Managing Parter Emilio Ayanz for Corporate Magazine

Emilio Ayanz - Managing Partner at Creas

Original article by Bárbara Fernández for Corporate

 

 

Creas is one of the first impact fund managers in Spain, with more than ten years supporting projects that seek to provide transformative solutions to improve society in areas such as education, health, and the environment. To date, they have raised two investment vehicles and manage over thirty million euros, having invested in more than twenty companies. Now, Creas is preparing the launch of a new fund to continue growing and supporting transformative companies. We spoke with Emilio Ayanz, one of its partners, to tell us more in detail about Creas and about his vision of impact investment as one of the best tools to build a meaningful world.

 

 

Forty-five tons of CO2 avoided in the atmosphere, ten thousand students trained with an 80 percent employability rate, one hundred families at risk of exclusion employed, three thousand elderly with improved home care... Has Creas's mission been fulfilled? 

 

 

I would like point out that we are currently fulfilling it and that we still have a long way to go. Creas was born a decade ago to propose a different way of investing based on a very clear vision of the role and ability of capital and companies to generate transformative changes in society and the real economy. Our mission is to contribute our grain of sand to build a meaningful world, that is, a more fair, responsible world that puts people and our environment at the center. And to demonstrate with facts that the best way to do it is through investment, and that this way of investing scales and creates value.

We know that the task is big, that many hands are needed and that the more of us working in the same direction, the better for society. Therefore, from our beginnings, we were and still are active protagonists in the development and consolidation of the Spanish ecosystem and increasingly also in the European one.

Today, after ten years of existence, we are finishing the investment period of our current fund, Creas Impacto FESE, of thirty million. We have just closed an investment in the field of circular fashion, which is the second most polluting industry on the planet, and we are working on other transactions in areas such as sustainable agriculture.

 

We believe that impact investment is a path, and we have a great opportunity ahead to continue advancing and going deeper into the issues we already know and boosting growing companies with the highest transformative potential in Spain and the European Union.

 

How did Creas come about?

 

Creas was born in Zaragoza, at the hands of Luis Berruete, Javier Armentia, and Sergio Sanz, at a time when nobody in Spain was talking about social entrepreneurship. In 2012 the first pilot vehicle was launched and in 2017 they began to raise the first institutional fund of thirty million when the world of impact investment in Spain was beginning to wake up. At that time most of the questions we were asked revolved around dealflow, if there was capacity to invest so much money in impact companies.

 

What is your goal next year?

 

 

As we said before, there is still a long way to go. The challenges to be solved and the investment opportunities continue to be very large. We want to consolidate ourselves as the partner that accompanies the best impact companies in Spain on their growth path between early stages and more mature stages. Filling a market gap that we believe is generally not well served. For all this, we are finalizing the process of establishing a management company and we are already working on the launch of a new impact fund that we hope will at least double the size of the previous fund.

With this fund, which we hope will be operational by mid-year, we aim to boost companies that propose transformative solutions to challenges such as school dropouts, structural unemployment, elderly care, circular economy, and regenerative agriculture.

 

¿ How would you define yourselves, in what are you pioneers and what is your differentiating aspect?

 

We often say that we are simply people who work with people, for people. There's a widely shared idea amongst the team that we work to serve a greater purpose, to serve our portfolio companies, their beneficiaries and our investors. And that this can be achieved with rigor, professionalism, and good returns.

We were pioneers because we were fortunate or crazy enough to get started very early, when impact investing was a newly coined term. Driven by rebellious idealism and perhaps some recklessness, we moved forward. We launched one of the first impact vehicles in 2012, the first Spanish Social Entrepreneurship Fund (FESE) in 2018, we became the first B Corp fund in 2020, we've completed the first exits in the sector...

Another aspect that characterizes us is that we  go one step further, betting on innovation (which is not only technological) to generate changes. We invested in the first car-sharing in Spain, we launched the first last-mile logistics company with a majority of the workforce with disabilities, and more recently we are transforming home healthcare at a B2B level, or scaling a circular economy model in the textile field for large distribution and base of the pyramid.

 

We don't know what the future holds, especially in this time of great uncertainty, but we do know what we believe in, who we want to be and how we like to do things. From here, I think our main differentiation is our team, our thesis, and our way of originating and creating value, always from the impact perspective.

 

You work in three main areas: empower, care, and regenerate. Has the focus on these topics increased significantly after the pandemic? How do you see society today?

 

We believe that the pandemic has accelerated the transition towards a more digital and more sustainable economic model. It has also made us more aware of our human condition, it has "humanized" us. We live in an increasingly digital (connected), complex, and uncertain environment, and we have two major global challenges such as inequality and climate change that make the next decade a crucial period for humanity. So we have great challenges and great opportunities ahead. Private capital has an essential role in designing the world we want to build and, as managers, our mission is to channel capital, experience, and talent towards the companies with the most potential to change things profitably.

We look for companies that improve people's quality of life through care, food, and accessible quality health and social care; empower people through education and training so that they can have decent job opportunities and that have regenerative models of production, consumption, and mobility.

Many of these themes are clearly trends and it is normal that they are the focus of many investors, not just impact investors. That said, we are not a "return first" fund and, from a portfolio perspective, we seek to reach where others do not.

 

What are you most proud of and what do you have left to do?

 

Of the people who make up Creas. First of all, our team, which is our best investment, but also the people who advise us, promote us and help us grow and be better every day. And here, of course, I include our investors.

 When we launched Creas Desarrolla (our first vehicle)  to prove that impact investment was possible and profitable. We achieved returns above ten percent with our first exits, but for us however, it was equally or more important, for example, that more than a hundred people with intellectual disabilities had a job and improved their quality of life thanks to Koiki.

 

With Creas Impacto we have wanted to show that there is deal flow and that impact investment can be scaled and that we can systematize our way of measuring and managing impact. Qida, which is dedicated to home health and social care, has multiplied its sales by more than 4x since we invested and today, every day, more than 2,000 caregivers work with a salary above the minimum wage thanks to the company. In addition to Spain, we have also invested in France and Germany, we have co-invested with more than fifteen national and international funds and our portfolio in these early years is growing at very positive rates.

In the future, we want to go further by going deeper, building on our experience and focusing on value creation at three essential levels: strategy, people, and capital, always from the impact perspective, standardizing and systematizing measurement even more as well as demonstrating that management from the impact perspective is transformative and creates differential value.

 

 

Impact, innovation... are your must-haves. Should they be in the DNA of all companies, old and new, before any other quality?

 

More and more companies understand that impact can generate deep and large-scale changes, and therefore, our intention is to be next to those who want to be part of this transformative change, to continue advancing and discovering new ways to improve society. The teams and their alignment are also absolutely essential.

 

What does Spain lack in this sector?

 

The mindset in the sector is changing and accelerating, and although today we see how the large capital managers incorporate ESG and impact investment strategies in practically all their portfolios, it is necessary for the sector to grow and continue to professionalize and especially that there are success cases, as has happened with conventional PE or VC funds, so that LPs, both private and institutional, bet on investment proposals with this approach.

That said, the biggest change will come when investments are valued for what they generate for society and the planet beyond and in addition to financial return. We need to modify our conception of value and success, because the reality is that we talk about integrating and prioritizing social impact in investments as a win-win but this is not always the case, as many times prioritizing the impact can involve short-term trade-offs, especially when we want to make deep social changes in the most neglected people.

 

Are Spanish companies leaders in helping? Can they be considered benchmarks?

 

The impact ecosystem in Spain is growing and professionalizing, but there is still a long way to go. In our country there are more than 3,000 startups that have not yet raised a Series A round and more than 200,000 SMEs below 20 million euros in turnover. Although the percentage of impact investment on this reality is small (we estimate based on our analysis that it is between three and five percent), it already speaks to the large number of existing investment opportunities.

France is surely the country with a more mature ecosystem both at the company level and at the level of impact funds with very diverse focuses. That said, there are very interesting managers and companies in Spain. Looking at our portfolio, we have Qida which is a leader in terms of the public and private B2B agreements it is reaching, or Baluwo, which is developing the first cash-to-cash payment solution for Sub-Saharan migrants in Europe.

 

If you want to add anything else…

 

The next decade is crucial and we have the opportunity to change course from investment.