Cameron Neil - Red Hat Impact

Welcome to another VC Wisdom podcast. We have Cameron Neal with us today. He's the founder at Red Hat Impact. It's all about impact capital innovation and orchestration, impact market building. Cameron is also the co-founder and director at Land for Good. You're an associate at the Good Business Foundation, Cam. So welcome to the podcast. Tell us a bit more about yourself and what you've been up to.

Hey, Charles, great to be here. Thanks for having me. Yeah, I think the theme that comes through from the things that you just went through that I do, I have a big portfolio, but I'm really focused on how we reimagine how capital works so that we can solve 21st century challenges. That's, you know, the core of my work across the range of different things that I do. That's a journey I've been on in my professional career for like 35 years. And That's kind of where I've landed now, where I think I could have the most impact.

And did you always want to do good from day one in an entrepreneurial way, or did that come later on once you had the, I don't know, big financial exit?

No, look, I wish I'd had the big financial exit, Charles. But no, look, when I finished school, I think when I was looking around for what do I do, My thing was stopping kids killing themselves. Like, I, you know, my school had been touched by a young man committing suicide that year. And I'm like, okay, what's going on with that? How do I stop that? And I guess my journey since then has been, what's the best way I can contribute to that? And, you know, it's been a journey of discovery of what's going on in the world. You know, as a 17-year-old, I didn't know much about how the world worked, you know, and increasingly as I've gone along, it's like, For me, I think the primary thing that leads to what that young man experienced is the way capital markets and capital works. And so, okay, how do we reimagine that? How do we change it? So that's kind of been the throughput of my life, has always been about how do I do that? I went and did a psychology degree thinking that might be the answer, to provide counseling and support, and decided that that wasn't it either. Yeah, it's taken me a while to get to being an entrepreneur per se. Like, I think I started out, you know, working in not-for-profits and then working in government, um, but increasingly drawn to the world of business and markets and capital and technology as like, you know, that's the theater where so much of our world is written these days, right? And so that's where I feel like I need to be to have the influence that I want to have.

Right. Um, it's interesting. Uh, it's— I mean, kids killing themselves already is always pretty brutal, right? Because we're at such a young age and we're like, yeah, uh, he was living such a different reality than us, probably didn't share enough. It's like mental crisis. Plus there's a lot of that nowadays, right?

Yeah.

And one suicide can trigger like another, right? Because it's like a sort of an open invitation. It's also sometimes a fuck you to society. It's like, Hey guys, I just, I, I'm unsubscribing. I don't want to be here.

In a pretty extreme way. But yeah, look, I think that's right. You know, I actually, you know, on my journey, I spent some time running a youth service where like my clients were all potential candidates for that. Like we had to call police on suicidal ideation and stuff for kids. And like when I kind of got into it with those young people, like they had no vision for the future. Like they had been written off. There was no hope. They were living in a community that was up to 3rd generation unemployed. Industry had been wiped out. Like a whole bunch of stuff had gone on for them. And when they thought about the future, they weren't in it and they weren't valued, right? And I'm like, okay, what's going on here? You know, that's— and that was kind of a real awakening for me in terms of this journey that I've been on. But, you know, like it being around those young people was just kind of like, Like you mentioned, different worlds, right? And it was like they lived in a completely different world than the one that I understood it to be. And that was quite confronting.

And why do you think that most kids didn't choose the social path or doing good like you did? Why were you like so obsessed with that?

I think, you know, I think one of the differences is agency. I think part of being an entrepreneur, right, is you see the world a bit differently. Where other people see challenges, other people see crisis, you see opportunity. And like, that's probably just luck for me that I have that kind of predisposition to see that. And, you know, I saw a way that that could be different and like it didn't have to be the way it was. And I felt I had agency to do something about it compared to, you know, these young people that didn't feel like they had any agency to do anything about the world that they were in. Right. And so, Having that, I felt a real responsibility as to how do I use that agency, right? And found other people that had a similar view of like, okay, great, we have privilege, we have agency, how do we best use that to make the world different and better, including for those people that feel like it's hopeless and don't have agency? A lot of that is people doing what they see and the culture they grow up in and the people that they're around. And so again, I'm lucky, I guess, that I didn't come from a wealthy family or anything like that either. But there's something in me, which I recognize now in retrospect, that just had a different perspective on it and was different perspective on, I can do something about this as opposed to it being a hopelessness of, oh, it's all just screwed and there's nothing I can do and that's just the way it is. And that's where I guess the entrepreneurial thing really kind of kicked in for me, is, is that it was more of a framework or a mindset or a spirit at the beginning before it became enterprises that I started, right?

Interesting. Yeah, because there's a lot of socially focused people that don't have the entrepreneurial stuff in them, not just the motivational and grit part of it, but also being numbers-oriented, goal-oriented, being like systematic, strategical. Looking at your career, right, you had so many positions. Sometimes you work for people, some other times you work for yourself. Which, uh, part of your career are you the most proud of? Which one had the greatest impact in your opinion?

Hmm, that's a really good question, Charles. Um, as I say, I have had a portfolio career, as you've said, and I think, you know, what, what has been the core is, you know, how do I like make change happen. And I have been a gun for hire and gone in to do things. But I think, you know, probably, you know, there was that experience where I was running that youth service in Ipswich that was kind of transformative for me. I think the next big thing that was transformative for me was stepping into running fair trade in Australia and New Zealand, you know, tapping into a global perspective, a global system that was all about how do we harness business and trade and commerce to make a difference, right? And getting into that, not just from the philosophical point of view and the doingness of it, but I got to work with some of the biggest brands in Australia and New Zealand as part of that. I got to travel to Europe and to travel to Asia to meet other people doing this. And it kind of really broadened my perspective out of just the Australian market and began to see I guess for the first time, you know, coffee growers in Timor and the opportunity that them growing and trading in coffee presented to them and their community, right? Like, that was the— I'm like, oh wow, seeing coconut and, you know, growers in Samoa and, you know, just what they were trying to overcome to do their business and just kind of seeing business everywhere and seeing that there was a different type of business. There were people starting businesses with this intent. Like, I put that phase of my career down as I was trying to convince people that you can do good through business. And then I saw all these businesses that were doing good. And, you know, that, that was, you know, the mid-2000s through to early 2010. And I think, yeah, there, there was a reckoning in the world and there was a kind of understanding of, oh, supply chains, you have a responsibility for that. And so, you know, but, but then, you know, I've moved beyond that to go, well, okay, there's lots of people now starting. And as you said, starting businesses to do good is kind of pretty de rigueur these days. Like, it's like, okay, yeah, we'll do that. But my next phase was like, well, how do I help those people who have started businesses to do good, run good businesses? Because as you said, many of the people who start it are not actually business people, right? So how do you kind of support that? And then what I found out of that was, oh, actually, no matter how good we make them, the way capital markets work does not fit what they need to be able to grow their business. So how do I solve that problem? And that's kind of where I've landed. But I think that fair trade experience where I was in that and like, you know, doing 70, 80-hour weeks working globally, working from farmers all the way through to, you know, supermarket CEOs in Australia and trying to work across that whole value chain, that was a transformative thing for me to really understand, I guess, how money works, how finance works, the reality of kind of business and trade. And that's kind of really what pivoted my career to the direction that I've been on since.

Isn't the market functioning because it is unfair? Uh, is the market fair today? Should we aim to make it fairer? Isn't that disrupting the whole thing?

Look, um, I don't think anyone would argue that markets are fair. I think we see pockets of stuff that are good. I think we see people beginning to understand that you can use those same tools to get different outcomes. I think the key thing that I really got a hold of during that is to understand that markets are made. I think the way— it's back to that entrepreneurial mindset. I think for a lot of people, the way the world is, is the way it is. It's like a natural order or a natural law. The way a lot of people talk about markets and capitalism and finance is it's like a natural law. I'm like, no, it's completely made up. What it pays attention to is decided by us. But many people just never reach that, like never reach that understanding, right, that that is possible, that for it to be different. And I think it's one of the powers of what fair trade did is it pointed out that you can make it work differently, and that was important in shifting, you know, shifting people's behavior and mindset. Is there a long way to go? Yes, a lot of people didn't want that change, you know, a lot of big companies that got involved with fair trade then pulled out because they didn't want to give up the power, didn't want to have the transparency, that that kind of thing required. So like, markets are not fair. Markets are made by us, and they're still dominated by, you know, um, as a, a operating system that is really trying to extract wealth to the top, right? And when you, when you look at something like a chocolate value chain, it's dependent on all these cocoa growers in West Africa, for example, where there is child slavery and there's kids, you know, kept out of school and like violence, whatever. Because it's— because they're poor, they're trapped in poor, in poverty. Whereas the, you know, there's 4 companies in the world that buy that cocoa, they're making tons of money. You've got people speculating on the price of cocoa on futures markets making money. And, you know, um, we're getting cheap chocolate and the chocolate, you know, companies are making money, but the farmers aren't, right? So like, you know, I think there's just— that, that's an operating system. Like, while you can point to cocoa for that and chocolate. Like, that's not an operating system that is at all non-typical of the way that these value chains work, right? And so, you know, I think, I think there is a long way to go on us understanding how we make markets different and function differently than what they do, and to understand that we make them, like, that they are not inherited, they're not gravity. Like, they, they function the way that we ask them to function.

Right, right. Huh. I also understand these kids because they need like to make money for their family to survive, and sitting on a desk is pretty ridiculous. Is like, uh, time waster for now. Might yield in 10, 15 years. I think the education system is broken as well. I think kids should be able to make money, right? Like, why have them stop? Just like not have them work in horrible conditions and As a human being, if you have a kid step down in a hole, I mean, it makes you a pretty fucking terrible human being, right? It's like, dude, it's a 7-year-old kid, right? Like, that's abuse.

Um, I have a 7-year-old, right? So, you know, like, it's something that I, I think about. Um, but yeah, like, I think when you look at those families, they're making rational decisions over where they are, you know? Like, what— how do they survive, right? And I think, you know, for me, if I go back to that, you know, young man committing suicide at my school, and like that was a pattern of many, um, I think what, you know, it's, it's about the, the dream about equality of opportunity, right? Like what the opportunity for us all to be, be who we can be and to express our talents. And like that is, you know, that is, um, denied for many young people who are on farming, you know, communities in Africa. And that's one of the great quotes that I always come back to. Um, I can't remember who said it, but, you know, they're kind of saying, you know, um, not so much celebrating Einstein's existence, but just thinking and thinking about and grieving for the number of Einsteins that are in the fields of Africa that never have the chance to give us their gifts, right? Like the next Einstein that could have the theory that could change everything could just be one of those kids in Ghana, and we will never get their abilities because they never get the opportunity because they're farming cocoa, right? And so, you know, like, that, that's, that's— it's a, it's obviously a utopia and a dream that you can have that equality of opportunity. But for me, like, that's like, how much are we losing? The opportunity cost for us as a world that people can't be who they are and express their talents. And, you know, I think that's that's not what markets are designed to do. And that's, you know, what I would like to see markets designed to do is like, how do we give— no matter where you're born and who you're born to, that there's an opportunity for you to express your talents and to participate. And that's not evenly distributed.

Right, right. Yeah, my brain is like, um, Starlink, right? Give these things, these kids Starlink, but then they need electricity, basic infrastructure. But even if they would become, I don't know, a tech billionaire, whatever, what Africa needs probably like basic stuff like agriculture, but the land is very arid, right? So it's a tough problem to solve. And then my naive brain is like, can AGI solve all of this, right? Like just give them, I don't know, proper soils with new discoveries, new R&D. There's a gigantic brain drain on Africa as well. So all the talent is leaving. So it's, it's a very hard problem to, to solve, you know. Um, don't you get desperate from like trying to hustle so hard for decades? And I mean, we're seeing progress, right, in Africa?

100%, we are, you know. And we're seeing progress in Asia, we're seeing progress other places, right? But like, like that, that what you point out is, is very true, right? Like a lot of things have to change. And you do see amazing businesses jump up. I cannot think of the name.

In Nigeria especially.

Yeah, there was an awesome— I think this one was in Kenya, an awesome fintech that launched in Kenya, got a bunch of VC investment, was kind of doing great stuff. But after 7 years, it collapsed, right? And people are kind of dissecting and going, oh, the business failed. And I'm like, no, no, no, look, The business was great and the solution was awesome and the technology was awesome, but you expected them to perform the same way they would as if they were in Silicon Valley, but they're in Kenya. And what they have had to do to overcome this ecosystem debt is they've had to do like 20 things with their money that you don't have to do if you're running that same business in the US, right? They've had to go out and build relationships with banks and educate them about how to use the technology and how to connect stuff up. These are costs to their business that a business who's not there doesn't have. And so, I think a lot of people understanding that transporting those same kind of investment models and investment expectations into the African market, and that's just one example, but other markets just doesn't work because you don't have the same ecosystem arrangement, you don't have the same infrastructure, you don't have the same stuff that you can take for granted in other locations. And so it is a much more patient, longer thing. And, you know, I think this for me is, you know, I've mentioned to you, like, one of the things I'm really passionate about is, like, in those contexts, I think you have to think about returns to markets, how you build those markets, how you kind of drive this, the outcomes you want to build ecosystems, as opposed to being so worried about returns to investors, right, for those kinds of things. Like, You, you need decades-long kind of horizons for this. You know, 7-year exits just don't— 10-year exits for funds and stuff just don't work in that context because there is such an amount of stuff that is taken for granted in those investment models that you just can't transport into those markets and see those same returns, right? You— that there are things that need to happen, um, in, in those communities for these businesses to work.

Interesting. So how are you helping solve that? And me as an investor, if I would invite— invest in some of these companies out there, yeah, sure, social in mind, should I sort of limit my returns, cap them, I don't know, 20%, 80%? What's the model here?

It's, you know, I think, you know, I think in general, What we are seeing is that there are investor returns. They're just not, you know, they're not built around a VC power law, you know, where you're kind of investing in 100 things and you're relying on like 1 or 2 of them to kind of give you the portfolio return, right? What you're trying to do in these contexts is, you know, maybe get a 4x, 5x return over like 10, 15 years by getting success across, you know, 20 companies and 18 of them succeeding, right? And so, you know, it's, it's a kind of very different, um, patient, uh, patient approach. But, you know, you need different investment vehicles, you need different investment terms, different investment horizons. And so, you know, we, we have been, um, piloting some stuff because, again, trying to invest into women's business in the Indo-Pacific, for example, is something that from the impact space, a lot of, um, governments, a lot of, um, DFIs, a lot of, you know, impact-focused investors want to do, but they've struggled to do it because they turn up going, well, we want to invest 6, 7 figures because that's how our fund works or how our due diligence process works. And there's just not those kinds of businesses in those markets, right? What you've got is a woman running a childcare center with a cafe that needs like $20,000 of inventory. And how do you finance that? And the banks are immature, they can't access those kinds of forms of capital. But at an aggregate, and this is kind of when we're doing this returns to market stuff, what we are seeing is if you can build kind of aggregation mechanisms to kind of pull lots of those people together into buying groups or distribution groups or logistics. Because, you know, it's, it's the purchasing, it's the distribution, like, you know, these kinds of things is where these fragmented markets really fall over and don't work. And so, you know, how we, how we can solve that is by using capital to like bring people together. And we, we have been delivering like 8%, um, returns to investors, but it's debt, not equity, right? Like it's non-dilutive credit stuff that really kind of works more in these emerging markets. But you get higher liquidity, right? Like, our investors have got exits, you know, they've got returns, you know, and they've got their money back, you know, as opposed to tied up in a fund for 10 years. And so, you know, they can then recycle that into other things if they want. But, you know, it's a different— it is a different quality of thing than a kind of, you know, Silicon Valley kind of VC going into a venture fund and, you know, chasing those unicorns. It is about how do you have a diversified portfolio across a, a range of companies that together represent a de-risked context, as opposed to investing in individual entities. You're investing in markets, you're investing in collectives that can give you those 8%, 10%, even 12% returns, but on, you know, but on, um, liquidity cycles, um, that you can do that with. Now that means we have to use different instruments like evergreen funds and stuff so that people can put money in and out because the money needs to be there for not the 3-year loan we've got from Charles with his 10% return on, that needs to be there for 30 years. But we'll buy out your position with someone else who'll now come in and go, hey, you've proven that, I want to put my money in for 3 years and get that 10% return and get that impact, you know, return as well. So, you know, it is a very different thing. So, you know, for investors, it's a question of What's your portfolio look like? What do you want to do? Certainly, play in equity, do that. But if you want to play in something different and you want some impact returns, when you go into different markets, different exposure, learn different stuff, you can still get returns, but it's far more 8%, 10%, 12% debt, 3-year, well, 12-month, 3-year, 5-year kind of cycles. That just gives you liquidity and exposure in those markets. But it is a different quality of thing. You're not putting money in and hoping for the unicorns. It's very much a, how do we lift all boats and then generate those returns based on that?

Interesting. And why should they pick you? Because there's a lot of people doing that as well. How do you justify them choosing you?

LPs? I think what we have done is built a reputation and brand of doing stuff that's, um, innovative in the way that it, uh, puts the people who we're giving the money to in, uh, positions of power and decision-making. Capital's not— capital comes with power, right? What we seek to do is to actually, you know, and we think it leads to better outcomes and, and actually, you know, wealth building for those, um, those women themselves. So that, that project I'm talking about in Indo-Pacific, those women who use this trade finance vehicle to buy the inventory and equipment, they own the thing that is deploying that capital, you know, and they have an ownership stake in the capital mechanism. And so for a lot of investors and LPs, it's like, ah, there's like a premium. Like, you know, it's, it's like when you go out and go, well, I could just buy this and I'll get my 8%. It's like going to get my 8% and I'm, you know, getting impact. Oh, and I'm shifting power. I'm giving these women actual power over the value chain that they're a part of. That's really interesting to me. And so, you know, I guess we're kind of offering, you know, a little bit of a gold standard or a bit of like something extra on top of traditional debt investing, right? To say it's the way that capital gets deployed, who it gets deployed with, who has decision-making over that, that's also shifting the way things work. It's not just we're getting you an 8% return for doing something good. Like, it's actually trying to rewire, um, that stuff for the future that give these women more empowerment, more resilience, uh, more say over what's going to happen for them for the next 10 years.

My cause is entrepreneurship, right? Creating as many founders, maintaining as many founders in the game as possible. I'm opposed to corporations. I think, uh, The AI future means having your own job and not being employed as well, 'cause AI will be quite powerful. What can I do as a founder myself, as an investor myself, to 10,000x this cause and create and maintain as many founders as possible?

Excellent question, Charles. I think with these communities, you know, there are, there are some that are digitally enabled, some that are not. And, you know, and you mentioned before around, you know, uh, it's not just having digital, like you need electricity. And so like some of these communities, they need that electricity, right? So, you know, I, I feel like there's, there's layering here. Like, you know, how do, how do we get people, um, electricity stable? How do we get people digital access? How do we teach people digital skills. And I think you're right. I think there's a real opportunity for them to be able to have a very different interface in the world, like stuff that you and I haven't even imagined. I think you've probably imagined it more than I have with the work that you've done with agentic AI, right? But imagine that organization of women can deploy agentic AI to find the best deals on the products that they want to buy. And they're negotiating with trade suppliers in China, you know, and to, to get the best deals on the glass jars that they need. And, you know, that, that just kind of, you know, that, that would blow their minds, right? At the moment, like, they just don't have the skills or capacity or even know who those suppliers might be, right? So, like, I think there's a lot of greenfield stuff in a lot of these communities that, again, as individuals, it would be very difficult to employ and to uplift. But I think through collective models where you've got an organization that is owned and run by 500 women entrepreneurs and founders, or 1,000, like, that gives an economy of scale where you could see stuff that could actually kind of make sense to invest in and to, and to help drive change with. In other communities, it's not the same, right? And like, that's, that's just one model. But, you know, the work we do in Asia, like, Asia's probably got a lot higher base of kind of digital literacy and renewables access and things that you can do stuff. And we certainly see some amazing founders doing great stuff with, um, you know, digital and markets and stuff, um, out of Southeast Asia in particular— Vietnam, Indonesia. You know, there's some really cool stuff there. How that transforms their business, I don't know. How we— what I do know is that we've got to figure out how to better resource them with the capital they need to do that. Because that, that does, you know, some of it does reduce cost, as you know, you know, the cost of running those businesses and the cost of capitalizing those businesses, whatever. But a lot of those businesses are hard infrastructure. A lot of those businesses are, you know, moving agricultural products, processing, you know, these kind of things like— and that, that is capital intensive. And so, you know, I guess, you know, there's a, there's a new future that I'm beginning to observe as to how different that business world will be in 10 years as these digital tools and agentic AI and things begin to get more widely adopted. The danger is that, you know, we see the same people who are already left behind being left further behind, right? And that's what I'm really passionate about stopping. And I think the way to do that is probably through collectivization as opposed to individual enterprise. wise kind of approach. So, you know, like, yes, I love working with founders too, Charles. It's a huge, huge part of what I do and I love it. What I see is that when we're working with those founders, it typically identifies a market problem that is holding them back. And it's like, how do we solve that problem? Right? And so trying to solve the problems at the level above the founder so more founders thrive is kind of where I think we can all try and focus is let's lift our eyes out of individual enterprise and returns on them and say, well, what market are they in? What's holding them back that's at a market level? How do we shift that? And if we can do that, then I think it opens up and extends opportunity to hundreds and thousands of founders. And that's, I think, something where you and I are aligned in, like, how do we kind of do that? And I think it's a market-level intervention. And how do we build vehicles that can finance that market-level intervention? Because most models are built around funding individual enterprises. Like, you know, how do we do that? That's the thing that interests me.

There you go. Yeah, I love that. Where can people find out more about you, Cam?

redhatimpact.com would be a great place to start. Um, check out, you know, the work that we're doing, uh, in the Indo-Pacific and, uh, in Asia. Um, you can find me, um, on there and onto LinkedIn. Um, just search Cameron Neal on LinkedIn. There's not too many of us. Uh, there's only one that has Red Hat Impact in the profile, so you'll find me there.

There you go. So that was Cam and Charles for another