You’ve probably heard the term ‘butterfly effect’ before.
In case you haven’t, the ‘butterfly effect’ describes a system where even the smallest actions will inevitably have a certain level of influence on many other parameters.
One of the most quaint and literal examples is that of a butterfly flapping its wings, creating a very slight breeze which then goes on to affect how another animal behaves, and the chain continues on and on until that tiny initial action is amplified.
The butterfly effect applies very strongly to finance and investments.
For example, there are mergers and acquisitions happening all the time, many of them between businesses that the general public might not even be aware of.
But it’s a guarantee that restructuring efforts of any kind will end up having some kind of effect on the outside world, possibly a negative effect. Of course, it’s not possible for the public or legislators to carefully follow and predict every potential deal.
The same is true for investors. Even seemingly innocuous investments will impact the relevant community in some way.
Thankfully, many investors are aware of this, and some investors are taking special care to only invest in businesses and ideas that are likely to have a positive overall effect on communities, whether those communities are small towns or entire nations.
We have one of these investors here with us today: Marco Novelli.
Introducing Investment Banker Marco Novelli
Marco Novelli has more than 16 years of experience in the upper levels of the financial world. Originally from Italy, Novelli’s career has taken him all around the world as he became an expert in Consultancy and Investment Banking, with a special emphasis on distressed investments, which has allowed him to preserve jobs and improve the outlook of many projects.
In the press, Novelli has made it very clear that his personal investments are conscience-driven. He is very much aware that his position allows him the opportunity to support ideas and entrepreneurs that seek to improve the lives of others in some way.
In particular, Novelli talked to us about investments with a real human impact, as well as his dedication to investments that promote green energy and aim to drastically reduce carbon emissions.
Thinking back on one of his first green energy investments, Novelli had this to say:
“The first time I analyzed a green energy project, a family friend was investing in green energy concessions and developing wind and solar farms in Southern Europe. Within my sales and trading job, I had not come across many opportunities in the sector. Regarding my own personal investments, this asset class is a crystal clear priority in my eyes. It is a fast-moving sector and the human impact is enormous.”
That first investment in green energy led to a continued interest in this sector, but before we talk about Novelli’s other efforts in this area, Artvoice asked him to talk about that butterfly effect concept in more detail.
How investing supports people and communities
Novelli talked extensively about how almost all investments are going to have some kind of significant effect on communities, even if just a small “microcosmos” of people, as he put it.
Of course, this reality of effect isn’t inherently good or bad. It all comes down to the investors and the ideas involved.
Just as an example, if a group of investors contributes money to a major real estate development project, there’s a much higher chance that the project will have a negative effect on people in the community, at least in the short-term.
Compare this to an investment opportunity where a bold new business with a high chance of success establishes a headquarters in an underserved city neighborhood. Not only will there be immediate potential to create new jobs in the area, but there will also be potential for other businesses unrelated to the investment to move in, supporting the hyperlocal economy of the neighborhood.
Of course, there’s no limit to the kinds of businesses that can have a positive effect well beyond the company itself.
While we were on the topic, Novelli elaborated on one of his more recent investments, one that has a very tangible effect on its users.
“I am an early investor and partner/advisor in LoopedLive. The most satisfying part of this investment is to see the expression of sublime happiness of LoopedLive customers when they literally face their role model live on their phone. Right now, nothing is more precious than something which can give you inspiration and stamina for your next life chapter after COVID.”
LoopedLive takes an interesting new approach to the familiar concept of using technology to make human connection more convenient, or, in the case of COVID, possible.
The platform also has the added appeal of connecting users with celebrities and professional performers, creating a miniature mentor experience for those users.
Whereas the effects of other investments might be harder to parse, Novelli appreciates that, when it comes to LoopedLive, he can get a very accurate sense of the good that the service is doing.
A key green energy effort
Returning to investments that have very broad and far-reaching positive effects, green energy investment opportunities have become much more prominent in recent years.
These investments take different approaches to combat climate change, often by setting strict emissions goals for large businesses or by funding alternative energy production.
The latter is what Novelli focused on with one of his most significant green energy efforts, which was a multi-billion-dollar restructuring of a large utility company in Latin America.
“This company was constructing one of the largest green energy production assets in all of Latin America. When completed, it would substantially decrease the overall carbon fossil energy production in the entire region. If we had failed to support this restructuring, there would have been a large loss of jobs, plus a failure of implementing a large green energy production in a state heavily dependent on carbon fossil energy.”
There’s no doubt that this was a crucial investment at a time when Latin America needed to focus more on sustainable energy production. But of course, this technology is still relatively new and requires a substantial amount of capital, especially in the early days.
To this day, Novelli remains very proud of this investment and sees it as a meaningful way to improve the lives of many, not just those living in Latin America.
Are green investments just a trend?
There are a couple of important notes on green investments that we should mention here. It’s true that in many cases, investors and companies alike are making these moves for the good of everyone.
However, Novelli sees a worrying aspect of these investments, namely that the motivations behind some of them seem to be herd mentality or simply a desire to do what’s currently fashionable.
To illustrate the point, Novelli described a similarly cynical motivation that takes place on the level of the individual:
“For example, a person who finances an electric car and gets a new one every time the lease expires is definitely creating more CO2 emissions versus another driver who buys an internal combustion car but keeps it for 10-15 years. Sadly, this same principle can apply to green investments.”
In the short-term, it’s definitely positive for major companies to set carbon emissions or commit to using sustainable materials, but once these efforts have stopped being trendy and beneficial to external marketing, there’s no guarantee that these companies will remain committed.
This isn’t a rebuke of trend-chasing green investment as much as it is a word of warning. In the end, the best way to judge an individual’s or a company’s dedication to sustainability is by looking at their track record over the long-term.
An ongoing goal for investors
Novelli sees himself as part of a modern approach to investing, and there are, thankfully, other professional investors who consider the moral and ethical implications of their work.
Along this line, Novelli tries to put himself into a headspace where the ultimate goal, both personally and professionally, is growth and improvement, and he hopes that this is also a motivation for many investors like him.
“Professional achievement is accomplished when you, as a professional, are continuously growing through the transactions and activities you have led and managed. The more complex the idea or investment is, the larger the indirect social impact should be. My greatest joy is seeing the impact of my contributions to larger communities.”
So far, Novelli has definitely found ways to support ideas that really do have a positive effect on many different people.
If this driving goal becomes the norm among the investors of the present and the future, then public perception of investors and the finance sector as a whole could change drastically.
Even more importantly, the types of businesses and organizations attracting major investments could also lean more toward altruism and responsible business practices. If they do, everyone would be better off, not just those seeing returns on their investments.