Rose Weeks

From Occupy Wall St. to Impact Investing, 2 Visions of Markets at Net Impact 2011

“Occupy Wall Street from within.” The challenge, vigorously Tweeted through smartphones and MacBooks, went out to some 2,600 business students, young professionals and socially aligned executives at Net Impact 2011.

“You are the change the world is waiting for,” cautioned Hanna Jones, vice president of Sustainable Business & Innovation for Nike and a keynote speaker. Nike was a sponsor of the conference held in Portland last weekend.

Throughout sessions, speakers emphasized the urgency of channeling youth and energy to effect positive change, an upbeat message that also reflected the risk, uncertainty, and newness of the field of social investing.

“When the field is five to ten years old and you’ve been at it for five years – you can move fast,” said Ross Baird, the 27-year-old executive director of Village Capital, noting, “you have to create the job you want.”

Markets as a solution

As the Occupy Wall Street protesters continued their encampment in Portland’s Chapman and Lownsdale Squares, it became difficult to reconcile the two visions of markets. Baird suggested that business needed to respond to protesters by demonstrating the value it creates.

In a panel on international development careers, speakers suggested that the concepts of global development and global markets were merging fast.

DAI’s Kristi Ragan declared that “international development is dead,” opining with Chris Jurgens of Accenture that market-led development offered the best solution to rectify globalization’s inequities.

Measuring Social Impact

Metrics for impact investing are more focused than ever on pinpointing the social (and financial) value of these cash flows.

GIIRS (“gears”) is leading the charge for better evidence about the social impact of investment companies and funds. Flory Wilson from B labs described GIIRS’s aggregation tools released last month at the Clinton Global Initiative. GIIRS aims to provide impact ratings for more than 2,500 companies and 350 funds with the goal of driving $1 trillion toward impact investments in 10 years.

IRIS continues to provide standardized language to articulate social and environmental impact of investments for many firms in attendance like including Grey Ghost Ventures and Agora.

On the other hand, in a panel on the future of the giving sector, philanthropists complained about the lack of standardized metrics. Paul Shoemaker of SVP Seattle said, of his former life as a manager at Microsoft and Nestle, “I miss ’net profit’-you know whether you succeeded or failed. It’s important for social organizations to know whether they are having impact.” He called for the creation of “a dashboard with indicators, to measure if we are succeeding or not.”

Putting your ear (or your team’s ear) to the ground

The advice came in a chorus: Get out into the field.

Many students had field experience-Jamie Lippman from Dartmouth’s school of business could describe the flavor of Gujarati dahl (sweet, not spicy) from her year working with local crafts entrepreneurs in Bhuj.

Aside from building resumes, investors’ boots on the ground in emerging markets are clearly key to advancing deals responding to local needs.

Nancy Kamei of Intel Capital fund described a recent deal the company’s Chinese team had sourced in health care IT – one that responded both to Chinese markets and Intel’s health care strategy. Kamei referenced an earlier strategy paper that led to investments in hotspot development globally – I used Boingo’s hotspot at the Houston airport to write this, and I thank Kamei’s people profusely for the convenience-leading up to release of Intel’s Centrino platform, which allowed people to access wi-fi on laptops.

B Labs’ Wilson, too, stressed the importance of understanding local markets, pointing to an American company that successfully sold low-cost fiberglass domes in domestic housing market, later introducing the product in India to find out that the domes were “totally inappropriate for that market.”

Baird noted that Gray Ghost Ventures-a sister company of Village Capital-invested in Promethean Power, which produces commercial cold-storage applications for off-grid and partially electrified areas of developing countries. The diesel-powered fridges reduced energy usage and helped farmers earn more money because chilled milk becomes a premium product like ice cream. Yet diesel wasn’t part of the plan. “Our investors were angry,” Baird recalled, “they wanted solar energy [powered refrigerators].” Baird said the cheapest they could make solar-powered fridges was $6000 and Indian dairies would pay only $3000.

“What makes me excited about this investment is that we invested in a great team, and they found the product [people were] willing to pay for,” said Baird.

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Impact Assessment, Social Enterprise
social enterprise