Galina Markova is a corporate banker turned angel investor focused on impact investing.

Her finance experience and passion for working directly with founders fueled her drive to support innovative companies, which later evolved into her committing to impact investing and backing companies that pursue commercial success in parallel with net positive outcomes for society and the environment.

Galina's journey as an angel investor showcases curiosity, a thirst for knowledge, and a genuine desire to make a difference. With each investment, Galina sought to contribute to a future where purpose and profitability go hand in hand.

In this interview, we touch upon her motivation to invest in startups, her strategy, lessons learned on her portfolio, impact investing as a core focus in her thesis, and more insights for angel investors.

What Drives Galina Markova?

"I've always loved doers. I'm a deal junkie, as I tell my friends and colleagues. I love a deal that is both exciting and remunerative.

I've always loved companies and the 'whys' behind why they exist. Somehow, that naturally led me to angel investing."

However, Galina's true passion lies in understanding companies and their purpose. This natural curiosity led her to explore angel investing in 2018. Her first investment was in a company founded by a fellow Bulgarian, a former Microsoft employee offering essential services to the tech giant.

"I immediately fell in love with angel investing because I loved the founders' passion. It’s something that I missed in the corporate world. As much as I liked my job because it was intellectually stimulating, I missed the passion.

I got that from angel investing, working directly with the founders, and seeing how they developed and grew. And that's what motivates me."

Immersing herself fully in London's angel investing landscape, Galina joined multiple networks, eager to stay updated on emerging opportunities.

“With impact investing, you intentionally consider the outcomes before defining your solution/product. You need to plan how you develop your startup or launch your business according to the framework. If you think and plan and include all your stakeholders in the analysis, your business will likely create greater value and become more valuable.”

Impact investing is becoming a way of thinking about doing business and investing."

Diversifying an Investment Portfolio

Galina's belief in the potential for diversification within impact investing allows her to build a well-rounded portfolio that aligns with her financial and impact objectives.

"As an investor, I'm for commercial strategy and profit. Impact doesn't mean social enterprise. It is much wider than that. I invest for profit and am very commercially minded, business-minded."

She recognizes that impact opportunities provide ample room for portfolio diversification, spanning various sectors and applications. Galina highlights sectors like ClimateTech, AgriTech, GreenTech, SaaS solutions, IoT, HealthTech, EdTech, and FinTech as examples of diverse sectors ripe for impact investments.

"I don't think impact poses the issue with portfolio concentration because it is broad in sector application. "

Another diversification strategy is to invest part of your portfolio in later-stage startups – this can be a less risky option, allowing for a higher probability of early exits. While the returns may be lower, Galina emphasizes the importance of assessing the upside potential and being willing to accept a smaller absolute return.

“I've always known it's a long-term game. I never expected a quick buck.

You can invest in later-stage companies if you want to be less risky. You’ll have a higher chance for an early exit for diversification purposes.”

She also highlights the possibility of investing in founders who have previously been through successful IPOs or exits to reduce risk and increase the chances of returns.

Adopting Impact Investing as Core Thesis

In her journey as an angel investor, Galina experienced a shift toward impact investing. Her last four investments are in impact-focused companies, and she reflects on a success story from her portfolio that started in 2018.

"Impact investing wasn’t my focus at first. I started looking at it about two years ago, and only my last four investments are genuine impact investments.

One of my investments is in a startup founded by Emma Sinclair, who, in addition to being the youngest person in the UK to take a company public, is also a UNICEF UK Advisor on business and innovation. She’s a remarkable founder who managed to do a fantastic job for her company.

Another example is Provenance.org. The company digitally verifies corporate sustainability claims in net-zero and fully recyclable packaging areas. In this way, it helps companies turn positive social and environmental impact into brand value.”

Impact investing stands apart from ESG strategies, which primarily follow an exclusion approach. Unlike ESG, impact investing seeks out companies with a deliberate vision to create measurable social or environmental benefits.

“Businesses strategize, plan, and diligently monitor, measure, and manage their efforts to achieve desired outcomes for their stakeholders.”

Galina is impressed with the Bulgarian startup FoodObox and their focus on KPIs, including monthly measures of saved boxes translated into CO2 reduction.

The regulatory landscape is also evolving to provide clarity in the industry. The US Securities and Exchange Commission and the European Securities and Markets Authority (ESMA) are working on guidelines and regulations to define and govern impact funds.

These initiatives aim to establish specific criteria and requirements for funds to use "impact" in their names, ensuring a focus on generating positive and measurable social or environmental impact alongside financial returns.”

Impact Investing in 2023 — Trends & Opportunities

Galina believes that this focus on impact is becoming mainstream, even though it may be referred to by different names, such as "Tech for Good."

The wide adoption of the term Tech for Good demonstrates that the impact mindset has become the primary nature for more and more people and organizations.

“I recommend to startups and their investors to use:

The 3Ms” — Measure. Monitor. Manage.

There are some frameworks for impact investing, and they can use them to deliver positive outcomes. I prefer the IMP — Impact Management Project, from GIIN — Global Impact Investing Network.”

"When you are intentional about it, devise your strategy for your stakeholders, and build a process around measuring, monitoring, and managing, that inevitably will lead to higher value generation.

You want to deliver the best outcomes for stakeholders. That creates value for them; thus, the market rewards your company with a high valuation."

Galina believes that the simple business logic of creating value for stakeholders will make impact investing mainstream.

Lessons Learned From Angel Investing

Trust your gut instincts.

Galina believes gut instinct is connected to personal experience and improves with time and knowledge. She emphasizes the distinction between intuition and falling into patterns that can lead to biases.

I have ten investments in my portfolio. During due diligence on the second company, I sensed something didn't stack up. Despite my instincts, I decided to follow a seasoned investor.

Within 12 months after the investment, the company liquidated. Since then, I have always followed my gut instinct.

She believes that women are more open-minded in acknowledging biases and actively working to address them, making decisions more objectively. For her, intuition can be an objective tool. By considering different circumstances and experiences, Galina applies her intuition in a way that helps her make informed decisions.

She emphasizes the importance of independent thinking in portfolio construction, cautioning against mindlessly following trends and waves in the market.

"I don't follow the herd. I follow the waves only if they have good insights. When you work with top experts or people who are very knowledgeable, you can access good opportunities.

One still needs to ask themselves if they are overpaying by following the herd.”

Startup Investing is a Long-Term Strategy

For Galina Markova, investing in startups is a long-term strategy that requires patience and focus on the founders. She acknowledges that while there may be rapid growth and quick returns, predicting such outcomes is challenging.

Galina believes that the founders' personality and ability to work effectively as a team are crucial factors in determining a company's success.

“Founders essentially make or break a company. It’s the personality of those architects and the team building the product and how they get together."

It takes time and effort to build successful companies. As an investor, you are in for the long haul on the journey with the startup and its team. You can learn about businesses, markets, and technologies. You can also learn about yourself and your passions, which define your investment style. Enjoy the ride.

Resources mentioned in the discussion:

Connect with Galina:

• Linkedin
• Guest author on The Recursive

Others:

• Emma Sinclair
• FoodObox
• US Securities and Exchange Commission
• European Securities and Markets Authority (ESMA)
• Impact Management Project
• Global Impact Investing Network

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