In the latest podcast of Stocks4Docs, we sat down with the incredible Praveen Varshney, who has been a principal of Varshney Capital Corp., a Vancouver-based merchant banking, venture capital, and corporate advisory services firm since 1991, and an ESG investor.
Praveen tells his story of how he started investing in his values and how he firmly believes that your view of the world changes when you begin “voting with your capital” for the kind of world you want.
When we invest in our values rather than investing in what will give us the greatest return, our world starts changing for the better.
Keep reading for a quick rundown on what Praveen had to say about this critical topic.
Praveen’s Journey to Investing in His Values
As Praveen says, life is interesting; it’s serendipitous. It’s funny when you look back and see all of the twists and turns that your life took.
For example, when he started his education, Praveen began to study the sciences and actually failed physics, and had a moment where he thought, “What am I doing here? I don’t even enjoy this.”
So, he made the inevitable switch to business. He now works in his family office in Vancouver called Varshney Capital with his Father and younger brother.
Praveen’s career had 3 phases.
Phase 1. Getting Started in Industry
Praveen worked at a large accounting firm called KPMG for five years early in his career. He gained a lot of experience and know-how during his time here.
Phase 2. Family Business
After his time at KPMG, he made a move that seemed natural to him and decided to join the family business at Varshney Capital, where he worked as a CPA.
Phase 3. Start of Entrepreneurship
Coming from a family of entrepreneurs, they started half a dozen companies in various sectors. When he was around 29 years old, they had created a Casino company and went to Las Vegas regularly for trade shows.
The Canadian company eventually became public and did well; he thanks this time in his life for the start of his entrepreneurial journey. This journey would continue for 12-14 years, where he even started some tech companies.
But, things changed when he had children, and he began to think of investing and the world as a whole differently.
This was when Praveen became interested in ESG investing. ESG stands for environmental, social, and governance investing, and this is where we get into the topic of investing with your values. The very first project Praveen worked on was in Victoria, B.C., called Carmanah Technologies, which eventually went on to become Canada’s largest solar company! It was a surreal experience because they took this startup and brought it up from 2 1/2 million in revenue to 75 million in only five years.
Carmanah grew at about 75% annual growth rate, which gets more challenging as the base is getting bigger. As a public company in Canada, the stock went up by 10X. Praveen remembers thinking at this time, “wow, this is amazing. We’re doing something good for the planet and making money for investors and ourselves. It was a no-brainer.”
This was a turning point when he realized that you could have the best of both worlds: investing in a company with a high return rate and making you a ton of money and doing good things for the world.
At around this time, his first child was born, and then a couple of years later, his second child followed. As Praveen says, “becoming a parent not only made me think differently about business but also the planet.”
Carmanah was the accidental startup to impact ESG investing before it was even a trend socially. That summarized three things for Praveen:
- Just because something is legal, it doesn’t make it right. It’s not worth it if you’re making money but hurting people along the way.
- The sheer scale of the lens of becoming a parent and the different worldview. He found himself thinking, “How do I make the planet better when I check out from when I checked in, for my children, and humanity?
- As you get older, you start considering your legacy. What is my role on Earth, and what kind of impact do I want to leave on the world? How will people talk about me at my funeral?
When working with social impact entrepreneurs, it isn’t just about making money at all costs; it’s how you can be a better person.
Looking for the best of both worlds: Values & Returns.
Years ago, before the environmental movement and trying to live a more sustainable lifestyle, investing looked very different.
Investors were mainly concerned with what will make them the most money. Since then, there has been a shift towards investors only putting their money into projects they resonate with.
Praveen explains, “We are in a war for talent now because of the younger generation. Gone are the days of workers simply showing up to work and doing their jobs; they want to work on something that matters, something that creates a change.”
Consumers and investors are voting with their wallets. Several funds specialize in this sector, and Praveen is a partner in a handful of them.
Voting with Capital: A Global Phenomenon.
Investors are choosing to vote for the kind of world that they want to see with their capital. It’s changing the world, and Praveen is delighted to be a part of it in such a significant way.
Here are some platforms to go to for ESG investing in Canada:
- SVX – A platform that only funds companies that are practicing social impact.
- Spring Activator – Vancouver-based incubator accelerator that only works on do-good companies.
3 Companies That Praveen Has Worked On Aside From Carmanah:
Five years ago, when the entrepreneur of NEXE first approached Praveen, all he had was a patent and a mission to take down the plastic coffee K-cups polluting the Earth.
Praveen saw his passion and realized that this problem needed to be solved. At the time, there were enough discarded K-Cups (1 inch) to wrap around Earth 10 times!
Investing in his values, Praveen started to finance this company and took it public in December of 2020 at 80 cents a share, and within a month, it was trading at around $5. The initial investors were up by 25-30X, so they made many shareholders happy AND helped the environment.
Based in Vancouver, Nature’s Path is the largest organic cereal company in the world. Investments in healthy foods are brilliant investments. There is recurring, stable revenue because everyone eats daily.
Plus, you’re supporting food free from chemicals or harmful additives that are ultimately not good for your body or the environment.
A Canadian tech company focused on helping Indigenous people in Canada receive the money they are owed and making every government process more automated and readily accessible.
Again, Praveen felt inspired by the entrepreneur that approached him about his company and knew that it was a fantastic company to invest in.
One Feather helps over 2 million people in rural Canada access their critical documents and cheques.
What Should You Take Away From Praveen’s Interview?
You, as an investor, have a lot of power with your money when you invest in your values. Many people shy away from it because they’re worried they won’t do well and invest in the next big tech company or what they believe will make them a lot of money.
Praveen is evidence that we can have both! We can be socially responsible while being a smart investor who does terrific at the same time.
Praveen helped a friend of his write a book about the value of integrity.
In the book, he talks about two types of integrity:
- Internal Integrity
This means being true to yourself and your values. Internal integrity is how you act when nobody is watching.
2. External Integrity
Saying what you mean and doing what you said you were going to do. External integrity is about keeping your promises.
Praveen believes that we should carry this integrity over into our investing portfolio by having a simplistic approach and while making big decisions, ask yourself if it is integral or not.
Integrity brings positive results every single time.
Praveen has been a principal of Varshney Capital Corp., a Vancouver-based merchant banking, venture capital, and corporate advisory services firm since 1991. He’s also a Founding Director of Pyfera Growth Capital & a Founding Director of Humanitas Smart Planet Fund, both with a social impact focus