(Editor's Note: Both local and global talent is sorely needed to help the enterprising poor build businesses for scalable and sustainable poverty alleviation in capital-weak areas around the world. Since 2011, Frontier Market Scouts has prepared a new generation of business and development leaders for six-month assignments with such social enterprises. This is the first of a series of dispatches from the 2013 Scouts. Follow Myles' Frontier Market Scout experience with Eco Fuels Kenya on his blog, Croton Chasers.)
Fresh off the completion of a two week, crash-course certificate program on impact investing and days away from a six-month assignment at a promising young social enterprise in Kenya (thanks to Village Capital and Monterey International Institute), there are lots of uncertainties in my future and the future of my fellow classmates.
What does a career in social enterprise look like and how do we get one? How do we participate in impact investing if we haven't already made millions of dollars? What do we do with all our passions and enthusiasm without disregarding our personal financial future?
I’ve been trying to answer these questions since my introduction to social entrepreneurship by Northeastern’s Social Enterprise Institute in the spring of 2009. As an eager young graduate with educational credentials and a background working with startups, I thought I was an asset to behold for any organization; particularly social enterprises getting ready to change the way the world does business.
Three years and two career changes later, reality hits hard, and I’m thankful to have been able to keep my head up through my ‘real world' working experience. I’ve learned a lot about social enterprise and impact investing and have adjusted my strategy for finding my way in the field.
Here are some things I’ve learned:
Everybody gets excited about social enterprise and impact investing. Profit and an end to poverty? Yes, please. Unfortunately, it takes more than excitement to make a company succeed. No matter how many people like your idea or the idea of the company you work for, it is not an indication of how successful it will be.
It is harder to succeed as a social enterprise than a traditional for-profit company. Startup failure rates are enormous. More than 50% of companies that seek only profit-maximization no longer exist after five years. Social enterprises that seek social impact on top of profit? Even harder. Impact can be so complex and expensive to compute that many just leave it as an assumed value instead of a numeric one. Add in lower profit margins and the burdens of poverty (dirty water, siphoned electricity, child labor instead of education), and the light at the end of the tunnel starts to dim.
Realizing you are probably going to work harder for less success — or at least what our society traditionally values as success — than your peers who entered traditional businesses after graduation is just the beginning of the hurdles.
Many leaders in the space have had helping hands to the top. Some of the most influential leaders in impact investing have been given millions of dollars by relatives or wealthy individuals to start their impact investment funds. Having the funds to be able to learn from business mistakes would seem to increase the chances of ultimate success. That's discouraging to many of my peers.
I see it differently. I see a sector being developed in front of my eyes. Given the right opportunity, an unpaid fellow can have as much impact as a wealthy donor. There is no such thing as too many socially-motivated, globe-trotting, hard-working individuals to generate impact on investment dollars. You never know where the path may lead you: an undergraduate internship turned full time position at an impacting investing firm; a chance to launch an impact investing division at one of the world’s biggest banks; an introduction to a philanthropic billionaire; or a six-month placement with a company in Africa’s entrepreneurial hotbed.
The industry is very, very young. Modern social enterprise and impact investing is less than 30 years old, which means the first generation of people who have had any type of career in social enterprise, the pioneers, are not even retired yet. The fact there are very few examples of enterprises or funds that people would unanimously agree are successful, means the industry has struggled to move beyond early adopters to the point where impact investing is accepted by the mass majority.
I'm looking forward to my Frontier Market Scouts placement and to putting these ‘lessons learned' into practice.
I don't believe there is a career path in impact investing. But I do know that you don’t make a career out of social enterprise by sitting back, accepting a corporate fate, or passing off the issues of the poor as something you don't have time to worry about. I've learned from my studies and experiences that my chances of becoming a social entrepreneur or impact investor, or an asset to one, significantly increase by working hard when others won’t and scouting a path even where there is none.