Kicking off #ImpInvNYC!

Last night 100+ New Yorkers gathered in SoHo for the first of many NYC Impact Investing community events.  The energy and enthusiasm was contagious as this smart, talented group of people discussed Impact Investing as “a powerful new way to change the world.”  The networking was anchored by some of the field’s top professionals sharing thoughts on the current state of impact investing, advice for career switchers, and more, including words from:

  • Pip Deely, SFC Associates
  • Nell Derick Debevoise, Inspiring Capital
  • Jennifer Field, Gerson Lehrman Group

  • Giselle Leung, GIIN
  • Abhilash Mudaliar, GIIN

  • Folake Oguntebi, ImpactAssets

  • Joe Silver, Imprint Capital

  • John Walker, Columbia Business School

Here are some of highlights for those who couldn’t attend (from the live Twitter feed @inspiringcap #impinvNYC)

General Thoughts

@RoCgracek

Tonight’s meetup: encouraging to meet impact investors & entrepreneurs who want to make a difference in this crazy world #impinvny

@InspiringCap

At tonight’s #impinvNY event we have #socent @PatrickFromuth who is funding and rebuilding an orphanage in #haiti #impinv

@InspiringCap

Joe Silver of Imprint Capital on advising for buy side #impinv : big spectrum of impact and financial return #impinvNY

@InspiringCap

Giselle Leung of @theGIIN on how #impinv work speaks to both the power of leveraging biz approaches and doing good in the world #impinvNY

 

On Challenges in the Space

@S3IDF

MT @InspiringCap @118Capital on building a portfolio of early #socent cos. biggest challenge: turning momentum into $ #impinvNY #socinn

@InspiringCap

@IAimpactassets Dir. of Marketing: we are lowering the minimum of #impinvproducts so that individual donors can participate #ImpInvNY

@InspiringCap

@NFFSocialImpact on biggest challenge for #impinvNY: understanding capital needs of social sector and facilitating flow to it

 

Thoughts for Career Switchers

@InspiringCap

#impinv #jobs Tip: @theGIIN has a #career database on their website and they are hiring! #impinvNY

 @InspiringCap

@theGIIN tip: be thoughtful about your passion in the space, think about your skills and interests and be articulate! #impinv #impinvNY!

Stay tuned for our yet-to-be-announced September NYC Impact Investing Event! In the meantime, join our Meetup group so you’re sure to get the next invitation. And use #ImpInvNYC on Twitter to share great resources, news, and events in the Impact Investing space! (http://www.meetup.com/New-York-Impact-Investing/)

Big thanks to our event organizers Nell Derick Debevoise, Pip Deely, and John Walker!

Wanted: Rockstar social entrepreneurs

I had the pleasure of attending the Nexus Global Youth Summit at the UN this week, as a speaker on the Frontiers of Impact Investing panel. We had a fantastic discussion with a room jam packed of talent, energy, and enthusiasm for the use of financial capital to change the world. Exhilarating! 

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In the next panel I attended on entrepreneurship, also jampacked, and masterfully moderated by Tabreez Verjee, with the insights of Rachael Chong of Catchafire, Seth Bannon of Amicus, and Saad Khan of CMEA. Among a number of interesting points raised by the group and discussed, one particularly stuck out to me: We (may) need more ego-driven social entrepreneurs who pursue personal fame and so increase the visibility of the field.

The first question Tabreez fielded was “What single venture / entrepreneur has been the most impactful on society?” Replies included Thomas Edison, Bill Gates and Microsoft, and BRAC. Seth then asked who in the room could name the founder of Facebook (everyone) and BRAC and only one hand went up (proud that it was the hand of Marilia Bezerra, Inspiring Capital advisor and friend).

This dramatically made the point that social entrepreneurs don’t tend to be spotlight-seekers in the same way that ‘traditional’ business entrepreneurs do. Marilia’s very valid point was that BRAC’s success is not due to Fazle Hasan Abed (yes, that’s the founder of BRAC) as an individual, but to 10s of thousands of employees, plus partners, funders, and clients of the organization’s vast efforts over time. 

The counterpoint that while of course no organization rests on a single person’s shoulders, smart, successful, charismatic individuals can be very motivating sources of inspiration for young people considering various career paths. And while there are many such people in ‘traditional’ business, entertainment, and even politics (fewer!), there are few if any visible social enterprise ‘rockstars’.

Do we need to encourage or build such profiles? Or would we regret it? 

TGIF: a 360 friend

It has been a wonderful week for Inspiring Capital, and so there were many people I could thank today, and am indeed sending my gratitude! But my weekly thanks go to a 360 friend: someone with whom I easily spend hours chatting and laughing about the grittiest details of my business, as well as the joys and challenges of relationships past, present, and future; global travel; work and life styles; and plenty else in between. This despite having spent relatively little time together in the relatively short time we’ve known each other.

I was introduced to this wonderful woman by another professional contact-turned-friend. Neither of us was exactly sure what the connector had in mind, but made time for lunch. It didn’t take long to fall into a very natural and comfortable exchange of ideas and thoughts, and indeed start brainstorming projects and ventures that we’d like to explore together. The discussions have continued, and get deeper and more comprehensive with time. 

I’m grateful to have been connected to this new friend, and for her openness and willingness to get to know me and support my work. And I am also grateful that there are people as smart, ambitious, well-connected, and thoughtful as her who have such a deep commitment to positive social change. 

A welcome addition to the NYC impact investing scene

I was thrilled to see that Investors’ Circle is establishing a local network here in New York. The only (that I - or they - know of) formalized impact-only angel network in the country, Investors’ Circle, has an impressive range of programs and has invested $172 million in 271 ventures, which have raised $4B of follow-on funding. They consider the sector of activity as the primary factor in choosing entrepreneurs to pitch, which offers a pragmatic, action-focused, if somewhat qualitative way to get money to great early stage ventures. 

They do monthly pitch nights in the cities where they have chapters (Durham and Philadelphia, with NY and SF coming online now), as well as larger networking and matchmaking events. They also had a fellowship program to train MBAs in impact investing, but had to discontinue that given its significant administrative cost. Of course, there’s an online platform that all members have access to, as well as regular calls with general sector discussion and specific consideration of a given deal.

Their first meeting in New York was standing room only, attended by 60+ investors who are considering joining. We’re proud that New York showed Investors’ Circle such a warm welcome: good confirmation that there are lots of impact dollars in this city looking for a good home! 

TGIF: Serendipity!

This week’s gratitude is dedicated to an inanimate force that I’ve been particularly aware of this week: serendipity, or unexpected but fortunate events. Ever since I found out that chocolate chip cookies are the result of just such an accident (no, really!), I’ve had a real appreciation of serendipity. It has been especially noticeable this week. 

I went to an event that a client invited me to, celebrating the (hopefully game-changing) approval of B Corps status in Delaware, where nearly half of all US private corporations are registered. As I got ice water at the bar (to fight the record-breaking NYC heat), a senior gentleman approached the bar, and asked me why I was at the event. We chatted about Inspiring Capital, my vision for autonomous and efficient social enterprises (rather than grant-dependent non-profits), before finally introducing ourselves. 

Not only was my random new acquaintance the man that my client had most come to see, but also Alan Patricof: an idol and icon for any entrepreneur with a passion for the power of wise investing.

Of course, I had the relationships to know about the event, made the effort to attend, and done the work to have stories to engage my idol in conversation. (In other words, my lucky serendipity was facilitated by years of practice.)

Nonetheless, I am grateful to the forces responsible for this and countless other serendipitous encounters that I have always allowed to shape my work and life.

Lean Impact: Productivity tips for social entrepreneurs

I co-hosted my first Twitter chat yesterday, under the able guidance of the Lean Impact team, who’s been leading a Lean Impact chat every Wednesday at 2 pm EST for the last few months. It was a great experience: we had useful as well as friendly / funny discussion. If you’re interested, see the full transcript, thanks to Yangbo Du, and more importantly, follow #leanimpact now and next Wednesday 2-3 pm EST to join in the conversation!

Take-aways

1) Trello: I’ve already fallen in love with this freeware to build to-do lists that are so much more. And eminently share-able. And free! 

2) Prioritization of tasks was identified by the group as a crucial skill to master, whether by organizing your day in the morning and checking in hourly (see Peter Bregman’s 18 Minutes) or making a list and crossing out all but the top 3 most important tasks… See the transcript for more great points on this topic.

3) Tomato time: http://tomato-timer.com/ will help you manage your time and energy, with 25 minute work periods followed by 5 minute breaks. (And the full pomodoro method calls for a long 10 min break every four 30-minute cycles.) Going to try this one tomorrow! 

4) Afternoon lull: many of us lamented the ‘afternoon lull,’ and suggested tips from meditation to an episode of The Daily Show to exercise to a peanut butter and jelly sandwich! 

TGIF: A reliable and effective champion of me

TGIF, remember? Thank goodness I’ve Friends! I met this week’s object of my gratitude at a Meetup last winter referred to me by a b-school classmate. Robert was the speaker, and presented his long strategic efforts to get mainstream investors aware of and bought into Triple Bottom Line investing. Most of us had not heard of him or his organization because of TBLI’s focus in Europe (until their fabulous first NYC conference in June), as well as mainstream commercial investors rather than the ‘tribe’ of impact investors, CSR professionals, or social entrepreneurs. This choice makes Robert’s work a steeper uphill battle, but with a markedly higher upside in terms of the impact he has when he does convince a client or partner of the logic and potential of Triple Bottom Line Investing.

When I sent Robert a LinkedIn request after the Meetup, he replied with an apology for having provided what he felt was an inadequate response to my question about professional opportunities in the field. We met for coffee before he went back to Amsterdam, and had a great chat about his career and vision and my own aspirations. He made several recommendations of individuals whom I should meet (and introductions), and included me in the preparations for the first TBLI conference to be held in New York. 

The conference was outstanding, as I wrote in June, and the people that Robert has connected me to have been uniformly helpful, smart, and optimistically ambitious about the future of triple bottom line investing in the mainstream as well as the smaller, faster-moving niche of social entrepreneurship. I even had the chance to meet Robert’s wife and son, and hear about his wife Rieki’s incredible social tourism project in Bhutan, including an upscale eco hotel and vocational hotel school.

The benefits just keep coming - I had two fantastic calls with outstanding women that Robert insisted I connect with yesterday, both of which I am confident will yield some rewarding, educational, and fun work! I am so grateful to have been embraced by Robert and the TBLI community, and look forward to getting more involved and active in their work. Next stop: TBLI Zurich in November… 

You can’t help ventures there from here… Or can you?

I helped moderate the latest in the Spark Workshop series put on by the Social Enterprise Program at Columbia Business School. It’s a great concept that brings together people from the Columbia community and beyond with a shared interest in a given topic or venture in the social enterprise space. Rather than highlighting a single speaker, Spark workshops allow all participants to share their experience and learn from others. 

Our theme was International Social Enterprise (details on moderators etc here). The first group I moderated, of the investors in the room, decided that the most compelling topic for them to discuss was “What can I do from the US to support social entrepreneurs working abroad?” We remixed the groups (originally divided into early and late stage social entrepreneurs, supporting actors, and investors) to ensure diverse perspectives on this question. 

Here are our TAKE-AWAYS (keep reading below for the backstory if you’re interested):

1) Social entrepreneurs need to be clear with their investors: are they looking for donations or investment to grow the business? And remember that all seed stage investment is essentially a contribution! Most for-profit businesses don’t make it beyond that stage either to return investors’ money. 

2) Social enterprise is all about marketing: customize the blend of your product’s benefits and its socially responsible aspects to match your customers’ interests.

3) The most powerful mentors or advisors share the entrepreneur’s big picture view about the business’s mission. They also have some understanding or experience of the context in which the business operates.

4) There are strings attached to all types of money (whether donations, family loans, equity investments, etc), but they are different. Know what you’re getting into and what will be expected of you in return!

BACKSTORY:

We were lucky to have a social entrepreneur visiting from India (Pragati of Chockriti: fine chocolates from New Delhi) so we used her as a case to explore the issues. What we found was that there are two main ways in which people in the room could help entrepreneurs like Pragati: money and knowledge. These answers weren’t surprising to any of us, but we were able to learn a bit more about how we could contribute those resources more effectively. 

KNOWLEDGE
Pragati explained how important it was that mentors and advisors 1) have the same vision for the business, with a triple bottom line, pursuing financial profits but also accounting for its impact on the people and planet that it touches. And 2) an understanding of the unique challenges in the context where she’s working (a village near New Delhi). Without this alignment and understanding, it’s hard for Pragati to integrate advisors’ well-meaning advice.

MONEY
Of course, this is where the conversation really got interesting. Pragati was very honest about her struggle to decide the best financing model for her business. She is breaking even and sees opportunities to expand that would improve profitability. But the family money she has been using so far to build Chockriti aren’t enough to get to that next level. However, she hesitates to promise returns or give away part of her business to take investments. She is getting revenue from customers, which is always a great sign, and using that to build the business, but it’s not enough to really grow.

Pragati mentioned several times the option of getting donations, whether cash or in-kind gifts of equipment or supplies she needs. She also talked about bank loans, and offering chocolate as a ‘return’ for individual investors who provided capital. 

For the potential investors, ‘traditional’ entrepreneurs, and other supporters of social enterprise in the group, this blend of forms of capital and return was uncomfortable. There was a general preference for clarity around a business’s identity (for- or not-for-profit) and therefore they type of funding they request (donations or investment). This sentiment may explain why it is difficult for hybrid organizations to really gain traction, or maybe it’s just a matter of time? 

The important take-away for Pragati was that while it’s of course scary to accept investment money or debt capital, and it’s not right for everyone, an infusion of cash can offer huge potential for the business to grow. She could simply buy adequate lighting for her chocolate studio, and personal protection so her female employees to get to and from work safely, without waiting for someone to donate these items. That is the power of social finance: it affords social enterprise leaders the autonomy to get the resources they know they need to optimize their business operations. Let the social capital flow! 

Is the social enterprise trend dangerous for women?

I visited the Venture for America training camp at Brown this week, and was duly impressed - great program (read more here), awesome staff and above all, more than 100 outstanding fellows! However, 3/4 were biologically ‘fellows’ too. Only 17 of this year’s 68 VFA fellows are women.

We heard a few hypotheses from the staff about why they’re so far from a 50/50 class, including: women are worried about safety in VFA cities (Cincinnati, Detroit, etc); women think they have to be engineers to apply; and women are looking for social enterprise jobs and aren’t willing to work for a business-minded for-profit.

This final theory is the one that stuck with me. It reminded me of research presented in Women Don’t Ask, which shows that the majority of the pay gap between male and female MBAs’ salaries 10 years after graduation can be attributed to men asking for more money at every evaluation and women not asking.

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The connection I drew between these salary negotiations and young women’s strong preference for a non-profit employer is that perhaps women’s relationship with money has become so unhealthy that we aren’t even comfortable asking for money from our customers for our employers. Even if it’s just an implicit ask, by virtue of taking a job at a for-profit company.

There are many issues in the emergent social enterprise space about money: can you solicit donations for a business? Aren’t seed stage investments basically ‘donations’ (write-offs) anyway? Should social entrepreneurs earn private sector or non-profit salaries? What level of profit is acceptable for a B Corp or a for-profit social enterprise? 

And now, overlaying the gender issue with these money-related concerns, I have two questions:

  1. Is the social enterprise trend dangerous to women, because it will encourage them to continue to undervalue their work, only now in a for-profit context withOUT the safety net of donations (easier to solicit than salary or customer prices) to support their efforts and organizations?

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  2. And/or will the greater proportion of women leading social enterprises (compared to traditional enterprises) be an obstacle for the financial viability of the sector, by perpetuating a trend of pro bono and low bono services, cost-plus low-end pricing, and sacrifice of bottom line for optimal performance and quality? I treasure the nature of social enterprises, concerned with profit AND their implications for the people and planet they touch. BUT there is a great need in the sector to protect the financial considerations of each venture to ensure that it is able to become a viable and so sustainable business. Will women’s reluctance to ask for adequate cash for them and their businesses get in the way of that progress? 


Clearly, women offer great value to the social enterprise sector, but to optimize that value, it is important to consider all aspects of this involvement. Just as men’s involvement could threaten a social enterprise’s commitment to mission based on traditional ‘male’ qualities of being cold and analytic.

I know these are controversial points, but I feel strongly that it is important to discuss such points honestly if we are to do the best for each other and the next generation of entrepreneurs and investors. Plus, don’t you always enjoy an intelligent debate? 

A promising example of cross-sector replication

I had the chance to check out Venture for America’s (VFA) training camp at Brown today. I know the Teach for America model (on which VFA is based) fairly well, and met VFA founder Andrew Yang at the Social Innovation Summit this spring. A business school classmate has gotten involved with VFA this spring as a judge and donor, and brought me to Providence with her to see the 2013 fellows being trained, as well as a midterm session for the 2012 fellows.

VFA recruits top college grads who would otherwise be seduced into finance, law, or consulting careers. They host them for an intense 5 week training and match them with jobs in startups in American cities that lack the robust entrepreneurship infrastructure of NYC or Silicon Valley. The startups pay their $38,000 (more or less) salary, and VFA provides ongoing guidance throughout the two years of fellowship. VFA’s hope is that its fellows will gain the skills, motivation, and connections to establish their own startups during or after the fellowship, contributing to the 100,000 jobs the organization aims to help create by 2025.

A team from McKinsey did a great job with the new fellows, though a few fellows confirmed our speculation that it was probably an odd experience to be ‘trained’ by people essentially their age doing the very jobs that the fellows chose not to do. Anyhow, the consultants facilitated an interactive workshop about basic workplace success tools to help the fellows contribute valuably to the startups they’ll join in a few weeks. They integrated VFA Founder Andrew Yang’s commitment to fellows learning an ‘owner’s mentality,’ working for and thinking about the startup as though they were the founder. 

The VFA team managed the second year fellows on their own, reflecting the organization’s ample and talented team with tangible commitment to the mission and empowerment from Andrew and the board. Indeed, we learned that staff members attend board meetings, which struck me as a great way to ensure alignment within a young organization. The group of 2012 fellows had a different feel, thanks to their year of ‘real world’ experience at their startups, and also as the first-ever VFA fellows. 

David Rose, of New York Angels, Gust, and Singularity University, came to speak to the new and old fellows.

A primary theme that came up over the day (which ended in a full-on New England lobster bake, complete with steamers and corn on the cob) was the ratio of young men and women in the program. There are 17 women out of 68 2013 fellows, and the first class had an even lower percentage. VFA is aware of this challenge, and keen to right the balance to 50/50. They haven’t quite cracked it, but mentioned a few contributing factors:

- Female candidates think there’s a technical background required for the positions. (Not true: there are many business development, sales, and strategy opportunities too.)

- Young women are more intimidated by the idea of living in VFA cities like Detroit, New Orleans, and Cincinnati because of safety. (I don’t give this theory much credence, given an internship program I know of in Palestine that has 80% female applicants.)

- Women want to work for non-profits and drop out of the selection process (or never apply) when they learn that VFA would place them in a for-profit startup. (THIS is the issue I really want to dig in to… more in a second post.)

In the meantime, I wish VFA and the 2013 fellows the very best and look forward to engaging more with the organization. 

Take-aways:

1) Staff attending board meetings is a great tool for mission and vision alignment for social enterprises, especially in early days.

2) We still have a lot of work to do encouraging young women to work for and establish startups.

3) Entrepreneurship (and supporting entrepreneurs by working at startups) is something that we need to be teaching, for the good of the American economy.