Thursday
October 8
2015

NextBillion Editor

Live from SOCAP15 : Quotes, tweets and nugget-sized insights from the first full day

More than 2,700 people are attending the eighth annual SOCAP – which describes itself as “the largest conference in the world that is mixing the people who want to use business to change the world for good with the people who invest and make that happen” – in San Francisco this year. Below are a smattering of quotes and tweets gathered by NextBillion Editors James Militzer and Kyle Poplin at SOCAP on Wednesday, the first full day of events.

 

The Opening Plenary

 

Meeting a “valuable stranger, an unlikely ally.” That’s what SOCAP is all about, co-founder Kevin Jones told the crowd in his opening remarks.

 

 

“The system is failing. It’s time to talk about what’s next,” said Gar Alperovitz of the Democracy Collaborative. As evidence of that failing, he said income distribution in the world resembles medieval times – only it’s worse now than it was back then – and there’s a higher concentration of U.S. citizens in jail than were ever incarcerated in the Soviet Union.

 

 

Brendan Martin of the Working World said the “next system” will be local and based on people solving problems. “Finance is the most powerful force in the world. This room has the power.”

Michelle Long of BALLE said the system is so broken that it needs a fix – not like changing vanilla to vanilla beans, or even vanilla to chocolate, but vanilla to music. She said she had an epiphany two years ago at SOCAP when she saw “people competing with each other to save the world.” The needed fixes, she said, should come from love, connectedness and compassion, not competition.

 

 

 

Lisa Hall of Anthos Asset Management said, “Impact investment is on the path to the mainstream. Even the pope is talking about it.”

 

 

 

Eryc Branham, CEO of MissionHUB, which organizes SOCAP, talked about the personal changes that led him to his current position: “Some people find god. I found good.”

 

Ann Mei Chang, executive director of the U.S. Global Development Lab at USAID, delivered a hard truth about socially focused investing. Even though evidence is emerging that these investments can pay market returns (or close to them), she said, "I get a little queasy when I think about putting my retirement money toward impact investments.”

 

 

Cheryl Dorsey, president of Echoing Green, articulated another struggle for the sector: "The most promising early-stage ventures still face crippling hurdles in accessing capital.” Beyond financing, she said, the social impact sectors need to attract more talent – which she described as “the key asset in the modern economy.”

 

 

Bill Drayton, founder of Ashoka said, “We’re at the most amazing transition point ever. … Giving people a skill they’ll repeat for a lifetime doesn’t work anymore. … This is a different environment. You have to have everyone (become) a changemaker.” A hundred years ago, he said, the world required everyone to be literate. Now, he said, the world requires coordinated empathy, and children should be taught empathy at an early age. (Note: NextBillion will be publishing an interview we conducted with Drayton on the sidelines of SOCAP in the coming weeks.)

 

 

Wednesday’s Panels

 

“Climate (change is not) above jobs in the economy. Climate is jobs in the economy,” said Kate Gordon of the Paulson Institute. She was participating in “Climate Ventures 2.0,” in which the panelists agreed that if the problems of climate change are presented in finite and focused ways, entrepreneurs will be willing to tackle them; if the entrepreneurs can develop products or services that people want to buy, then those solutions will be fundable by both private and public entities.

 

 

 

“We’re doing it wrong. The whole idea of equity investing with a return on the end is wrong,” said Michael “Luni” Libes of Fledge, an incubator for “conscious companies.” He walked attendees at the “Wanted: Alternative Exits” panel discussion through a scenario in which investors are repaid by a company’s revenues, when and if they are available, as opposed to some “equity event” – like a sell-off – by the company. “Nearly every company I work with has no desire to sell their company,” he said. “That would be a loss to them, because their baby is gone.”

 

 

“We are 10 years behind where the climate data was,” said Joy Anderson of Criterion Institute, at the panel entitled “Upgrading Your Due Diligence With a Gender Lens.” She said it’s time for more sophisticated ways of valuing gender in businesses; it’s not just about counting women.

 

 

Mark Lee of SustainAbility, moderating “Innovation Station: Designing New Business Models for Sustainability,” said the current economy requires new business models that “change the way value is created and exchanged,” and “tinkering with products and services on an incremental basis isn’t sufficient anymore.”

A stimulating discussion between impact investing luminaries Cathy Clark, Director of CASE i3 at Duke University and Fran Seegull, Chief Investment Officer at ImpactAssets covered many of the current topics of discussion in the sector. Seegull compared the practice of major investing players building their own impact investing presence, while others are buying smaller funds and leapfrogging this process. She also touched upon recent IRS guidance on the fiduciary role of foundations, which could let them make impact investments without insisting upon market-rate financial returns, along with changes in crowdfunding regulations that are helping to slowly open the door to private equity for retail impact investors. But it wasn’t clear if any of these moves would address the common complaint that there is more money in impact investing than companies to field investments.

Clark discussed some possible solutions to this issue, including what she called "layer cake investing," in which different players add capital to catalyze an impact investment, while taking on different levels of associated risk. She said the sector needs more "buyers' agents" – similar to what happens in real estate – to make negotiating between investors and entrepreneurs a fairer process. And she mentioned that although there's a pioneer gap in impact capital, there's also a communications gap between entrepreneurs and investors – something CASE is planning to address.

 

 

In what he called an “aha” statistic, Arjan Schutte, Managing Partner at Core Innovation Capital said that “92 percent of Americans' biggest financial aspiration is stability, not upward mobility.” In the panel he moderated, “Fintech for Good,” he led panelists in a discussion of the huge potential that lies in the convergence of this growing income instability and the fintech revolution. With the incredible entrepreneurial energy that’s focused on disrupting financial services, panelists agreed, the fintech sector is full of promise for both businesses and underserved customers.

The panelists sounded off on a number of fintech innovations, from blockchain (promising but hard to understand part of crypto-currencies) to big data (“a little overhyped” according to Accion Venture Lab Managing Director Paul Breloff). But in Breloff’s widely endorsed view, “A lot of the innovation in emerging markets isn't about fintech, but about new business models.” Investors often care more about the latest flashy technological innovation than customers do, he said. What’s more, “The best financial services leverage fintech, but hide it from the customer experience.” And one of the more exciting uses of this technology involves automating human experiences.

Sarah Gordon, present of the Center for Financial Services Innovation (a NextBillion content partner) seconded his Breloff’s, emphasizing that “The term ‘fintech’ can include high tech or low tech solutions.” Before pursuing a high-tech solution, she said, it’s good to consider whether that technology will make customers’ lives any better.

And at the end of the day, in the view of Ross Baird, Executive Director of Village Capital, fintech solutions aren’t going to transform underserved people’s lives anyway – however, they can make their lives “less bad.” The fintech solutions that excite him the most, he said, are those that take something that people have been doing for thousands of years and make it easier.

 

 

Categories
Entrepreneurship
Tags
conferences, impact investing, investment fund, SOCAP