As the coronavirus pandemic was taking hold around the world, a simple, three-letter code name became the most wanted weapon on the front-lines.
The N95 mask, a particulate-filtering face mask, was integral to keeping healthcare workers safe while treating infected patients. However, the sudden rise in global demand caused the supply chain to collapse, leaving governments scrabbling to find suppliers, and manufacturers.
As the Canadian government was putting together a group of companies to help secure millions of N95 masks and other personal protective equipment (PPE), a little known company called True North Impact Investments became an integral player.
So, how did ‘three guys, three laptops, and a dream’ end-up serving the highest levels of government with Canada’s most high-profile procurement challenge?
“It’s being in the right place, at the right time, with the will to act,” summarized Kai Chen, MSc’ 17, who is the founder and fund manager at True North Impact Investments.
Chen may seem like your regular management consultant, but for the past three years, he has been running this ambitious, side-business, which he describes as “the right-sized impact fund to allow private investors in Canada to have a global impact.”
Since its founding, True North has attracted some heavy hitters, like Frank O’Dea, co-founder of Second Cup, and Louis Desjardins of the Desjardins pharmaceutical brand: they currently serve as chairman and senior vice-president, respectively.
Together, the trio has led True North investments in a variety of projects, both in Canada, and abroad - from building retirement communities, vertical farming, to the development of more energy efficient insulating concrete form (ICF) blocks.
But the coronavirus crisis might have been its making.
The right place, at right time
With O’Dea’s influence in government and Desjardines’ experience in the medical industry, True North was able to get a seat at the table early on.
Additionally, while the disruption brought on by COVID-19 had levelled the playing field, Chen and True North had a number of established connections in China through previous investments.
Chief amongst these were True North’s investment in a Brazilian construction materials company, ARXX, that had already developed an upstream supply chain in China.
“We had buyers and logistics on the ground before it started… and that made a world of difference that we had counterparts that we could trust to buy for us in China,” said Chen.
That trust was vital when the U.S. Centers for Disease Control and Prevention (CDC) downgraded the list of Chinese suppliers from over 80 to just 14, largely due to quality control issues.
With the Public Health Agency of Canada taking its cue from the CDC, Chen was relieved to have their supplier in the clear as one of the approved 14.
Still, despite having all these pieces in place, the past few months have been quite a ride for Chen and his informal team at True North: From countless nights of phone calls where Chen’s own Mandarin skills came into play, to transferring in and out tens of millions of dollars from small business accounts that weren’t built for digital banking - all the while, trying to complete a $100 million plus contract with parties spread across Canada, the Netherlands, and China.
At one point, I was trying to figure out how to transfer around $40 million on my phone app while I was on a train in Germany, trying to make this transaction happen. It really blows your mind sometimes; what is holding this whole operation together?
According to Chen, they have successfully procured more than 17 million masks for Canada since May.
More to the world than M&A
Chen wanted to change the world, and he saw business as the best avenue to do so.
“I always believed there’s more to the world than M&A. When students grow up in our society, they always want to do good in the world… but in practice, and in (our) professions, we lose a lot of that,” said Chen.
Leaving university, he became the first hire at BerQ Capital, an investor and advisor in green tech, founded by Ivey entrepreneur Bas Van Berkel, MBA ’06. “It’s two guys, two laptops and a dream, he always called it,” reminisced Chen about the then small company that has since grown to be a major player in their industry.
“That was where I cut my teeth in venture capital and investing,” said Chen, who decided to head back to school and join the Ivey Business School’s new MSc program. Chen took the internationally recognized CEMS path (The Global Alliance in Management Education), which gave him the opportunity to work in Europe.
One thing he took away from the Ivey experience was how the program treated its students and built their confidence.
“From day one, the whole experience treats us as if we were professionals. And the contribution, the rigour of going through cases, the competitive environment that encourages people to stand-up and take risks - that builds the confidence you need to go out and succeed in the real world,” said Chen.
It was in the MSc Program that Chen met Greta Unterlechner, MSc ’18, who became his go-to, and first hire at True North.
They shared a lot in common, most importantly Unterlechner’s own desire to do good through business.
She had put together a career with experiences in across Europe, and Asia, and had herself felt frustrated with how businesses were far too eager to play the system, rather than initiate change.
After Ivey, Chen followed the path most travelled and settled down in a consulting role. While continuing to learn and enhance his skill set, Chen was going through an internal crisis.
What was I doing with my life? I’m flying 5-6 hours every Monday, and then back every Thursday, to oil and gas companies supporting giant, billion dollar M&As but I’m restructuring jobs. What value am I adding to the world?
It was during one of those weekly flights that Chen sat next to Canadian entrepreneur and humanitarian, Frank O’Dea. The two sparked off a conversation, which concluded with O’Dea saying, “Kai, I don’t know what it is yet, but we are going to do business together.”
That was the genesis of True North Impact Investments.
As the new side business was taking shape, Chen called Unterlechner, who was completing her study abroad project in India. What started as a way to make some extra pocket money, has become a staple part of Unterlechner’s own career.
“Since the COVID-19 campaign, it’s a bit more formal; and it’s been an interesting and fulfilling experience,” said Unterlechner.
Gearing up to change the world
For Chen, True North’s mission encapsulates what being Canadian has always been about.
We are a nation of immigrants from around the world, only one out of my team of eight was born in Canada… that speaks so much about the fabric of who we are as Canadians. Particularly in this current period of increasing isolationism and nationalism, we need to realize that we are stronger together, not apart. And if we are truly global citizens, we need to recognize that there are, sometimes, more impactful places to deploy capital abroad than in Canada.
As True North completes their contract with the federal government, Chen is eager to convert their momentum into building a team to operate the company at a professional capacity.
Part of that process is developing a sustainable and market viable investment thesis.
“For the past two-three years, this was a hobby. We had not one central investment thesis - we just looked at opportunities to see if they would work and have impact,” said Chen.
True North team meetings were never conventional, with members working across four time zones.
As the new, expanded and formalized team prepares for a round of fundraising, Chen is positioning to secure private investors who are looking to contribute their time, and expertise, as well as capital. After all, changing the world needs all the help it could get.
The pitch to private investors is simple:
If you are looking to make an impact, leave a legacy - True North can help, and in the process change lives, and livelihoods for many around the world.
It’s a pitch that is also very, proudly, Canadian.