Hi guys, welcome to the Fintech Coffee Break.
Today, I sat down to share my coffee break with Serena Fleischman and Alejandro Fritz, Co-Founders of FLIT invest.
FLIT Invest is an investment app that allows users to use their money to power businesses and causes according to their values. Customers can invest as little as $10, lowering the barriers to the investment landscape.
We spoke about what this kind of approach to investment could mean for modern-day issues and the rise in attraction for people to vote with their dollars.
Isabelle Castro – Nice to meet you guys. How are you?
Serena Fleischman – Good. How are you doing?
Alejandro Fritz – Great, thank you.
Isabelle – Good, glad. So to start with, I just want to know what gets you up in the morning and gets you motivated to start doing what you do.
Alejandro – For me, it’s pretty easy. I would say there are two things, one, professional motivation, I love what I do, working with our team, and obviously making sure that our clients’ money is invested the right way and doing well and right for them so they can grow their wealth over time.
But the other one is really personal. I’m originally from Hungary. My parents and my family are still there, and I hope to one day bring them here to us. And obviously, being a business owner can potentially help me achieve that goal.
Isabelle – That’s a really good motivation. And you, Serena?
Serena- Yeah. For me, what really motivates me is my team. We’ve been able to really create an awesome team and an awesome environment to work with. So that motivates me every day to keep going.
Isabelle – Nice, nice. When did you guys know this is what you wanted to do? You’re both the cofounders, right? So when did you know this is what you wanted to dedicate your life to?
Alejandro – Yeah, you go first. Yeah.
Serena – I would say originally, I wouldn’t say that. I knew I wanted to dedicate my life to this. But one of our co-founders was looking at sustainable investing apps. And he decided to do his research and find what he thought was the best option out there. And he was based in the UK, opened up the app, and was really excited to get started with it. And then looked at the companies in his portfolio, and he had Chevron, ExxonMobil, and McDonald’s. For him, he was wondering how could he be invested sustainably if he’s invested in companies that, you know, don’t align with his values.
For him, climate change is a super important issue. And when he realized that, he called us up and talked about how this could be. And we found out that it’s because the most sustainable investing apps available to the everyday investor are ESG apps and ESG investing. Companies are ranked based on their environmental, social, and governance scores. So a company like Exxon Mobil can have really great women and leadership policies, really great diversity and inclusion. So they get a really good ESG score, but they have horrible practices for the planet. So they have that bad “E” score.
Even though they have that bad “E” score, it kind of evens out, and they get a thumbs up as a good company. So when we realized that, we thought there has to be a better way. And that really is what set out the motivation to build FLIT and to change the way people vote with their dollars.
Isabelle – Yeah, I’ve heard of all of this greenwashing with ESG. So it’s really good that you guys are here and doing this. For you, Alejandro. When did you know this was what you wanted to do?
Alejandro – I think as soon as Richard, our third co-founder, who’s based out of London, called me. It was incredible. Because in my past life, I was an investment advisor, primarily advising ultra-high-net-worth individuals on their investments. And it was the same exact question I was getting from people in their realm, whether they would be institutional investors or even private families.
Richard, a really good friend of mine, who’s in finance, is asking the same questions like, wow, okay, so this is not only a trend that I’m seeing in the realm of people who are the key holders of capital in the world, but it’s really, the average person may also deeply care about these issues around sustainability. And given that there was also something that I was really passionate about while I was an investment specialist and had already been recommending investment solutions with an intent to create impact. It was just…I feel like the stars had aligned that are really good friends that I trust. And I know that we could maybe start something together; we can take the leap of faith and start this business. So we did, and now we’re here, two and a half years later, with an app in the App Store. So super excited.
Isabelle – Well, I’m very glad that you guys are here. So tell me a bit about how fintech has affected this whole landscape. Has it affected it a lot or…?
Alejandro – I think it has so even from the very beginning And my biggest concern was, how are we going to mount huge investment operations, you know, to 20-something-year-olds, coming off of the experience from Wall Street, but really no technological background.
What we find really early on is that fintech actually has provided all the piping on the infrastructure side to create a really solid solution with the help of incredible engineers, but without the need for an incredibly huge back office or middle office operation that you would have expected it maybe a decade ago. So on the infrastructure side, it was a huge, huge change.
Number two – Access. Fintech has provided access not only from the realm of founders being able to create their own solutions but also for new products that can reach not only the people with the keys to the capital in this world but really the average investor who can also get started with basically minimum investment amounts and get started with investing in things that they truly care about, which have historically been reserved for the ultra-wealthy.
So I think the infrastructure side and access are what I would point to where fintech has really, really helped innovate and provide those opportunities for the everyday investor.
Isabelle – Yeah, I saw that you have brought your initial investment down to $10. What impact has that made? Like? How have you seen it change the kind of clients that you’re having?
Serena – Yeah, I would say it definitely has a big impact on overall access to sustainable investing.
So when we were looking into it, when Richard found out that he was invested in ESG, investing and was looking into, you know, how can he go beyond ESG Investing, How can he have impact through investing, we found that most apps out there, or most platforms out there, where you invest sustainably have super high account minimums. So in order to get access to that, you have to spend 10s, or you have to have 10s, of hundreds of 1000s of dollars, in order to invest. And we just thought that for the everyday investor, that’s not accessible. Not everyone has the money to get started. And the most important thing with investing is not how much money you have to start, but that you start and you start as early as possible. So we really want to show people that it’s possible to align your investments with your values without having to have an ultra-high account minimum to get started. And that’s why we decided to make our account minimums $10.
It’s something attainable for everyone and hopefully encourages everyone to get started as early as they can.
Isabelle – What kind of impact do you think this will have on these issues? Because I mean, you’re addressing a lot of issues. But, for example, the climate crisis, what impact will lots of smaller investors have on those kinds of causes?
Serena – Yeah, with this lowering account minimums to $10, we want to build up the community and build a community of financial activists who want to drive change.
So we believe by having this low account minimum that’s achievable for everyone that, we can build a community of changemakers. And together, we can put our money together and really vote with our dollars and make our voices loud.
We think that everyone should have a seat at the table. It shouldn’t be because you have a certain amount of money that you’re able to make these votes with your dollars or with your investments, but everyone should be able to. So we want to build this really big community of people driving change together by voting into these investment themes, like climate solutions, as you mentioned, the climate crisis, and other ones like clean water or gender equality.
Isabelle – Do you think there’s more of an appetite to be investing in these kinds of causes now? Rather than in the past?
Serena – Yeah, I definitely think it’s, it’s growing. The amount of people who want to, who care about their values, and who want to align their values with their investments. There’s, I think, a growing number of people today that vote with their dollars in their everyday life, whether that’s from the lifestyle choices they make, the shops that they shop, so they support shopping local, the purchases, they make, you know, picking a dairy alternative, people are already voting with their dollars and in their everyday life.
I think they want to vote with their dollars in their investments, they just don’t know that this is accessible or they have the option to do that. So I think there’s definitely a growing amount of people who want this.
Alejandro – What I would add to this is that it’s not only that we believe that there’s power in numbers, but we need that amount of number and that pressure to not only come from a few stakeholders but if together as a community as a society, we can rise up and say we would like to accelerate the transition to a lower carbon future. If we are able to show that there are 100,000 retail investors who otherwise wouldn’t have a seat at the table, as Serena mentioned, who also care about. This incentivizes companies to change because companies will not wake up from one day to the next and say, Oh, today, I want to start reducing my carbon emissions because I want to do good for the planet.
It’s much rather coming from pressures to generate profit for their shareholders. But if those profits can only be generated by adhering to some of the demands that consumers have towards them, and they are able to meet that demand by transitioning to a lower carbon future and lowering their carbon emissions, that, we believe, can create a huge, huge impact outside of the investment dollars that are going into these companies, but really, their collective mindset and pressure that we can apply to large corporations overall.
Isabelle – Have you noticed any changes now that the economic conditions are a little bit more challenging? Has that affected how many people are investing or how much they’re investing?
Alejandro – Yes, I think being a financial advisor, I’ve seen cycles in the past. And whenever there are certain recessionary pressures, people start taking a bit more conservative approach to investing, maybe saving a little bit more rather than investing as much as they have done before, which is a very valid concern and approach.
What I would also say is sometimes these are opportunities. These are the times that can be the most attractive entry points for investors who haven’t started out yet. And as far as the popularity of sustainable investing versus traditional investing, there are a lot of controversies out there. ESG investing, in general, I think, has been highly controversial, eluding to what Serena said in the past about focusing on three completely conflicting pillars of environment, social, and governance.
However, with the investment themes that we provide on our platform, we don’t not only underwrite it from an impact perspective but also from a financial return perspective.
So climate solutions is an example that you’ve brought up in the past. Probably most people agree that 20, 25, and 50 years from now, we will have a vastly different way of relying on the energy sources that we do today. So investing in the future of the economy makes sense.
Affordable health care is another theme that maybe some people don’t think about it as much. But being in a society with an aging population, incredibly rapid advancements in medical technology are all fundamental drivers of an investment thesis to invest in many of these companies that are creating the solutions for the long term. So it’s not only that they will create an incredible impact and will result in a more sustainable, just, and equitable future for all, but it also helps the everyday person grow their wealth over time because they’re investing in things that will grow as time passes and for the better of the future.
Isabelle – Yeah, I mean, your product is amazing. I love it. I’m gonna start, but I don’t know. Can I access it from Europe?
Alejandro – Unfortunately, currently, it’s only available to US investors. There are a lot of regulatory reasons for that. But we want to make sure that we started out here, we’re able to showcase that people, the everyday person has the availability to invest this way. And they’re willing to do it. And we definitely have our eyes on international expansion, given our team’s make up as well.
Isabelle – Awesome. So one more question on this point. We brought it up greenwashing. I know, technically, it applies to the climate crisis and stuff like that. But I’m sure that there are other ways that companies kind of wash over certain aspects or pump up the fact that they’re doing certain things. How does your approach get around that?
See-through all this greenwashing and make sure that the investors are investing in what they want.
Alejandro – So as far as greenwashing, it, greenwashing, pinkwashing, impact washing, these are some of the terms that relate to where companies may put out false or misleading information around products or their services’ impact on the world.
And a great example of that is over 90% of investment funds in the US in 2020 that were labeled as green or sustainable have resulted from remarketing efforts. There were no underlying changes in the investment process or the management of these investment funds by really just relabeling. This is what has driven us to start flooding best, given Richard has spotted this greenwashing as a slightly more sophisticated investor. But unfortunately for the average person, this may not be as clear.
So the way we are looking to go beyond that and go beyond ESG and just providing a score is providing you with which is part of our core features. One is giving you the opportunity to divest from industries you may don’t want to agree with. And this is the well better-known investment strategy that has been around for decades.
You can exclude tobacco, fossil fuels, private prison, civil, and firearms if you wish from your portfolios, and we can follow that. Or you can actually follow an active ownership approach, where you say I want to invest in Chevron or Exxon Mobil, but with the expectation that I am going to be actively participating in board meetings and voting for proposals that will drive them to a more sustainable future.
So we give these two options to users. And beyond that, for each of our investment teams, we provide metrics that we rely on internationally recognized frameworks. For example, in clean water, how many gallons of clean water have for access to clean water assets have your underlying portfolio companies generated? Or how many, how much carbon emissions have been avoided or removed from the atmosphere through your investments in your climate action portfolios? So we quantify these metrics, which is hours and hours of analysis on our team’s part. But we want to make sure that no matter what you select, we are a transparent audit and report on this.
So it’s really the transparency, the reporting, and intentionality that I would say primarily differentiates us.
Isabelle – Do you want to add anything, Serena?
Serena – In layman’s terms, I would say that we don’t just walk or don’t just talk the talk, but we walk the walk. So every investor should look at the platform that they use and hold them accountable.
If someone is telling you that we are helping the planet or we are promoting gender equality, they need to have the metrics to back that up.
A lot of times with greenwashing, that’s what’s the missing piece of the puzzle is that they’re not showing you the metrics, they’re just giving you a thumbs up or giving you a feel-good, a green label or saying it’s eco-friendly, and you feel really good about it, and you somewhat trust the company. So you’ll believe that. But what we’re doing is we’re encouraging our investors, encouraging everyone to kind of question that and to find the proof. And we’ll show the proof to all of our investors and all of our users with our metrics.
So all they said, we have carbon metrics; we show people the thematic metrics, so three metrics for each investment theme that you invest in. And we also will show you how your investments are aligned with the UN SDG – the UN Sustainable Development Goals. And that’s how we promote accountability, and transparency for all of our investors.
Isabelle – Nice. So what do you hope has been invented in 100 years? It can relate to this, it can relate not to this.
Alejandro – I would relate to this because both as an investor and as, someone who’s, hopefully, would like to have children on this planet, the largest risk, in my opinion, is the climate crisis. And I believe that we have to act fast. So even if it’s not in a 100-year turn, for me, that may feel a little too long. But in the next couple of decades, we will find solutions that can help mitigate those risks. And there are already incredible technologies out there that are working towards it, but we need to find them. We need to invest in those technologies to get there. And that’s one of my primary motivations also, in being in this space thing in this space, to make sure that future generations also have a place to live on. And that’s my personal opinion.
Serena – Yeah. I would also agree that transition for me the transition to a more sustainable future is super important. I’m really passionate about climate change and hope that, yeah, in the next one, not even 100 years, next 25 years, next 50 years, we see that transition. I feel that at the current state, we’re moving really slowly when it comes to climate change and the climate crisis. So I hope that in 25-50 years, we’ve made large strides and the fight for the climate crisis.
Alejandro – And the invention in that realm, for me, would be the missing puzzle that every scientist is talking about is carbon recapturing. So how are we going to remove carbon from the atmosphere?
Currently, there are solutions out there that do it very expensively and not efficiently. Is there a way we can get there? That’s the billion or trillion-dollar question that I would hope to see to see over the next couple of decades.
Isabelle – Okay, nice. What is a piece of advice someone has given to you that you would give to someone else?
Alejandro – For me, I think it has gone through my life. I was an athlete growing up playing soccer, then as a trader as well; we tend to, I think, under-communicate as people, and the best one of the best pieces of advice I’ve gotten is to over-communicate. So whether that’s you’re in the field, so, letting your teammates know what’s happening around you, make sure you over-communicate.
When you are taking a trade, ensure that you have triple confirm all the information before entering this. And besides the professional part of my life, where I have seen incredible improvement as far as communication within our team, it also helps in our personal lives.
I’ve gotten closer to my family because we started over-communicating with my spouse. So for me, these are, this was a piece of advice that I’ve taken not only and applied to my professional life, which has been very helpful, but also to my personal life, which I found really powerful.
Serena – And for me, I would say to just try things. You never know until you put yourself out there. I’m definitely not from a finance background whatsoever. I’m super passionate about climate change super passionate about social issues. So if you would have said two and a half years ago, I’d be, you know, starting an impact investing app. I would have never expected that for myself. So I think just putting yourself out there and trying new things.
Isabelle – Cool. Both are very good pieces of advice. Okay, so now is the curveball question. Don’t be scared. So I put it into a random generator- it is a little bit tricky.
If someone wrote a biography about you, your company, or you personally, you can do this together. What would you title it?
Serena- I think I know what you would title yours.
Alejandro – What do you think I would say?
Serena- Impossible is nothing.
Alejandro – That’s actually pretty capturing. I think that would be impossible is nothing.
Isabelle – Okay, cool. I like that. And Serena, do you want to go with that one as well?
Serena – Yeah, I would say impossible is nothing. Cool.
Isabelle – Perfect. All right. I think that really capsulate what you’re doing; basically, you’re working towards things that people think are impossible. But they’re not. Yeah. $10. You’re fine. You’re contributing.
So how can our listeners get a hold of you?
Serena – To get a hold of us. They can go to our website, it’s flitinvest.com. They can also check us on social media. We’re on Tik Tok, Instagram, LinkedIn, you name it. All of our handles are also flitinvest. And then, you can download us in the app store. Just search for FLIT invest again. And you’ll find us, and you can download the app and get started for as little as $10. Perfect.
Isabelle – Thank you so much for coming. It’s been really nice to talk to you.
So as always, you can reach out and chat to me on my personal LinkedIn or Twitter at @IZYCastrowrites. But for access to great daily content, check out Fintech Nexus on LinkedIn, Twitter, Facebook, or Instagram. You can also sign up to our daily newsletter, bringing news straight to your inbox.
For more Fintech podcast fun, check out the website podcast where you can find more fascinating conversations hosted by Peter Renton and Todd Anderson.
That’s it from me. Until next time, enjoy your downtime.