The Nonprofit Law Blog has been writing about SOCAP (Social Capital Markets) since 2010, and I am thrilled to be attending and covering the annual SOCAP conference this year.
SOCAP16 is gathering impact investors, social entrepreneurs, foundations, corporations, global nonprofits, and other valuable strangers all contributing to a vibrant marketplace for socially, environmentally and economically sustainable solutions.
SOCAP identifies itself as “a network of heart-centered investors, entrepreneurs, and social impact leaders who believe in an inclusive and socially responsible economy to address the world’s toughest challenges.” Its mission is “to create a platform where investors willing to put money into enterprises focused foremost on social return can meet the world’s most innovative entrepreneurs.” The SOCAP annual event, operated by Mission Hub LLC, a Certified B Corp, is the biggest of its type and has drawn more than 10,000 people.
SOCAP16 will highlight recurring themes from the community including:
- Impact Investing
- Neighborhood Economics
- Cities: Centers for Change
- Inclusive Entrepreneurship
- Clean Energy for All
- Sustainable Food and Agriculture
- Country Context
Below is a running list of highlights:
Presenters at Wednesday’s opening plenary session discussed the “how” and the “why” of social capital markets.
- Impact At Scale – Nancy Pfund, Maya Chorengel, and David Kirkpatrick began with their journeys to scaling impact and considered how to continue the growth.
- The vocabulary for objectively measuring impact is still emerging – Maya Chorengel
- We have to be in this for the long haul, we are disrupting age-old industries – Nancy Pfund
- “We need responsible stewards of capital who are committed to impact”- Maya Chorengel
- As we look to the future, we have to ask ourselves: How do we drive policy change? How do we mentor and build the impact investing field more broadly? – David Kirkpatrick
- Matthew Weatherley-White posed a question: what if the institutions who hold the world’s invested assets implemented ESG (Environmental, social and governance) factors into every phase of the investment process?
- Weatherley-White suggested reframing the opt in/opt out choice: what would happen if investors were actually asked to opt in to investing in companies that exploit workers and corrupt the market, versus opting out of investing in sustainable and impactful funds?
- Like organ donation, the prevailing view in countries that opt in is that donating organs is a move of extraordinary altruism; in opt out countries, it is seen as ordinary community behavior
- Rather than asking investors to fight cognitive biases of opting in to contributing to socially and environmentally responsible capital markets, asking them to opt out would change the system irrevocably
- Transformative Edge of Impact – Morgan Simon and Edward Dugger III
- Markets are good at scaling things that are better, but better doesn’t mean fair – Morgan Simon
- The goal of impact investing should be to create more value in communities than we take out in return
- Impact investing is reinventing investing. How do we create the most powerful ripple effects that we can? How do we include the excluded? – Edward Dugger III
- Jed Emerson (who has said, SOCAP is where Wall Street met Burning Man) talked about wanting to shift the focus from “how” (how to structure funds, how to measure impact, how to raise capital) to include the “why” (the purpose of capital)
- The “why” question is a deeper, historical question that requires looking at the parts and the Whole
- When the focus is only about the mechanics of impact investing, there is a risk of developing high functioning funds with limited impact
- “You can’t have cheap impact. Intentionality is required”
- When we put financial return above everything else, we’re all contributing to the world we’re trying to avoid and change. We need to do something radically different – Matt Stichcomb
- If we want to change business, we need to change business education (who is teaching, and who is being taught)
- Stichcomb has 6 principles of what it means to do good work. Good work.. honors nature; nourishes the whole human; invokes community; embodies integrity; strives great, not big; leaves room for the mystery.
Navigating Impact Investing: The Pursuit of Clarity and Simplicity
Debbie McCoy, Yasemin Lamy, Nick O’Donohoe, Giselle Leung, and Cathy Clark
- For simplicity and clarity, investment teams need outcome orientation from investors. Investors sometimes do not have the “why” in mind when they choose to incorporate something other than risk and return into their investment portfolios, and can have a range of interests from broad to niche. – Debbie McCoy
- Find lessons in past structures and unpack how these transactions came together. – Giselle Leung
- Create patterns and simplify investment structures to core elements that others can replicate. – Cathy Clark
- For Omidyar Network, the definition of impact is: what is the direct impact on that firm or organization’s beneficiaries? – Yasemin Lamy
- For the Gates Foundation, impact management is more important that impact measurement. Beneficiary identification and governance are critical – Nick O’Donohoe
Impact Women Tell All
Cody Nystrom, Fran Seegull, Tasha Seitz, Johanna Posada, Nancy Pfund, and moderator Stephanie Nieman
- Statistics show the gap between the large percentage of women who are asset owners and the small percentage of women who are investment firm partners.
- When there are women investment professionals at investment firms, firms are 3x more likely to invest in women entrepreneurs.
- There are more women impact investors than women who are traditional investors. Why? Is it a safer place to invest?
- Panelists refuted. Impact investors have to hit returns like any other investor, but must optimize on two levels: returns and impact, which inherently makes the work harder.
Extinction or Extension? The Role of Corporations & INGOs in Social Enterprise
Ryan Johnson, Jitendra Kavathekar, Wendy Gonzales, Lewis Hower, Marilia Bezerra, and Kevin Connolly
- Why should INGOs, large corporations, and social enterprises partner?
- From a scaling perspective, partnership is critical – Kevin Connolly
- Startups that use innovation and technology to solve problems for human beings need resources from large corporations, but also need INGOs in the field to implement their ideas.
- Social enterprises can learn from INGOS and large corporations about the need for process.
- In order to form meaningful partnerships, each side must get over themselves and their own agenda for the sake of coming together. Each side must be willing to experiment, innovate, and step out of their comfort zone. – Marilia Bezerra
Crowdfunding For Impact
Ken Nguyen, Eve Picker, Pitichoke Chulapamornsri, and John Katovich
- Equity crowdfunding can help democratize investing, leveling the playing field for founders who don’t fit the mold. – Ken Nguyen
- Municipal bonds are arguably the oldest impact investing instrument. Across the market, municipal bonds are low risk and the returns are high impact. The Golden Gate Bridge was built by municipal bonds. – Pitichoke Chulapamornsri
- The high denomination of bonds and the opaque nature of the municipal bond market has made them traditionally inaccessible to many people.
- Crowdfunding can and should be used not just for investment capital, but also for product marketing.
Additional Resources from or featuring Wednesday’s Speakers
Matthew Weatherley-White – The Most Fascinating Impact Investor You’ve Never Heard Of
Fran Seegull – Impact Investing: What Will It Take to Get to Scale?
Nick O’Donohoe – The Role of Big Society Capital in Growing Impact Investment
Ken Nguyen – New Impact, New Inclusion in Equity Crowdfunding
- When you own the lens, when you own the story, when you own the power, you can tell your story better – Stephen Ozoigbo discussing the Hollywood in Focus Program
- How does someone become the face of someone else’s cultural creation? – Devita Davison (Meet The Man Who Launched The Nashville Hot-Chicken Craze versus How Hot Chicken Really Happened)
- We feel like what we’re doing at SOCAP isn’t political, but most people feel left out of the capital markets – Ross Baird
- Women make up less than 5% and minorities less 1% of start-up investment
- Deval Patrik and Jim Shelton discussed what’s next for social enterprise in education
- “How can we transform the learning equation to empower teachers and students and improve outcomes?” – Jim Shelton
- School desegregation was about asking children to do what adults didn’t want to do. But now, some schools are more segregated than ever. – Deval Patrik
- Chan Zuckerberg Initiative on education: the problem has never been the kids. It’s been our inability to solve the problem. – Jim Shelton
- Setting up a system so that the image of what success in schools looks like has clear benchmarks and transparency to the public—this is a great role for policy and government.
- Toilet Board Coalition – business-led coalition partnering entrepreneurs, nonprofits, and government
- 2.4 billion people are held back because of poor sanitation. Business models that deliver sanitation at scale should be supported and accelerated
- For the next 300 million toilets installed – we need to make sure “they’re not dumb buckets, they’re smart sanitation” – http://www.toiletboard.org/
- Rick Ridgeway, Patagonia
- When you reduce energy, you save water, and cut back waste — you save money. You also reduce the risk of impact to the environment and harm to workers.
- There is no business on a dead planet.
- Don’t Buy This Jacket
- 20% of the world does not have electricity to meet their basic needs – Dawn Lippert and Rachel Pritzker
- The entire world is going to power, but will we burn up our planet? – Dawn Lippert
Eight Years Later: Impact Policy in the Obama Administration
Divya Kumaraiah, Rob Lalka, Mark Newberg, Jessica Yuen
- “Impact” is a better defined concept than it was 8 years ago
- There are now four different agencies that have “innovations funds”
- Social impact bonds are intended to help scale high performing nonprofits.
- The White House Office of Social Innovation (OSI) began to look at why foundations were apprehensive about granting/loaning to for-profit innovators and wanted to lower the cost of doing these transactions. OSI strived (and succeeded) to update examples in the outdated regs (Program Related Investments)
- Standardizing PRIs and MRIs would encourage and help foundations to use them
- State and local governments should not be overlooked with respect to impact policy
Sync and Swim: Demystifying Foundation Investors and Building the Two-Way Pipeline
Gayle Jennings-O’Byrne, John Duong, Melanie Audette, Sam Fankuchen
- Startups should understand a foundation’s mission and how they fit before seeking funding
- Alignment with a private foundation can give credibility to a social enterprise – John Duong
- PRIs, as a financing tool, has not been flexed as much as it should – Gayle Jennings-O’Byrne
- Ask yourself: how can you cultivate your network and relationships to get credible access to both investors and entrepreneurs?
Prize Philanthropy: Driving Social Change Through Contests
Phillip Denny, Juno Fitzpatrick, Sarah Koch, Ani Vallabhaneni
- Early stage innovation competitions provide publicity to issues and connections to investors and subject matter experts – Juno Fitzpatrick
- Critics of prize philanthropy say: “Ideas are easy but implementation is hard”; see Dump the Prizes
- From a funders perspective, prizes and competition shed light on projects that wouldn’t otherwise be easily found – Sarah Koch
- Student competition initiatives encourage young people to develop key entrepreneurial skills and build their networks – Phillip Denny
Am I an Entrepreneur? Challenging the Stereotypes
Kelechi Anyadiegwu, Tony Tolentino, Sheila Herrling, Monique Woodard
- Statistics show that diverse companies are outperforming non-diverse companies
- Traditional investors did not see the potential in Kelechi Anyadiegwu’s idea: How one 26-year-old turned $500 into $2 million online
- Barriers to the diversity of entrepreneurs: gender bias, racial bias, homogeneity at the investor firms making funding decisions– Monique Woodard
- While many startups fail, entrepreneurs of color have more pressure to succeed for the next person waiting behind them