By Maggie Cutts, MBA Candidate
For a first-timer, the Social Capital Markets Conference (SOCAP) can be an overwhelming experience. Everything from choosing the right session to attend among all the stellar options, to making sure to meet the other players in one’s field (an opportunity seldom come by in some cases), to retaining and synthesizing all the information presented. Then there is the added pressure of making good on the investment you or someone else made in purchasing the ticket ($$$). Top it off with the inherent weight to the subjects being discussed - poverty, violence, resource depletion, etc…! I learned this time that the best way to handle this onslaught of intentions and information and connections was to do as we do in the sustainable field: take it one step at a time and try and be present in each moment.
So, after a deep breath and an open mind, I was able to appreciate the tremendous breadth and depth of the subjects presented. Something that tied it all together was the perspective that there were no right answers. Panels were made up of people who had experience in a certain issue area, but each experience was true to that person. Taken together, the audience could walk away with a better understanding of the different ways to approach a problem. This in turn has the effect of generating new ideas and scenarios, and ultimately, solutions.
Here are a few of the themes I took away from the event:
As the conference matures, every year there are new themes introduced. This is symbolic of the growing and maturing field of impact investing. With a few years under its belt, it can now be said that there are leaders who can lend their lessons learned to some of the up and coming newcomers. Take, for example fair trade coffee. This industry has done fairly well as far as making itself known to mainstream markets without compromising its mission for improved quality of life and product and ecosystem. What can it teach to those interested in improving the health of our oceans and the fishing/aquaculture industries? How can we create investment opportunities for sustainable businesses in this realm that maximizes positive economic social and environmental impact? Certainly at this point there are more obstacles than solutions, but attention to the theme is the starting place, and SOCAP is the perfect venue to do so.
Another theme that I recognized throughout the conference was that of what to do with endless data. How can it be used for the right reasons, and how can we use it to our advantage while furthering our own cause? In the healthcare industry, the quick transmission of vast amounts of personal health data is changing the landscape for quality and accessible healthcare. At a side event sponsored by SOCAP Health at the Fed, conversation included the innovative strategies being used by the tech industry to passively send health indicators to doctors to better assess and prescribe treatment preventatively. This includes asthma inhalers that are time-stamped and bathmats that can sense foot ulcers for diabetes patients. The theme here is a combination of cost efficiency and direct care.
Data also comes up in the discussion between investors who need to know the return on an investment and practitioners who wish to expand their metrics of impact to include more than a financial return. There is still no best way to do this, though significant attempts are being made (GIIN, IRIS) to codify and standardize impact. This remains one of the biggest challenges to the impact investing field. Other groups, like Impact Space are compiling similar data to enable foundations and other investors to find opportunities for investment
Alternative Business Structures
Appropriate financing is a huge challenge facing entrepreneurs who wish to grow their business while retaining their mission. Enough failures in this have been seen for there to be plenty of examples of how not to do things, as in the classic case of Ben and Jerry’s, to countless beverage companies who start off one way and end up a very different product after being acquired by a multinational. How does one grow well when mission is lost in the structures of finance? For a mission-driven equity investor, the challenge is to find an exit that is both profitable and appropriate for the company. For firms like Good Capital or RSF Social Finance whose role is often to provide mission insurance, the challenge is to make sure the company is able to stand on its own value laden feet after their sponsorship has left.
On the debt side, mission minded investors are also faced with finding a rate of return that both provides the return they need and is appropriate for the growth of the company. There is a balance at play here. Again, there is no right way to finance a social venture, what is important is finding the best fit for the type of business it is to become. This requires good planning, creative thinking, and expertise. Luckily for all of us there are more of these experts everyday as the industry grows and matures and learns from its mistakes.
In hindsight, thought leaders at SOCAP agreed that themes in past conferences centered on the “how” of impact investing and social capital. Whereas this question is still crucial to the development of the industry, there is now more discussion of lateral expansion. In closing, we were left asking ourselves who was not there and how will we include them in the future. According to the change makers, the progress of social and environmental innovation is now measured in part by inclusion. Diversity is equal to Value. This is no longer an asset class; it is a lens through which we shape our future.
For more on this topic, check out what the California Healthcare Foundation is funding.
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