Team #11 // Diatom

Executive Summery

A growing number of Danes want to support sustainable practices. At Diatom we want to leverage the large cash reserves sitting idle in the Danish bank account to change the world. By providing a liquid and simple investment platform, people can reinforce good corporate behavior and invest in the causes they care about. Investors thus impacting the world for the better; meanwhile fulfilling their individual needs to make a difference.

Problem

Danes currently have on average 120000 DKK sitting in their non-saving bank account amounting to 840B DKK in total [1]. To put this in perspective the total yearly budget of the Danish Red Cross is only 1.6B DKK [2]. The money sitting idle is not earning interest and is in fact losing value every day. The main reasons Danes don’t invest is distributed the following way: 48% say they want the liquidity in their economy, 28% don’t want the risk, 27% say they don’t know enough about the markets. Yet 50% of danes want to invest in sustainable companies and solutions [3].
Supplying investment capital targeted at sustainable development increases the incentive for companies and initiatives to work in sustainable development.

Target user / Customer

We want to target users who do not currently invest and have reserves of idle cash larger than they need. Our customers have strong opinions about what sustainability means to them and want to contribute to making the world a better place. They need a simple investment platform to invest through, as they are not themselves financially literate and don’t care for the deep mechanics of finance.

Your solution and how the concept is feasible

We offer a simple investment platform for the non-investor that funds sustainable business practices and projects.

Our solution allows our customers to choose what is important to them based on the UN sustainable development goals (e.g. climate change, gender equality, healthcare) and geographic location (e.g. Europe, Africa, South America). From this profile we invest their money in a mix of funds and projects that best align with their individual purpose. Using SAXO bank as broker, the customers money is invested in liquid instruments with a high degree of autonomy keeping costs low and making it easy to invest. We focus on low to medium risk investments, to keep growth consistent, and keep drawdowns under control. Thus, we meet the customers by lowering risks through diversification and investment selection, keeping the knowledge barrier low by focusing the user on causes and not numbers, and keeping the investment cash convertible through high-liquidity investments.

We receive information from the investment funds about the impact and stories that are funded. The information is sent to the customer, so they know the exact impact of their investment. The impact the investments are making is thus directly correlated with the customers set of values and higher purpose. The feedback loop will also reinforce the investors behavior. We have talked to Anne Metter Meyer from Red Cross Denmark who has supported the idea and confirmed the feasibility of tracing investment impact using Red Cross impact bonds. Our collaboration and partnership with the Danish Red Cross and SAXO bank will play a pivotal role in gaining credibility and building the platform solution. The demo website can be accessed at: https://s181312.wixsite.com/diatom. Here you will also find our business model and customer canvas.

Four unique value propositions

Financials

Assuming we can obtain just 0.4% of this idle cash in denmark it would result in a fund size of 3.4B DKK that would go to investing in sustainable businesses and projects. Diatom will use a high-water mark performance fee for compensation. This means we are paid 20% of the fund’s profits, after subtracting previous losses. With an expected average market return of 5%, the fee would correspond to an expected yearly average revenue of 34M DKK.

Impact

Investors have the power to influence businesses to act sustainably. The power of investors is seen in cases such as the drop in share price after the BP oil spill and in microfinancing in under-developed countries. By directing the Dane’s large idle cash reserves into causes based on the UN sustainable development goals, we act as a positive reinforcer for changing corporate behavior and funding projects otherwise unsupported.

Team

Our group members have a broad diversity of academic backgrounds and work experiences. We are specialists in financial markets, data analysis, mathematical modeling and sustainable energy engineering. In our cross disciplinary team, we have skill sets necessary to bring this product to market. Backed by our broker, SAXO, and in collaboration with the Danish Red Cross we have the capability to build this platform.

Link for more information

[1] derfor-ophober-danskerne-milliarder-i-banken

[2] Red Cross Denmark, 2017 annual report

[3]deloitte-Trendrapport-A4-jan2019-final-web.pdf


Group Members

List full name and e-mails (preferably not your student e-mail)

Stefan Graham [email protected]
Potchara Sumetha-Aksorn, [email protected]
Poul Gunnar Svane, [email protected]
Pierre Segonne, [email protected]

Share

Share on facebook
Share on twitter

More related