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  • Responsibilities of an (Impact) Investor

    3:02 pm on December 6, 2012 | 0 comments Permalink | Reply
    Tags: , , , impact investing, investing, , venture capital

    For the past few months, I have been reflect­ing a lot on my role as an investor. Busi­ness plans and pro­pos­als come across my desk and as I shift through them, it really struck me on how large a respon­si­bil­ity investors play in accel­er­at­ing trends, shap­ing a com­mu­nity or even country’s econ­omy, but yet how lit­tle this respon­si­bil­ity is spo­ken about in the invest­ing cir­cles. We place so much empha­sis on find­ing the right busi­ness, the right man­age­ment team, the right social impact, that some­times we get lost in our own capac­ity to rec­og­nize what really is inno­v­a­tive and what truly deserves to be funded. So, from my expe­ri­ences, here’s what I think an investor’s respon­si­bil­i­ties are on top of the typ­i­cal invest­ment work:

    1) Investors need to live in the future. 

    This is a point I feel very strongly about. If you’re an investor: VC/PE and par­tic­u­larly if you play in the startup and impact invest­ing work, (as Fred Wil­son pointed today in his blog post and what Paul Gra­ham said):  you should live in the future and see what is miss­ing. So well said. I’m cur­rently in an envi­ron­ment (yes, I rec­og­nize that I am in Africa — so feel free to shower stereo­types), where I know investors who are still using yahoo mail, inter­net explorer and Win­dows 2003 (true story!). Not to say that there are any­thing wrong with the prod­ucts, but more so — I think it’s so impor­tant to be keep­ing up with the trends in the world, tech­nol­ogy being one of them. How can you expect to iden­tify an invest­ment that is ‘ground-breaking’ if you’re not even fol­low­ing the newest trends in your sec­tor? Tak­ing this a step fur­ther, if you are fol­low­ing these global trends vs. local trends, it is then our respon­si­bil­ity to seek out entre­pre­neurs who can close this gap and fur­ther ele­vate the devel­op­ing world, or the devel­op­ing world would for­ever be play­ing ‘catch up’.

    2) Don’t be a sheep. 

    This respon­si­bil­ity is par­tic­u­larly impor­tant in the impact invest­ing space. Given that we’re play­ing in a field that is largely uncharted, risk is high and typ­i­cally, most investors are unable to size up a new mar­ket and end up rely­ing on the opin­ions of other investors. aka. I’ll invest if some­one else will too aka. a sheep. Impact investors say that they are risk tol­er­ant, but few trans­late this tol­er­ance into sign­ing along the dot­ted line. A very chicken and egg sit­u­a­tion. Hence, I have to con­stantly push myself to under­stand what is the right bal­ance of being a mar­ket leader but also not be a reck­less investor. Bal­ance is key.

    3) The need to close and dis­burse faster

    There are a lot of delays that occur in [impact] invest­ing. The court­ing of investors and [social] entre­pre­neurs, the dance between find­ing the right termsheet, the issue of mak­ing sure that the social impact actu­ally has an impact, and [insert your tra­di­tional delays in invest­ing here]. This is the norm. This is my chal­lenge to investors: rec­og­nize that the longer the delay, the big­ger the strain on the business/organization. From an entre­pre­neur per­spec­tive, you’re con­stantly watch­ing your ‘run­way’ aka. how much money do I have before I run out, and a delayed clos­ing round and dis­burse­ment is to the [social] entrepreneur’s dis­ad­van­tage as well as to their cus­tomers. If we’re really stand­ing with the poor, then deals need to close quicker with clear and sim­ple terms, as the longer the delay, the more peo­ple are miss­ing out on poten­tially expe­ri­enc­ing the product/service.

    This is by no means sup­posed to be an exhaus­tive list of respon­si­bil­i­ties, but instead ones that I feel are most impor­tant given my expe­ri­ence. As investors, we are in a priv­i­leged posi­tion to start/continue or end trends. I think it’s time that we started think­ing a lit­tle harder about where our respon­si­bil­i­ties lie.

     
  • How to Create an Impact Investing Movement

    11:19 am on April 27, 2012 | 2 comments Permalink | Reply
    Tags: , , , , impact investing, , ,

    I’ve been stalk­ing the impact invest­ing space closely for the last few years and it seems that across research papers, from the recently released Acu­men Fund-Mon­i­tor Group: Case for Phil­an­thropy in Impact Invest­ing (which is a great read!) to goals of foun­da­tion tack­ling impact invest­ing — a sys­temic issue that resur­faces is the lack of infra­struc­ture to help peo­ple iden­tify and func­tion as a part of the impact indus­try. A recent con­ver­sa­tion with a friend on move­ment cre­ation sparked this idea on fig­ur­ing out how to build this infra­struc­ture. It also reminded me of a old twit­ter exchange I had with Steve Wright (Grameen Foun­da­tion) and Kevin Jones (SOCAP) on the value of mar­ket­ing and sto­ry­telling in the social con­text. A snip­pet of our con­ver­sa­tion is below:

    I believe that marketing/value-positioning is an under­val­ued prac­tice in the impact invest­ing space. How­ever, if we’re look­ing to expand the space beyond those who care about the impact value of cap­i­tal, we have a to start look­ing at cre­at­ing a move­ment of impact invest­ing — a sus­tain­able and scal­able plat­form. We have to look closely on how we can cre­ate pull-factors needed for a suc­cess­ful impact move­ment. Now, I am not as naive to think that the world of phil­an­thropy and for-profit invest­ing should cease to exist. What I am sug­gest­ing is that the movement’s aim is to help the gen­eral pub­lic and those in the invest­ing world to have a third way to think about cap­i­tal: a blended value of cap­i­tal and impact.

    So, this is my attempt to build this movement’s basic frame­work and my vision of what core ele­ments of an impact invest­ing move­ment would con­tain and look like.

    Defin­ing the Movement’s Core

    Edu­ca­tion is the key to the move­ment and a first step is shift­ing people’s per­spec­tive to a third way to think about cap­i­tal. I would like peo­ple to think of their port­fo­lios as fol­low (Note: the pie charts below are based on a hypo­thet­i­cal way to think about cap­i­tal — main point is to illus­trate the inclu­sion of impact invest­ments when an indi­vid­ual thinks of capital):


    I believe the core of an impact invest­ing move­ment should be two-fold:

    1) The choice between impact and profit should not be a binary one.

    2) Close the men­tal dis­con­nects and iso­la­tion between the dif­fer­ent com­po­nents of the Impact chain of cap­i­tal: (Input –> Out­put –> Impact)

    Dis­tinc­tion of Tar­get Groups 

    Just like the ‘real’ invest­ing world, in the impact invest­ing world, there are two dis­tinct investors to tar­get: Insti­tu­tional and Retail. By the nature of the way that cap­i­tal flows into the space, influ­ence on the retail end is bot­tom heavy + per­sonal and on the insti­tu­tional side, it is top heavy and polit­i­cally bar­ri­ered. (Side­note: A great report to read to under­stand the institutional-policy rela­tion­ship in impact invest­ing writ­ten by Pacific Com­mu­nity Ven­tures & Har­vard Uni).

    Another tar­get group (and this is admit­tedly the harder group to pen­e­trate than the for­mer) would be both insti­tu­tional and retail invest­ment advi­sors. Straight away, the inher­ent chal­lenge to cre­ate this move­ment is how to cre­ate a simul­ta­ne­ous pres­sure on both ends and in each respec­tive groups.

    Five Strate­gies

    In cre­at­ing this ‘pull’ plat­form, because cap­i­tal flows through a sys­tem through an impact chain, the plat­form should become the mech­a­nism by which ‘push’ plat­forms must engage in. The graphic below illus­trates this point using the recently announced Mor­gan Stan­ley Invest­ing with Impact plat­form. The idea is that on Mor­gan Stanley’s end, they can only get so far by engag­ing their cur­rent clients. How­ever, if they look beyond their Invest­ing with Impact plat­form, and engage in a mid­dle ‘pull’ plat­form that edu­cates the masses, their mes­sage and reach would more than double.

    I believe that a suc­cess­ful impact invest­ing ‘pull’ move­ment would con­tain the fol­low­ing practices:

     1) Rad­i­cally lower knowl­edge barriers

    The land­scape of impact invest­ing is slowly com­ing to light. There is great research and data that heav­ily sup­ports the sec­tor. How­ever, bite size pieces of infor­ma­tion are far and few in between. Investors and advi­sors need under­stand: the rea­son for impact invest­ing, proof of con­cept, and how it would affect an institution’s or individual’s port­fo­lio. The knowl­edge bar­rier should also include a way to dis­sem­i­nate authen­tic and real sto­ries (see: twit­ter exchange above) about impact invest­ing and the results of the invest­ment — a form of curated ‘entertainment’.

    2) Uncover and dis­rupt offline analogies

    Most form of human inter­ac­tions sur­round a pre-existing way of think­ing. e.g. before email, peo­ple would send let­ters. In the case of think­ing about cap­i­tal, the tip­ping points of where some­one starts to think about money is in the edu­ca­tion sys­tem, with a focus on uni­ver­si­ties and col­lege (typ­i­cally an individual’s first expe­ri­ence in man­ag­ing a sub­stan­tial amount of money).

    3) Empower key com­mu­nity leaders

    I’m a big fan of Seth Godin’s prac­tice of build­ing tribes. Peo­ple are more pas­sion­ate about this issue than you think they are. A great orga­ni­za­tion that organ­i­cally (and per­haps unex­pect­edly) tapped into the power of tribes is Acu­men Fund. (Full dis­clo­sure: I cur­rently vol­un­teer with them, and this is by no means a rep­re­sen­ta­tion of their per­spec­tive on the mat­ter. Just my own). Acu­men Fund cur­rently has 12 volunteer-led chap­ters around the world that sup­port and spread their cause. These chap­ters are going into local com­mu­ni­ties with a depth and reach that Acu­men would not have been able to achieve just by themselves.

    4) Reduce friction

    Think­ing about cap­i­tal — can be an over­whelm­ing expe­ri­ence, espe­cially on the retail side. The move­ment needs to cre­ate a fric­tion­less and sim­ple expe­ri­ence that cat­alyzes ‘pull’ for trans­ac­tional activ­i­ties. A great exam­ple of this prac­tice is by Learn­Vest, a bud­get­ing and advi­sory plat­form to help indi­vid­u­als achieve their goals. Sim­ple and clear. I envi­sion a suc­cess­ful impact invest­ing plat­form to embrace a sim­i­lar fric­tion­less user experience.

     5) Get­ting started

    No sin­gle agenda or strat­egy is equally rel­e­vant to all tar­get groups. I see two main engage­ment strate­gies embed­ded in the move­ment, which in some cases can be exe­cuted sep­a­rately or com­bined. One is a online-mass led propo­si­tion with mul­ti­ple knowl­edge engage­ment pieces. The other is a high-touch with direct chan­nel dis­tri­b­u­tion. The lat­ter would fit in more with the advisory/‘push’ plat­form engage­ment tar­get group whereas the for­mer would fit into a engag­ing retail investors. The high-touch com­po­nent is def­i­nitely more of a chal­lenge as we would be look­ing at a tar­get group of banks/corporations/venture cap­i­tal­ist that have sys­tems in place in order to achieve exe­cute their busi­ness model.

     ***

    There are mul­ti­ple ways to con­tinue to build out this frame­work. The points above are merely a start­ing point in the basic wire­frame of this impact invest­ing move­ment. All ideas are wel­come, and if you want to have a brain­storm ses­sion about this — hit me up!

    Thanks to Erika, Jo-Ann, Steve and Kevin for inspir­ing this post.

     
  • Identifying the Next Steps for Impact Investing

    1:01 pm on January 28, 2012 | 2 comments Permalink | Reply
    Tags: , impact investing,

    A report by Credit Suisse and the Schwab Foun­da­tion for Social Entre­pre­neur­ship was released this week on the topic of impact invest­ing at the World Eco­nomic Forum’s annual meet­ing (Davos). A great overview of the cur­rent land­scape, it is worth a read, par­tic­u­larly Mark Kramer’s and Sir Richard Bran­son’s inter­views and com­ments on the sector.

    Investing_for_impact Credit Suisse — Schwab Report

    The report lead me down an inter­est­ing thought path on the “next steps” of the sector…

    Evi­dence:  The report high­lights sev­eral suc­cess­ful social enter­prise mod­els that are part of Schwab’s net­work. My per­sonal favourite was Bam Aquino of Hapinoy in the Philip­pines — invest­ment funds that cre­ates sus­tain­able dis­tri­b­u­tion chan­nels and busi­ness devel­op­ment strate­gies to empower for­merly iso­lated and infor­mal sec­tors of the Fil­ipino econ­omy. The report above, com­ple­ments the Data Dri­ven JP Morgan-GIIN report, that drills drown into the num­bers and break­down of social enter­prise in dif­fer­ent sectors.

    As a next step, I would love to see a report that focusses more on the acces­si­bil­ity and avail­abil­ity of invest­ments in the space — from an investors per­spec­tive. Com­ing from an asset-management back­ground, I have devel­oped a strong belief that under­stand­ing the invest­ment is just as impor­tant as know­ing your invest­ment options. Cur­rently, main-stream investor’s expo­sure of ‘social’ in invest­ments are SRI offer­ings — they need to be edu­cated on dif­fer­ent entry points and impact invest­ing prod­uct offer­ings rang­ing from an insti­tu­tional and pri­vate client per­spec­tive. A great start­ing point to this step is Impact Asset’s 50: A list­ing of Impact Fund Man­agers.

    Fail­ure: With the indus­try in a growth stage, as great as it is to know the suc­cesses and the land­scape, it is just as impor­tant to know the fail­ures. Where did we go wrong? What worked? How did you man­age to pivot? How do you pri­or­i­tize your mis­sion and your finances? When did you know the time to scale? There is such a stigma with fail­ure in the non-profit/charity world. This stigma should NOT be car­ried for­ward into the impact investing/social enter­prise sec­tor. Fail­ure is a gift — and the abil­ity to speak freely to learn from them, should be embraced by this sec­tor. A won­der­ful exam­ple of embrac­ing fail­ure is the EWB Canada’s Fail­ure Reports. I would love to see a sim­i­lar ini­tia­tive in the impact invest­ing sec­tor. Even inter­nally within orga­ni­za­tions — as a start.

    Road-Map: There is a wealth of infor­ma­tion on impact invest­ing that has been churned up within the last few years or so. The issue is know­ing where to look: from fund­ing social enter­prises to exit­ing an invest­ment. A nat­ural next step to this would be for var­i­ous stake­hold­ers to share their “how-tos” and points of con­sid­er­a­tion in the impact sec­tor. Some orga­ni­za­tions have already begun to pave the way for this, but what we need is for more road-maps to appear so at the very least, when you’re at the start­ing line — you have a gen­eral sense of direc­tion on where to go.

     

     
  • Constructing a prezi presentation

    12:39 pm on November 26, 2011 | 0 comments Permalink | Reply
    Tags: , impact investing,

    Ear­lier this week, I had the plea­sure of pre­sent­ing the VANCOUVER+acumen/Acumen Fund model to an impact invest­ing meetup in Van­cou­ver. It was also the first time I was on a panel of speak­ers and it was a really hum­bling expe­ri­ence to be there with other passionate/knowledgable peo­ple work­ing in the Van­cou­ver impact invest­ing space. I would like to share my prezi pre­sen­ta­tion that I gave that day as well as cou­ple of notes that I have picked up along the way from build­ing my fair share of prezi presentations.

    1) Build a pic­ture: Prezi is a fan­tas­tic tool when you are try­ing to present a con­cept as an over­all vision. It adds the dimen­sion of space to the pre­sen­ta­tion which is a bless­ing in dis­guise. I find the best prezi pre­sen­ta­tion is a pic­ture that you build in an audience’s mind. When the pre­sen­ta­tion is fin­ished, it really should be a com­plete sin­gle pic­ture with a few take­aways. This is the most impor­tant dif­fer­en­ti­a­tion point on why you should pick prezi over keynote: when you want to con­struct a visual pic­ture as opposed to a lin­ear flow of ideas.

    2) Draw out your pre­sen­ta­tion: When con­struct­ing this pre­sen­ta­tion, I spent a long time before­hand think­ing about what I wanted my final pic­ture to be. I knew the mes­sage I wanted to deliver: the acu­men story in two parts — the business/investment process and moral lead­er­ship. How that infor­ma­tion is pre­sented is a dif­fer­ent story. I chose a moun­tain and split my pre­sen­ta­tion to show the first part and then unveil the lower half of the moun­tain as the sec­ond story.

    3) Con­struct your path: I love the zoom­ing abil­ity of prezi, and when used prop­erly, can really add alot of impact to your pre­sen­ta­tion. My two favourite ways of using this tool is the abil­ity to give a sense of div­ing into some­thing, or mov­ing from one con­cept to another (think — movie reel). I per­son­ally haven’t been able to find an effec­tive way of using the tool that rotates words (unless its sur­round­ing a cir­cle) as I find that it dis­rupts the flow path instead of adding (I’ve had feed­back where I was overly excited and use it too much — peo­ple actu­ally became dizzy with the zoom­ing in and out).

    Hence, this tool really should then be used to unveil lay­ers (think — Incep­tion dream lay­ers) in your pre­sen­ta­tion — how­ever deep you want to dive. Keep the lay­ers con­sis­tent work­ing from big –> small, or in my pre­sen­ta­tion above, I chose to go small –> big. For my pre­sen­ta­tion the 3 lay­ers I wanted to cre­ate was mov­ing from the core of Acu­men — cre­at­ing a world beyond poverty, to the how of their busi­ness model, build­ing on that to their com­plete pic­ture which includes moral lead­er­ship, and finally the over­all call to action of get­ting involved with Van­cou­ver for Acumen.

    If you’re inter­ested in get­ting in touch to learn more about VANCOUVER+acumen/Acu­men Fund, please feel free to be in touch!

    Note: The pic­tures in my prezi is an Acu­men invest­ment: Water­Health Inter­na­tional. You can read more about them here.

    *All pic­tures and images are the prop­erty of VANCOUVER+acumen and Acu­men Fund. 

     
  • VANCOUVER+acumen Presentation - Making an Impact through Social Finance

    3:54 pm on November 8, 2011 | 0 comments Permalink | Reply
    Tags: , impact investing, ,

    For the past year and a half or so, I have been involved with an incred­i­ble group, VANCOUVER+acumen. We’re a vol­un­teer chap­ter sup­port­ing Acu­men Fund by actively cham­pi­oning Acumen’s inno­v­a­tive model of patient cap­i­tal to ele­vate global poverty. We achieve this by engag­ing in com­mu­nity, rang­ing from infor­ma­tional work­shops, monthly salons and our annual case com­pe­ti­tion. As one of the found­ing mem­bers, it has been a great priv­i­lege to work along­side such pas­sion­ate indi­vid­u­als in this space and to con­tinue to cre­ate a world beyond poverty.

    I’m really excited to announce that I will be speak­ing at the inau­gural Cana­dian Global Impact Invest­ing meetup in Van­cou­ver on behalf of the group — shar­ing the acu­men model (both on a global and chap­ter level) to the impact invest­ing com­mu­nity in Van­cou­ver. The event will be held on Wednes­day, Nov 23rd from 6:30pm — 9pm at SFU Segal Grad­u­ate School of Busi­ness in down­town Van­cou­ver. You can check out more details about the event here.

    Three other orga­ni­za­tions will also be pre­sent­ing at the event: Vancity, Global Cat­a­lyst Ini­tia­tive and Oppor­tu­nity Inter­na­tional Canada. Also, at the event, they will be giv­ing away door prizes ( 2 books I couldn’t rec­om­mend highly enough): Impact invest­ing: Trans­form­ing How We make Money While Mak­ing a Dif­fer­ence – Jed Emer­son, Antony Bugg-Levine and Banker to the Poor – Muham­mad Yunus.

    See you on the 23rd. Look­ing for­ward to con­nect­ing with other fel­low impact investing/social enter­prise champions.

     
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