1337 Ventures is a Malaysian venture capital firm that offer funding, mentorship, and resources to help early-stage startups, assisting them through their growth phase. They host quarterly Startups Accelerator Programs to help founders understand more about their customers, product and market. 1337 Ventures actively seek out promising start-ups to invest in and support their journey. This is a transcript of an interview with Bikesh Lakhmichand, founder of 1337 Ventures, edited for clarity.  

Freda Liu (Host)  
It’s The Shift with me, Freda Liu, and what’s The Shift about? It’s about the shift towards sustainability, and whether it’s seismic, big, small, we all have to make that move. Now, how are individuals and organizations doing this? I believe it’s a collective effort of everyone. Today, we’re asking the question, though, how much do people care? And what I mean by that are investments into businesses or impact organizations getting enough attention and money. So I’m here with Bikesh Lakhmichand, founder of 1337 Ventures, to tell me more because we want to know sustainability, who gives a… 

Freda Liu 
Now before we get into that though, you know you’ve seen a lot of companies in your time, right? And what do you look for when it comes to investable companies generally? 

Bikesh Lakhmichand (Guest Speaker)  
Yeah, so there’s about three things we look at, right? The first thing it has to be, is it worth solving? Worth being, you know, is the problem big enough? If it’s too small for the country, then is it going regional, if not global? Then it’s your way of solving this problem better than anything else in the market. When we say better, we like to put like a 10 times better than what’s existing. 

Bikesh Lakhmichand 
And third one is, do you have the right people to do this with? And when we say right, means a complete team. Those are the three factors. 

Freda Liu 
Okay, so beyond the founders. 

Bikesh Lakhmichand 
Yeah, it has to be beyond them too. 

Freda Liu 
Apart from the founders, who else is on your team? Typically, when startups initially approach you, they often consist of just one or two individuals, correct? 

Bikesh Lakhmichand 
Yeah, so minimum two. If it’s just one person, it’s a very lonely road to go down the entrepreneurship journey, so we recommend you have a co-founder. 

Freda Liu 
Okay, it’s a whole conversation altogether. But we’ll go into that another time. Okay, are there more impact companies coming around, right, from your experience? And what are some getting right and what are some still needs to be fine-tuned? 

Bikesh Lakhmichand 
I think the shift that’s happening right now and everyone’s talking about impact, where it’s not just impact ventures, social entrepreneurs, but also technology companies all have to do their part. So we are seeing that shift. People are talking about how you as a startup as a business can make the world a better place. So we do see the numbers going up and up and up. I think that’s good because it’s driven by that. We want to see more better practices in the market in terms of things that can be better. I guess that’s always about the funding situation. Do people know how to invest into such things. Do people know how to evaluate such things? How do you have that standardization between these kind of companies? 

Bikesh Lakhmichand 
So in terms of that, the maturity within SMEs or these early stage companies, that is fully not developed yet. I think that’s the biggest issues we’re facing. 

Freda Liu 
I know like just recently you had accelerators and you have many, just the recent ones, right? I mean like you had about 20 plus. From that, how many would have been impact? 

Bikesh Lakhmichand 
So it depends on how you look at it, right? So what is the impact? What is big enough for it to be called an impact? I would say at least half has a way to say that there’s some form of agenda that fits within the financial industry. 

Bikesh Lakhmichand 
I am trying to make people more literate in terms of how they run their lives, what certain segments in the market to uplift themselves from poverty, or just underbanked, becoming more banked from a food and security level. I think we had a lot of agriculture-based startups in the company in our cohorts that basically were saying farming could be done better, access to this particular food supplies could be better, prices could be better. So from that standpoint, yes. Health, making things more accessible, affordable, quality. I think we saw some healthcare stuff. So within every bucket we see within the startup ecosystem, there’s always that impact agenda that’s coming forth. 

Bikesh Lakhmichand 
So it’s pretty nice. I would say at least half. 

Freda Liu 
Right, so it’s a bigger picture kind of thing. They sort of not just look at it from one aspect. When you say impact, it’s like, ah, okay, this will solve this problem, that kind of thing.  

Freda Liu 
Now, okay, what about your conversations with fellow, you know, angels and investors, right? Is that trust, you know, looking for company sustainability? Do you see that or do they really just “show me the money”? 

Bikesh Lakhmichand 
Yeah, so it’s a mix of the two, right? So we have institutions that has people’s money and they have to give you certain kind of returns. So trying to have that conversation only solely on impact is very difficult with them. When you come down the angel route, you get a little bit of both. They are considerably a little bit more angels that are of a certain age that is way above me. I think they are starting to say that I want my money to do good, the whole karma, I want to see my money work out well for someone and make the world a better place. I have children, I have grandchildren. 

Bikesh Lakhmichand 
So there’s a little of that but not enough, right? Most institutions still want to say, I have a green agenda, I’m looking for sustainable companies but at the end of the day, let me look at your P&L, are you going to be sustainable from a business standpoint first? So it’s very hard to kind of move away from solely impact, the financial short-term part is always still on the table. 

Freda Liu 
Right, but of course there’re some into climate tech funds. There’re actually funds have been set up to support this, in probably the last five years. 

Bikesh Lakhmichand 
There are, but some of the things we just don’t know what they mean and how to access that. Like what are you measuring me on? When you ask some of these things, they’ve never got this whole transparent way. So some of the things that we said that can be better also could be standardisation. Have a way to say what does it mean to have access to sustainable financing? You need to have that clear cut, then people know. 

Freda Liu 
Right, because right now it’s kind of like, okay, I want to go for a start, but people are still… 

Bikesh Lakhmichand 
Yeah, it’s still gray. 

Freda Liu 
It’s still very gray, right?  

Freda Liu  

Now, you’ve helped a few companies that are sustainable in nature with ECF, equity crowdfunding, right? What’s your view on the general public’s interest in these kind of investments? 

Do people care? Do people care? 

Bikesh Lakhmichand 
So it’s a mixed bag also we see. Generally, I don’t think so people care as much. They like to, they would like to, but whether caring and investing I think is two separate things, right? They care about this, but would I put money into something like that? What am I going to get out of it.  

Bikesh Lakhmichand 

As part of an experiment in our recent campaigns, we intentionally lowered the minimum investment amount to RM230 and RM250. We noticed that many individuals chose to invest RM250, indicating that they were comfortable with this smaller investment. This suggests that when the investment amount is more affordable, people are more inclined to participate. Those who are passionate about sustainability may be willing to part with RM250 and hold onto the investment long-term without expecting immediate returns. However, when the investment amount increases, such as to a couple of thousand bucks, it becomes a significant portion of their income, prompting questions about potential returns and the likelihood of seeing their money back. This highlights the importance of individuals being conscious of the potential returns on their investments, even if they support the industry’s goals. 

Freda Liu 
Okay, so not enough of a volume yet. People still, like a small entry, sure, right? And I’m okay if I don’t make money, but I feel good. I’ve done my part. 

Bikesh Lakhmichand 
Certainly, to have a peace of mind. To put it into perspective, last year, only 4,000 individuals invested in the entire ECF ecosystem across various platforms. This figure is relatively low. Moreover, there has been a decrease in the total investment amount from 2021 to 2022, and we anticipate a further decline this year. This trend is concerning, especially for impact ventures seeking investment opportunities. However, there remains a significant amount of uncertainty in the market. On a positive note, the government is taking steps to incentivize investment in these companies by offering to match funds raised with a ratio of one to two, thereby facilitating capital acquisition. While this support is encouraging, it’s essential for individuals listening in to consider investing in such companies. 

Freda Liu 
Alright, what about other individuals who have access to this platform? Have you observed whether they are also focusing more on impact companies like the ones we’ve discussed? I understand you may not have researched this specifically, but I’m curious if there’s a trend among other users towards supporting these types of impact-driven ventures. 

Bikesh Lakhmichand 
So essentially, each platform doesn’t have its own specific niche; so everyone’s saying we are a platform that makes access to financing a little more democratized. We focus on ensuring that businesses have a viable model with revenue streams before accepting them. This distinguishes us from charity or non-profit organizations. As the government introduces co-investment funds in certain sectors, more platforms are expected to align with the green agenda. Even the Securities Commission is shifting its focus towards topics like agriculture and food security. While this shift is positive, its effectiveness ultimately depends on public perception and participation. 

Freda Liu 
Right, and of course with that, it’s great that there is a push on the government side, right? And is that what has happened, if you upon on a global scale where companies in countries have bit of the push from the government?  

Bikesh Lakhmichand 
Yeah, it’s a dynamic interplay between push and pull factors. The pull factor is particularly influential as consumer preferences evolve. Nowadays, shoppers are more conscious; they check product ingredients and opt for items that support fair trade. This growing awareness is leading to a shift in societal expectations. It’s not just individuals; even corporations, along with their suppliers throughout the supply chain, are expected to embrace sustainable practices. This shift will likely be reinforced as regulators tighten requirements for listed companies and their partners to meet certain environmental standards. 

And that’s when things are really going to make a change. 
 
 

Freda Liu 
Now you work with companies to raise funds in renewable energy to sustainable wood products, right? What are some fundamentals in business that should change? 

Bikesh Lakhmichand 

Well, there are certain aspects that warrant change and others that should remain consistent, correct? While it’s important for investors to feel good about where their money is going, it’s equally crucial for businesses to be sustainable and profitable. Investors want assurance that companies are targeting the right customer base and have plans for scaling, especially in the face of challenges like COVID-19. For instance, when we sought funding for a biogas power plant, we encountered a different investor demographic. They weren’t necessarily driven by green initiatives but recognized the stability and potential profitability of the project. With a proven track record and a concession to supply power to Tenaga National, the investment was perceived as a sound opportunity, raising approximately RM8 million. However, for projects with a strong green agenda, attracting initial investors proved challenging. 

Freda Liu 
What are your thoughts on companies transitioning towards ESG? Do you see it as a positive push towards genuine care, or do you also see a risk of greenwashing? 

Bikesh Lakhmichand 

Yeah, greenwashing is always present, but it doesn’t justify the means, does it? We’re witnessing a rise in sustainable businesses and better practices in the market, which helps address greenwashing. Standardization is key, and it’s encouraging to see most impact companies prioritize measuring their impact and seeking standardization and best practices. This includes implementing third-party verification to make it difficult for anyone to falsely claim sustainability. Regulators need to enforce standards to ensure claims are genuine. 

Freda Liu 
So, sustainable financing—is it the way forward? I mean, banks have gone into this space as well, but are they and other institutions really stepping up, or are they sticking to conventional methods? 

Bikesh Lakhmichand 
Yeah, sustainable financing should be the pathway for accessing projects in the realm of ESG-related activities. However, it requires a different benchmarking approach. While banks offer various green products like bonds and loans, they might not be suitable for all ventures. Typically, they cater more to later-stage companies. For instance, if you’re a property developer creating a new green building, banks are more likely to support your capital expenditure needs. But when it comes to innovative business models centered around sustainability, banks may struggle to evaluate them due to lack of understanding, resulting in reliance on traditional means. 

Freda Liu 
Right, and that’s why I guess people like you come in as well. Now, many large corporations have the financial capacity to back emerging sustainable ventures that align with their supply chain. Do you believe such partnerships should be a standard practice for corporations? Additionally, could you provide examples of successful synergies you’ve observed or heard of? 

Bikesh Lakhmichand 

Absolutely, that’s been a constant in the tech industry. We often emphasize that it’s not a zero-sum game; collaboration is key. This holds true for corporations aiming to advance their ESG agenda. Leveraging the expertise of companies that have already made progress in this area can lead to numerous benefits and opportunities. 

Bikesh Lakhmichand 

One key aspect is risk management, right? Collaborating with multiple vendors allows for diversification and access to various innovative approaches, fostering a culture of innovation within larger organizations. Each vendor may have unique strengths and targets, contributing to a more holistic strategy. This trend enables startups to leverage partnerships with established corporations, enhancing their credibility when seeking investment. We’re witnessing this collaboration across industries particularly within the oil and gas sector, such as Petronas engaging with solar energy firms and Shell partnering with mobility startups like ParkEasy. These synergies between large corporations and startups are becoming increasingly common and beneficial for all parties involved. 

Freda Liu 
Right, and it aligns perfectly with their entire supply chain, doesn’t it? Speaking of which, Sunway – not to drop any plugs, but they come to mind. Sunway, with their Sunway iLab, has fostered numerous startups. If it integrates well with their overall operations, why not, right? After all, a company can only have so much talent within… 

Bikesh Lakhmichand 

There’s even this listed company, Solarvest, which is offering grants without taking equity. If your idea aligns with their focus, they’ll provide a small check to help you kickstart your business, with the potential for future investment. It’s encouraging to see such initiatives. They’re leveraging ESG agendas to drive their growth. But again, it’s the end justifying the means. 

Freda Liu 
Okay, final question. Every discussion needs a call to action, right? So, what fundamental changes do you think are needed for widespread adoption? From your perspective, what’s the key shift needed to bring everyone on board? Otherwise, we could be here for hours! 

Bikesh Lakhmichand 
I mean you’ll cry. But anyway, it’s about a mindset shift. Consumers hold the power through their choices. When they demand change, it happens. Investors need to reevaluate how they assess deals, moving beyond traditional criteria and short-term perspectives. 

The sustainability agenda is a long-term endeavor, despite our desire for quick results. Evaluations must reflect this long-term perspective. There’s still a need for extensive education and awareness, especially in the mass market. Regulators are crucial because enforcement drives action. Without it, sustainability remains optional. Fortunately, we’re beginning to witness a shift in practice, indicating progress. 

Freda Liu 
Right, I love it. You know what you’ve just said, definitely gonna be a soundbite. But fundamentally, in our world of instant gratification, this process will take time, right? So, when you’re considering investing in companies, understand that it won’t yield results overnight. Of course we want things fast, but something’s just gonna take some time for that shift to happen, as you said.  

Bikesh Lakhmichand from 1337 Capital, 1337 Academy, 1337 Ventures. Thank you for being here.  

Bikesh Lakhmichand 
Thank you for having me. 

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