SoCap08: Day One

Day 1 of Social Capital Markets 08 down, and my head is officially spinning.  This is a good thing.

4 – 45 minute sessions, each with 4 panelists and a moderator on the topics of:
- New Wealth Management
- Mission Related Investing
- Market Creators, and
- Democratic Marketplaces;
Followed by keynote speaker Asad Mahmood from Deutsche Bank and a fast-paced speed networking session.

A number of key takeaways for me, including -

Multiple innovators in this space are focused on alleviating “friction points” which makes sense since social capital markets are all about easing the flow of capital to effective social solutions.  One example is the friction point that often exists with communication between social entrepreneurs and their investors / donors; groups that consolidate investment dollars like the Calvert Giving Fund, Kiva, and Global Giving alleviate this friction by becoming the one point of contact that social entrepreneurs have to report back to / communicate with.    eBay’s new subsidiary World of Good.com is leveraging the parent company’s 300,000,000 userts to launch an online ethically-produced products market; in doing it aspires to alleviate friction points in the supply chains of ethically-produced goods which will ensure that a higher portion of the purchase price goes to the end producer (3-7% is common now).

Acknowledgement that one of the key bottlenecks to the growth of blended-value investing is lack of expertise on the part of wealth / portfolio managers to understand and critically evaluate blended value deals.  Clients want blended value investments, but the managers often don’t know how to evaluate and compare potential opportunities.  This same theme came up in the second session when Lisa Kleiner of the KL Felicitas Foundation recounted the lengthy process she and her husband went through to find a wealth manager who could broker blended value deals for them.  This begs the question of what is the solution – training of wealth managers, creation of a set of rating standards, sharing of information by foundations and others who “get” social impact measures or (most likely) some combination of the above?

Not surprisingly, there was a good bit of discussion about how the current turbulence of the traditional financial markets would impact social investing.  Panelists thoughts:
- Potential increased focus on PRIs and mission-related investing by foundations to augment a decrease in their grant budgets;
- Stabilization of microfinance investing because MFI has a “sticky” source of capital (i.e. investors care about the issue, so are likely to stay in the game);
- “Patient capital” (like Beartooth Capital) will see a heyday because their investments don’t follow market fluctuations;
- Because financial markets are suffering now due to their lack of transparency; an opportunity exists fill the void of disillusionment with new opportunities that realize social goals (i.e. impact the issues of today, the things people care about).

Finally, there was some discussion on emerging legal structures to support hybrid for-profit / nonprofit business models. The U.K. already has Community Interest Company. Vermont has allowed an L3C (i.e. community LLC) corporate structure, and something similar may be coming down the pike in California soon.

All very exciting and perspective-expanding, and there is more to come tomorrow. Until then…

Kim Wilson
Director, Development & Marketing