CREATING IMPACT

by Jason Boudreau

Candid Conversations with Leaders in Life, Business and Philanthropy

PRAVEEN VARSHNEY | FCPA, FCA | VARSHNEY CAPITAL

WWELCOME BACK TO A NEW ISSUE AND A NEW YEAR! With hindsight literally being 2020, here’s to a 2021 filled with abundance in all areas of life for you and your family. To kick off a fresh season of Creating Impact, I am excited to share the story of another amazing entrepreneur whom I’ve had the pleasure of knowing for a number of years. He has a big heart and a deep focus on investing in growing companies that provide both a positive return for investors and the planet.

Through embracing this ethos, he has proven that both “doing well” and “doing good” are not mutually exclusive.

Praveen Varshney was born in October 1964 in Modinagar, a town in the state of Uttar Pradesh, India and was the first of three children of Hari and Madhu Varshney. Hari, Praveen’s father, was the main breadwinner for the family, working as a manager in a local factory. Two years after Praveen was born, his brother Peeyush came along and soon thereafter, Hari’s friend told him about the start of the MBA program being offered by only a few universities in the world, one of them being the University of British Columbia. Hari had done very well in his university years in India, graduating with the top GPA at Agra University and decided to pursue his MBA. He accepted a $1,000 scholarship from UBC and left Madhu, Praveen and Peeyush in Modinagar to get his MBA going and set up the family’s new life in Canada.

“At this time,” Praveen shared, ”my dad was really missing his family. He wanted us to be there with him and worked for hours as a busboy in the UBC cafeteria while doing his MBA to try and earn enough money to bring us over from India.” Eventually, Hari decided not to complete the program and left to pursue his Chartered Accountant designation. He began articling with Arthur Andersen as he knew he could make good money doing so and eventually, have the opportunity to bring his family to be with him. Two years later, Praveen was now five years old, he, his mother Madhu and brother Peeyush were finally able to move to Vancouver to join Hari for their new life. Shortly thereafter, Praveen’s sister, Vandana was born. “We grew up very modestly in East Vancouver,” shared Praveen, “I went to Killarney High School in my younger years and then as things got better with my dad’s work, we moved to the West Side and I ended up graduating from Magee High School”.

After graduating, Praveen decided to follow in his father’s footsteps, attending UBC. However, he was considering a very different path at that time, sharing that he originally wanted to become a teacher. “My parents strongly suggested I pursue other areas of study and so I decided to go into sciences which I loved, thinking I’d be an engineer. Well, it became quite the eye-opener. I failed physics and had a C+ average GPA. I knew I had to move on from sciences and thought I’d try business so I joined the Faculty of Commerce”. Praveen was loving the knowledge he was gaining and, just like his father Hari, decided to pursue the CA designation. “In the third year, I got a job at KPMG. I was learning all the different areas of accounting and was preparing for the UFE exam to get my CA. I literally failed every practice exam that I wrote but then, on the real exam where I needed 240 out of 400, I got 242 and passed!” (Despite barely passing his CA exam, Praveen would later go on to receive the FCPA, FCA (Fellow of Chartered Professional Accountants), the highest honour for CPAs in 2015, following in his father Hari’s footsteps).

After graduating with his UBC BComm, Praveen began working full-time in audit at KPMG. Wanting to learn more, he decided to apply to work in the tax department but there were no spots available so it forced his hand to leave KPMG and explore other opportunities. “I had a couple of different gigs in accounting after

I left, working with a few groups and doing some consulting. Then I decided to join my dad and his partner, Raj Chowdhry at their practice. They were doing some cool things at the time and I felt it was a great fit”. At this point, Praveen was now around 25 years old and through family friends, got introduced to a lovely young woman named Anuja. Six days after they first met, they got engaged. “One of my first life goals was to be married by age 25,” shared Praveen, “I don’t know why, it just felt like the right timing in life to get married”. Around the same time, Praveen was about to learn one of his most-important lessons in business and investing. “I was 26 years old and my dad and Raj approached me with an investment opportunity they were working on. It was going to get split 40% for each of them and they offered me 20%. I told them I didn’t have the money so I couldn’t participate but they smiled and said they didn’t ask me if I had the money! The lesson here is to do your due diligence because if it’s a good enough opportunity, you can always find the money! So I did my due diligence and saw just how great it was. My Father and Raj ended up lending me the funds for the deal and when we cashed out, I paid them back. It was such a valuable lesson to learn. Don’t let not having capital be a reason why you don’t participate in an investment opportunity.” This would prove to be a cornerstone event that truly shape Praveen’s career and life.

A year later, Pravenn was now 27, he got married and shortly thereafter, he, Hari and Raj formed a junior public company to explore the opportunity for diamonds on a property staked in The Northwest Territories. The company eventually merged into Mountain Province Diamonds and ended up discovering a large kimberlite pipe full of diamonds. They formed a joint venture with De Beers, called the Gahcho Kue Mine. It ended up becoming a multi-billion dollar venture with the stock going from $0.40 cents to a high of $9.00. The mine is still active today and in fact, at 157.4 carats, the largest “gem quality” diamond ever found in the mine was just discovered on December 17th, 2020.

“This was my first deal,” Praveen shared with me. “I thought all deals would end up being like this, which of course they were not! With this one though, I had an immense feeling of pride. We created hundreds of jobs and created a lot of wealth for many people. The mining town, the workers, First Nations - everyone benefited from it. This is what really stoked my fire for the model we still run today, called Public Venture Capital (PVC).” Following this venture and still at the tender age of 29, Praveen decided to take on a start-up in the casino business. “We worked with the First Nations bands in California to get a business called Thunderbird Casinos going. Using our PVC model, and with the strong financial results, the stock went from $0.25 to $6.00 a share. We also did the first ever listed convertible debenture in the history of the stock exchange. It had a 10% coupon and as the stock performed, the bond tripled in value. It was a fun industry to be in at that time.”

It was now the mid 90’s and the internet was starting to really take off. Praveen shifted his focus and founded his third start-up, an Internet Service Provider (ISP) called Axion Internet. “Business was booming!”, Praveen explained ecstatically, “we were signing up over 1,000 clients a month and at the same time, things started shifting as more and more providers came online. Consolidation quickly began and I decided that we would become a consolidator instead of being consolidated! We started purchasing small ISPs and struck a deal to merge with a larger company called Look Communications at $3.00 a share. Look’s stock had a meteoric rise to $27 which we benefitted from but when the stock came back down, I didn’t want to ride that roller coaster so I killed the deal. I took Axion back and then we eventually sold to a large ISP called Uniserve.”

At this point, Praveen was 30, he had reached certain significant financial goals he had set for himself. “It is all about creating value for others. The M.O. is that you must ALWAYS treat other people’s money better than your own and through creating value and wealth for others, you know that as a big shareholder yourself, you’ll do just fine!”

Fast forward to the new millennium. With a solid track record and a great reputation from their 10+ year run in starting and growing businesses, the Varshney family opened their family office in downtown Vancouver in 2000. “With Varshney Capital,” Praveen shared, “we wanted to manage our own money and be hands on investing in great entrepreneurs and lending our experience, expertise, wisdom and contacts to help their companies grow, thrive and exit”.

This particular time in life is also when Praveen first got a taste of impact investing, defined as investments made into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return.

“The first company we invested in was called Carmanah Technologies, a manufacturer of solar-powered LEDs” explained Praveen. “The founder, Dr. David Green, was incredible and working together, we helped take the company public and grow it to $75M in revenue in five years and so the stock was another

10X in return. Around the same time, our first child, my daughter Jaiya, whose name means “victory” in Hindi, was born. This was a somewhat serendipitous moment, having my first experience with impact investing at the same time I became a parent. It really put things in perspective for me and from that moment on, it has been a core focus of our investing: How can we make the planet better for future generations and use business as a tool to create the sustainable changes needed, without neglecting charity and philanthropy either?”

Two years later, in 2002, Praveen and Anuja welcomed their second child, their son Aneesh. Praveen shared that Aneesh’s birth further engrained the focus on impact and at that time, he started to think about the future in the context of three main considerations:

1) Just because something is legal, doesn’t mean it’s good or right.

2) How do I leave things better when I “check out” than it was when I “checked in”?

3) What is my legacy? Will anyone show up at my funeral and what are people going to say about me at it?

Around the same time, the Varshney family and the Feller family co-founded a company called MOGO (short for Money On the Go). They purchased the brick & mortar company Payroll Loans, sold off the physical side of the business and took it online. “Furthering the focus on impact,” Praveen explained, “we wanted to ensure that MOGO would educate consumers and increase their financial literacy to keep them out of the cycle of debt. We created an intuitive, user-friendly app and offered free credit scores so that people would know how to keep their credit strong and not get trapped by the big banks and credit card companies. Over the years, we’ve added more and more functionality and now you can even buy bitcoin with the MOGO app.” Mogo listed on the TSX in a $50M IPO in 2015.

Fast forward to the present day. The Varshney’s holdings are around 10% mining, 40% real estate and 50% impact investments. Their impact investing is done through two funds they co-founded, called Pyfera Capital and Humanitas Smart Planet Fund. In their social impact portfolio are companies like NEXE that create products from plant-based packaging like single serve coffee pods; Ronin8 that recycles e-waste; Little Kitchen Academy, a franchise to teach kids as young as three how to cook. Praveen is particularly excited about his new social housing real estate company called 3H Properties.

In tandem with the impact investing focus today, Praveen shared his business and investing philosophy: “To do good business, with good people and make more money so we can do more philanthropy and help more people! Money is just a tool, don’t hoard it! Hold onto it gently, create a nice karmic loop, think of it like a river and let it flow…don’t dam the river! What drives me is keeping my buckets full:

1) The Angel Investing Bucket - Help other entrepreneurs build great companies and reach their potential!

2) The Philanthropy Bucket - Give to others and create positive change!

3) The Long-Term Savings Bucket - Secure your future!

4) The Lifestyle Bucket - Enjoy your life and live it to the fullest!

5) The Random Acts of Kindness Bucket- Just randomly help others!

I’m also building my legacy bucket and I feel like I’m just getting going. A lot of people that are my age that I know are retiring and I keep asking myself, why would I ever retire? I’m in my 50s and I’m just hitting my stride!”

I asked Praveen to expand on his Legacy Bucket. “I would think that for anyone, how your kids turn out is your biggest legacy. We’ve taught Jaiya and Aneesh life and entrepreneurial skills and they are thriving in their own lives. Since they were five, we had them say aloud daily affirmations such as Make it a great day! Have fun, laugh and smile often! Always buy real estate! Remember peoples’ names and use them often! Be interested and be interesting! It’s amazing to see the people they’ve become. It was evident on a family trip a few years ago when Aneesh said to Jaiya, “Jaiya, I’ll tell you something. I’ll make all the money and then you can give it all away!”. This simple statement made us feel very proud”. Another “rocking chair” legacy achievement was Praveen receiving the 2020 Greater Vancouver Board of Trade Wendy McDonald Diversity Awards Outstanding Mentor award for his career of mentoring.

In closing our candid conversation, I asked Praveen to share some words of wisdom as if he was talking to his younger self and as these responses always seem to do, his made me reflect on my own life.

“Take time to discover what you’re passionate about AND what you’re good at. Focus on where those two intersect and double down on your strengths, forget trying to improve on your weaknesses! Remember, the universe has a grand design, let it play out. Say yes to a lot of things like meeting new people. You never know what might come out of a random interaction – that piece of advice or a contact could become your “luck”! Focus on building your personal brand especially using the value of Integrity as early as possible and most importantly, live your life by the acronym UPOD: Under-Promise, Over-Deliver!”

JASON BOUDREAU CFP, CLU WEALTH ADVISOR Principal & Founder - VELA Wealth