Rob Katz

Social Capital Markets: Mike Lee on Money and Meaning

Mike LeeGuest blogger Mike Lee is a 2nd-year MBA student at the Haas School of Business at UC Berkeley and leads the Net Impact chapter.? Prior to Haas, Mike worked as an evaluation consultant for NGOs and Foundations and also at Ashoka.? Mike is an alumnus of the Coro Fellows Program in Public Affairs and has blogged about social enterprise on Skoll’s Social Edge site. He is a graduate of Harvard University with an interdisciplinary degree in Social Studies.

By Mike LeeIt’s great to be blogging here on NextBillion. Props to Rob Katz, Moses Lee, Francisco Noguera and many others for creating one of the most vital blogs around for us hard-headed idealists.
Today, I sat in on a stellar panel, titled “Money and Meaning.” Not exactly an easy task for the panelists as those two words encapsulate much of what the SoCap08 conference is all about. Panelists–Will Rosenzweig of Physic Ventures, a $160MM venture fund focused on sustainable living and consumer-driven health care companies, John Goldstein of Imprint Capital Advisors, a mission-related investing advisory firm, and moderator Lucy Bernholz of Blueprint R&D–tackled this huge topic with insight and grace.?

The questions to be explored: How can capital be deployed in a way that serves the investor’s values and the social good?? And can our social values drive more effective investments? While 45 minutes was insufficient to draw any serious conclusions, the conversation produced several highlights for me.
The sweet spot = where meaning intersects with strategic interest.

Two of Physic Ventures? main investors are Unilever, a $50 billion company and CalPERS, the largest public investment fund in the US. How did Rosenzweig get these two behemoths to buy into Physic’s value proposition?? His answer: by appealing to their strategic interest.

For Unilever, their desire to transform their products from corn-based sodas to healthy foods fueled their interest in connecting with entrepreneurs who can help them make that leap. For CalPERS, as the 3rd largest purchaser of healthcare in the US, the ability to support entrepreneurs creating innovations in the consumer-driven healthcare space serves their longer-term strategic objectives.
These examples highlight how meaning can intersect with strategic interests to create a sweet spot where financial and social returns are not zero-sum. It also serves as a reminder to social entrepreneurs that your venture can garner the support of large swaths of capital if your meaning meets the investor’s strategic interest. Check out Volans, a new start-up from two giants in the field, John Elkington and Pamela Hartigan, if you?re interested in how these connections could be made on a larger scale.
How many social capital markets are there?

According to Goldstein, because different investors have different social values and desired financial returns, rather than create one social capital market, we should create many products that meet investors where they?re at. Some investors are going to be more focused on the percentage rate of return while others come to the table with an expressly social objective. The field should find ways to provide concrete entry points for investors across the spectrum of the money and meaning continuum.
Leadership as Translation

Rosenzweig observed that the most exciting opportunities frequently lie at the convergence of sectors and industries. Often, there’s not a language for these new opportunities (think social enterprise before social enterprise existed), so one of the key aspects of leadership is to be a great translator (Bill Drayton, for example). It’s an observation that most social entrepreneurs will recognize as true, having to work in territories where no paths have been blazed, but it’s something rarely discussed and, I think, underappreciated.
In the end, there were many other nuggets of wisdom, too many to do justice here. This was my favorite panel today so I recommend checking out the video, which will be posted on the SoCap08 web site soon.