROM InWest at Leiden Bio Science Park for a company visit to the health tech startup.

A great opportunity to demonstrate the importance of investing in innovative SMEs that are capable of dramatically improving access to healthcare at a global scale.

It was a pleasure having these investors with us yesterday.

FARE Capital invests in Whispp – AI Speech Technology

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Whispp closes investment to complete the development of AI technology to empower millions who suffer from speech disorders

Leiden, 21 March 2022

Libertatis Ergo Holding B.V., FARE Capital and TomTom co-founder Pieter Geelen invest €450k in Leiden based startup Whispp. Whispp also receives the Rabobank Innovation Loan of €150k.

Leiden based startup Whispp develops AI speech technology to empower millions of people who suffer from a voice disorder or stutter severely. One thing these people have in common is that they are able to whisper in a clear and relaxed way. Whispp is the only speech technology in the world that converts whispered speech into the person’s natural voice, wíth the intonation and emotion you intended, in real time.

The investment will be used for further development of the AI speech technology and for market introduction of the mobile and desktop application. With the mobile app phone and video calls can be made and for live conversations it works like a voice amplifier. The desktop application can be used in combination with your preferred video conferencing platform.

Whispp founder Joris Castermans: “We are excited to bring the first Whispp product to the market with this investment. Being located at PLNT, the Leiden Centre for Innovation and Entrepreneurship has been a key factor for attracting these investments.”

Rob Mayfield (Libertatis Ergo Holding B.V): “LEH is excited to support the Whispp team in the development of this AI technology, which may be truly life changing for those with serious speech disorders”

Matthijs Snijder (FARE Capital): “We are very excited about the potential of Whispp. We believe that the development and application of its unique AI speech technology is genuinely capable of making a difference by offering (social) inclusion for people that are coping with some form of speech impairment.”

Rogier Gardien (Rabobank): The Rabobank Startup & Scale-up team is happy to grant the Rabobank Innovation Loan to the impactful innovation of Whispp which will make a huge difference in the lives of speech impaired people worldwide!”

For more information about Whispp go to: www.whispp.com

About Libertatis Ergo Holding (LEH)

Libertatis Ergo Holding (LEH) is an independent subsidiary of Leiden University, which invests in science based startup companies associated with the activities of Leiden University and supports entrepreneurs.

www.libertatisergo.com

About FARE Capital

With the world facing these tremendous societal challenges around healthcare and food, FARE Capital commits to enterprises that are capable of making a difference in these sectors. We are looking for enterprises that embrace technology and innovation and rise up to the challenge. It is not about having an appealing idea. It is about investing in next generation technology and solutions that can be implemented on a large scale and can alter our way of life.

www.farecapital.nl

About Rabobank Innovation Loan

We are happy to help with the financing of innovations. Especially if there are no proven results, cash flow or paying customers yet. Are you working on developments that contribute to digitization or making society more sustainable? Or is your company focused on developments in the field of vitality? Request the brochure and share your plan with us.

https://www.rabobank.nl/bedrijven/zakelijk-financieren/financieringen/rabo-innovatielening

About PLNT

PLNT encourages startups to emerge and makes them grow. We stimulate, facilitate and support talent to become innovative entrepreneurs. We bring together the worlds of innovation and entrepreneurship, literally as well as figuratively.

www.plnt.nl

Sensoterra joining Inmarsat network

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It is with great pleasure that we can announce that FARE Capital has invested in Sensoterra, the international producer of wireless soil moisture sensors!

Extremely rugged, easy to install, with solid connectivity and a tremendous battery life, these sensors are a truly unique and vital tool in climate change adaptation.

Sensoterra sensors come in a variety of sizes (single depth, multi depth) and are the devices of choice for enabling water management solutions, platforms for agriculture & horticulture, land & drought management and smart resilient cities.

Also see the earlier announcement, about Sensoterra joining the Inmarsat programme:

Sensoterra joining Inmarsat network

If you wish to learn more, please contact Sensoterra International at rene.voogt@sensoterra.com

The investment is an excellent fit for FARE Capital, with its focus on innovative enterprises that are capable of making a positive impact.

Jumping to conclusions

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Use restraint when applying the limited amount of company data out there to draw conclusions about Dutch corporate health.

Today’s front page article in the FD contains some conclusions that are quite remarkable to say the least.

Bankruptcy as a panacea?

The article starts out with the bold statement that bankruptcies would actually benefit the economy by freeing up human resources that would otherwise not be available to other companies. That is a peculiar assumption as it would seem to suggest that a company that goes bankrupt could not have been adding value to the state of the economy, neglecting to address the actual cause of a bankruptcy in the process.

The article continues by stating that the number of bankruptcies currently is still at a historical low, furthermore adding that this number is not expected to go up substantially in the short term. COVID related government support is referenced as the cause, the aid having had a positive effect on companies’ health. As an indicator for enterprise health the article furthermore refers to the fact that risk ratings (measure for the risk of bankruptcy) in general actually seem to have improved.

This conclusion feels somewhat awkward.

First, what is being suggested? Are bankruptcies actually a blessing in disguise for labor mobility or not? Or is the implicit message that the number of bankruptcies is artificially low due to government support and therefore any aid is to be ceased in order for companies to die from a “natural” cause?

Lack of (reliable) company data

Secondly, the reliance on the improved risk ratings in determining the health of companies begs the question, what information are these risk ratings actually based upon? Reliable company data is scarce and has been for some time. Particularly in relation to small enterprises (the vast majority of SMEs in The Netherlands), data is often outdated, lacking detail and has not been audited. Hence, particular caution is required when interpreting ratings that use such a limited data source as input. In other words, a risk rating in itself is not exactly the sharpest tool in the shed when it comes to determining corporate health.

As mentioned before, this is not a new phenomena. A call to action has been instigated on several instances. Earlier this year a recommendation was made to the Dutch Ministry of Economics and Climate (EZK) for setting up a SME credit register, in order to develop the granularity and the quality of company data, serving to improve the reliability of the risk ratings as a result. Lawmakers would do well to pick up this gauntlet if serious about improving conditions for SME finance in The Netherlands.

Funding gap

SME finance capability (or lack thereof) is actually one of the most relevant and worrying indicators in predicting future bankruptcies or voluntary closures.

The problem is that due to the retreat of traditional credit providers, ever since the last crisis, SMEs have not been presented with alternatives that can meet their demand for growth capital. Solid enterprises have been capable of staying afloat during the last crisis and the pandemic, however with flat or ever decreasing financial margins.

Without a genuine effort to shore up finance capacity for SMEs, to bridge the gap that is currently out there, the number of bankruptcies can indeed be expected to rise over time. Hopefully there will be plenty of enterprises left to employ all available staff.

The article would be correct in stating that due to a combination of corporate resilience and government support, companies in general are more or less in the same position as before the pandemic. However, that was really not such a good starting point to begin with.

Too many hats

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Banks can play a vital role in post-pandemic recovery……in their capacity as creditors.

An article in today’s FD caught my attention: “Banken willen belang nemen in worstelende bedrijven” (Banks are looking to  invest in equity of companies that are struggling).

In short, banks are in talks with the Ministry of Finance and Economic Affairs and are contemplating the establishment of a “recovery fund” that is capable of boosting SME solvency. Moreover institutional, governmental as well as retail resources are being considered to join the effort.

The term “recovery fund” sounds very promising indeed, a much needed helping hand in these incredibly challenging times for entrepreneurs.

However, what is surprising is that this fund would a) solely cater for equity investment, b) focus on larger SMEs and c) select only those enterprises that have a bright future ahead, once the pandemic has subsided.

Although there is nothing wrong with depicting viable businesses, the approach by the banks raises a couple of serious questions.

A number of things to unpack here:

Conflicting roles

The most important aspect is the potential for a conflict of interest. The role of a creditor differs vastly from that of a shareholder, in terms of control, governance, risk & reward and accountability, to name but a few items. A single person or organisation is hardly capable of managing both roles, switching hats continuously in the process. Even having these assets managed at arms length is a considerable challenge for any bank. Trying to manage both roles nonetheless carries the risk of an opportunistic approach (not to be confused with opportunity risk). Potential investors should be very much aware of this. After all, equity investors, shareholders, commonly take the first hit if things turn out differently than expected. For instance, when viable businesses turn out not to be so viable after all.

Viable business – in or out?

In the article, risk assessment is being praised (by the banks) as being one of the virtues of bank involvement. The message, banks are perfectly capable of selecting viable businesses to invest in. That raises a couple of questions as well.

First, if banks are indeed eminently suitable for picking the winners, wouldn’t they have done so already? After all, why would there be a need for a selection, if the risk assessment has been right so far?

Secondly, how does one select viable business cases? A recent publication by the IMF that also explored the possibilities of solvency support, explicitly mentioned the challenge of making a meaningful selection, stating that banks and investors would have difficulty in identifying “viable firms under high uncertainty”.  It would be interesting to learn how the initiating banks have resolved this challenge and what eligibility criteria they will be looking to apply.

Sizing up

The intention is to focus on larger enterprises, given the importance of their contribution to employment. That is admirable. However, the majority of enterprises does not fall into this category. The question is, if employment is such an important consideration, then why are smaller enterprises not being considered?

Banking on “capacity”

A genuine effort for recovery is worthy of praise. More importantly, banks can play a tremendously vital role in such an effort, in their capacity as  creditors. This can be achieved by means of debt relief, debt restructuring and business support in the short term. Going forward, banks should be working alongside institutional investment in developing risk assessments and providing SMEs (small and large) access to finance.  This will help develop a healthy, innovative and diverse entrepreneurial landscape, that can make a sustainable contribution to employment.

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Joining the team

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