The Blue Angels “disrupted” the SOCAP, the Social Capital Markets conference, but not enough to chill the animated conversations and discussions. A few highlights from Thursday:
“Impact Inventing” is a thing. The term is what the Lemelson Foundation uses to describe using invention to solve the world’s toughest problems. But invention-based enterprises face unique challenges including lack of the flexible funding needed for prototyping and access to labs and other physical space necessary to invent. The foundation is out with a new report on these challenges and opportunities of invention-based enterprise inventing. In a post on Village Capital’s blog Baird waxes on the four principle “P’s” of starting or investing in “impact inventing.” (Dennis Price)
Kickstarter has been particularly apt in funding inventors, the majority of them women, adds Baird. Village Capital’s peer-selection investment model, where fellow entrepreneurs select the startup to receive investment, has also been effective in backing inventors (40 percent of the enterprises that have gone through its program). Peer-selection, the root of both models, “democratizes” entrepreneurs, and critically, the flow of capital. (Dennis Price)
Investors need to trust entrepreneurs. Walk around conferences like SOCAP and you’ll hear investors asking entrepreneurs: “is your model sustainable? Is it scalable?” The fact is many entrepreneurs just don’t know. And that’s ok, says NESsT co-CEO Loic Comolli. Investors need to be more patient and trust entrepreneurs they believe in. “We need a change in attitudes,” notes Village Capital’s Baird. “Rather than thinking about how a startup will fail, think about how you can help it succeed.” (Dennis Price)
First loss capital can be critical for growing startups. A first loss equity cushion or guarantee, often provided by a more risk-tolerant investor like a foundation, high net worth individual, or development finance institution, may be just what young social enterprises, attempting to demonstrate the viability a new product or business model, need. “First loss equity and guarantees can be leveraged to optimize the cost of capital for invention-based enterprises,” says Ankur Capital Co-Founder Rita Verma. The financial tool lowers the risk for more commercial investors—reducing the cost of their capital. (Dennis Price)
No speed dating? How about speed impact investing? Qualified investors and social entrepreneurs courted each other, looking to marry, in quick-pitch sessions. The impromptu event was organized quickly, to lower the transaction costs on both sides. “We figured we are not the only enterprise in the market for financing, so we took a collaborative approach to creating this event,” said Astrid Scholz, “Chief Everything Officer” of Sphaera Solutions and organizer of the event. (Zuleyma Bebell)
Corporate venture capital isn’t a new idea, but when big brands use business as a force for good, the world pays attention. Patagonia, Seventh Generation, and Clif Bar have launched internal Impact investment funds to invest in smaller companies addressing social and environmental challenges. The goal is to help these companies become bigger than they could on their own. He asked: How do we help companies formulate their products better? “We can be much stronger together. The difference between us and private equity is that we are in there for long term. The question is how to help the companies we invest in reach their mission, and help it become a reality,” said Pete Alberse. General Manager at Seventh Generation Ventures. (Anna Shen)
A lack of access to fertilizer, while better for the environment, is a major source of food insecurity among poor farmers in SSA and other developing world regions, said Shashi Buluswar, during a discussion highlighting findings of the report, 50 Breakthroughs” for Sustainable Global Development. The report was published by the Institute for Globally Transformative Technologies. (Jessica Pothering).
For those who want to continue the dialogue, SOCAP, powered by MissionHUB, is launching two new products: SOCAP365 and SOCAP TV. These are programmatic events and content throughout the year to continue SOCAP-themed conversations and drive work forward past forward SOCAP. (Anna Shen).
- SOCAP TV offers TED-like talks inspiring social impact and impact investing themes to anywhere in the world, for those who missed coming to SOCAP this year.
- SOCAP 365 will continue to convene these conversations in person, at MissionHUB campuses, including Impact Hubs San Francisco, Berkeley, NYC, Philadelphia, and Washington, D.C.