Rob Katz

Report from Harvard Social Enterprise Conference (2)

Harvard Social Enterprise ClubGuest blogger Miles Lasater is founder and COO of Higher One which provides financial services to colleges and students.? As creator of the Yale’s annual business plan competition, the Y50k, he was instrumental in ensuring that it has a Social Entrepreneurship category.? He has a hobby as an angel investor in for-profit and non-profit ventures.

By Miles LasaterI attended the Harvard Social Enterprise Conference on Sunday and felt the excitement of 1000 people who want to change the world.? There was a sense of new possibilities and new ways of solving old problems.

First thing, I met with a board member of One Acre Fund which is an early stage non-profit.? One Acre that improves the poorest farmers lives by enabling them to increase outputs and incomes by 3 or 4 times which creating revenue to drive itself towards financial sustainability.? I first met the founder when his team won the social enterprise category of the Y50k.? Since then, they’ve secured funding from Draper Richards and Echoing Green.? Being an entrepreneur myself, I can’t help but be excited by the thought of scaling an organization that can live on its own without donor funding.

As the day wore on, despite my excitement, I kept wondering – what’s really new here?

It sounds like something new is going on when:

  • Sarah Alexander of the Emerging Markets Private Equity Association points out that the amount of capital raised for private equity funds focused on emerging markets has grown from $3.5 billion in 2003 to $33.2 billion in 2006.
  • Jay Coen Gilbert talks about his For Benefit Corporations (B Corps) which exist for the benefit of all stakeholders and donate at least 10% of profits to charity.?
  • Or when you hear of hybrid models like Acumen Fund puts $20million of philanthropic money at work and invests it like a VC.? Yasmina Zaidman described how they are focused on alleviating global poverty and consider the “best available charitable option” to the for profit business they are considering investing in.? Often it is more expensive (on a per unit basis) to deliver services through the start-up in the early years, but once it reaches scale the model is expected to be more efficient than purely charitable efforts. (BTW, Acumen Fund is looking for good deals so if you want funding to target your business at the very poor and scale to million customers, contact them.)
  • Kimberly Manno Reott of Ashoka talks about creating a hybrid value chain.? Her project involves coaxing local Mexican nonprofits to sell and service irrigation equipment from an existing large irrigation company, then crafting a deal for a large retailer to buy the additional crop yield.? Prior to Ashoka’s work, the smaller farmers in the region were not customers of the irrigation company either because of lack of knowledge, little access to financing or high transaction costs.? She says that the project is different than a Bottom of the Pyramid model, although not having read the whole book, I did not understand the distinction.

On the other hand, maybe it is just the language that is new and the fact that social causes have caught the attention of MBAs?? Like a 1980’s “greed is good” mania through the looking glass.

The World Bank – through IFC – has been investing in private sector development for over 50 years.? Milton Namude Wanyama reminded people that IFC manages a $26B portfolio.? It was noteworthy that he emphasized that there is a close correlation between development impact and profitability.

Organizations like Investor Circle have been around for 14 years “investing in” social causes doing 180 deals with $120 million.? A number of foundations not represented at the conference would say they have been doing the same.

It’s no surprise when New York City Deputy Mayor Daniel Doctoroff tells you to move to his city and join his cause.? More seriously, it reminded everyone that government has huge impact.? The NYC $57 billion budget dwarfs the resources of any of the other organizations at the conference.

Also, the winners of the Pitch for Change Competition sounded like two modern companies and a donor-funded charity respectively:

  • Local Motors: open source designs for lightweight cars produced locally.
  • SURx: mobile phone-based authentication of pharmaceuticals to combat counterfeiting.
  • Beyond Orders: Donors Choose for Iraqis with fulfillment by US military.

While I enjoyed the conference, I’m not sure I answered my question of what’s really new here.? In the end what’s important is that there are people willing to dedicate themselves to making the world a better place.? What do you think?