CHICAGO (Reuters.com) - When it comes to understanding U.S. sensibilities, European entrepreneur Mats Lederhausen has always been ahead of the curve.
The former wunderkind helped draft McDonald's early sustainability practices and later turned the company's emerging Mexican concept Chipotle into the industry standard for fresh fast food. Now, he is strategically forging his own investment agenda.
His three-year-old growth capital firm, BeCause, is buying into sectors such as education and healthy food with positions in select companies such as the tutoring firm Sylvan Learning and restaurant startup Roti Mediterranean Grill. The investments are put through rigorous screens that test their prospects for both profitability and contribution to the greater good.
"The greatest business leaders of any era have always been driven by a purpose bigger than their product," said the philosophically inclined Lederhausen, 46, who was born and raised in Sweden, growing up in what he describes as a progressive Jewish household. "That's been my philosophy for 20 years."
Lederhausen tested his ethical business ideals early on. After taking the helm of his family's McDonald's enterprise in Sweden in the early 1990s, he pioneered progressive practices such as installing windmills on top of drive-thru's and eliminating antibiotics in animal feed in the company's supply chain - all while putting up solid numbers for the division.
"We converted McDonald's into a very green enterprise," said Lederhausen, who was recruited to McDonald's corporate in 1999 to head up global strategy. "It was a good thing for me, a good confirmation that you can run a business with good values and make money."
When scrutinizing investments for BeCause, Lederhausen looks for businesses that can help tackle social problems ranging from rising obesity rates to dependence on fossil fuels, issues he is personally passionate about.
"Can people get excited, not only employees and our partners, but society?" he said, noting that another criterion is whether an investment candidate can be easily scaled.
Roti, for instance, offers hummus, kabob, salads and other affordable selections from the Mediterranean diet, one that has been associated with a healthy lifestyle. The budding five-store chain aims to be transparent, using fresh ingredients and offering clearly displayed nutritional information to customers.
Identifying the next big trend is not an exact science and neither are BeCause's investment goals, which Lederhausen said usually fall between $2 million and $20 million. The firm is steadfast about its independence, one reason it has avoided raising funds from outside investors.
"We don't want to build a large firm," Lederhausen said. "We want to be able to say no and have fun while we're doing it."
BeCause has teamed up on some ventures with Chicago's Sterling Partners, the $4-billion private equity firm known for its portfolio of educational ventures, including Sylvan, where Lederhausen serves as chairman. It has also done some deals with Boston-based venture capital firm Cue Ball.
"Mats is very, very selective," said Eric Becker, managing partner and cofounder of Sterling. "I think a lot of what's he's passionate about connects to what makes sense for small businesses."
AN OUTSPOKEN VOICE
Lederhausen has never been shy about his opinions. While still heading McDonald's Swedish joint venture, for instance, he pressed the corporation to adopt changes that included company-wide sustainability measures.
"I wrote a lot to the board; I was unhappy with where McDonald's was going," said Lederhausen, whose response came from CEO Jack Greenberg in the form of an invitation to join the executive team. Lederhausen moved his family to the Chicago area, eventually taking over McDonald's Ventures, a role that allowed him to flex his entrepreneurial muscle with emerging brands.
He has maintained the direct approach at BeCause, which he runs with partner Chris Catalano, another alumnus of McDonald's Ventures. Lederhausen's global perspective, including a stint in London for The Boston Consulting Group and extensive worldwide travel, has helped to hone his consumer insights.
Entrepreneurs like Roti cofounder Larry Lessans said they appreciate his candor.
"He said, ‘I don't like your design, your lines are too long,'" recalled Lessans of Lederhausen's initial review of the concept. ""But the most important thing you have right - your food is the best. I love your concept and I'll correct everything else.'"
"(He) is chairman of our board because he has the most experience," added Lessans, who is looking to have as many as 20 Roti units open within 18 months.
Lederhausen's track record with fledgling concepts speaks for itself. Working with Chipotle Mexican Grill founder Steven Ells, he built the business into a nationwide powerhouse known for its efforts with organic ingredients, taking the chain public in a highly successful IPO. He also turned the RedBox DVD kiosk concept into a successful media rental service, later selling it to Coinstar.
"He had a very simple approach to understanding every single business," said Dan Rowe, CEO of Fransmart, a restaurant development chain. "He understands how to make a concept great."
Those who know Lederhausen best said that deep down he's really just a philosopher in a business suit. His firm's Web site is peppered with quotations from the likes of Gandhi and selections of his favorite books, such as "How" by Dov Seidman, the social responsibility expert who has helped companies such as Pfizer, DuPont and Procter & Gamble develop more ethical corporate cultures.
"When he says purpose he means it," said Seidman, one of Lederhausen's closest friends and a frequent sounding board to help determine whether potential investment opportunities pass the ethical sniff test. "I've always been struck by the fact that he takes it so seriously - he doesn't overlook anything."