A healthy dose of Toniic: Insights on impact investing at SOCAP16

By Alan Pierce

 

An annual mecca for impact networking and knowledge sharing, Social Capital Markets convenes an impressive array of plenaries, breakout sessions, and speakers. And at this year’s conference, SOCAP16, members of Toniic’s impact investor network held a considerable presence on stage. Over the course of three days and approximately 150 unique panels Toniic members led or participated in nearly a fifth of them.

 

I attended some of these events to listen to the Toniic community as they shared knowledge, experience and vision for leveraging capital in service to systemic social change. Below is a brief peek into three of these sessions with insight from the Toniic members who hosted them.

 

Each includes one memorable quote, a key insight, and, in alignment with Toniic’s mission as a global action community of impact investors, I have also offered an actionable message based on those insights.

Morning Plenary

Jed Emerson, Blended Value

 

A key quote: “This is not a conversation about trade-offs and compromise and marginalizing profitability in order to create some sort of fuzzy concept of charitable good. It is about how do we create a more integrated approach towards value creation through our companies, through our communities, through our capital. That’s the conversation.”

 

A key insight: Intentionality. Emerson cautions that the recent, rapid evolution of impact investing has introduced a propensity to de-emphasize the “why” in favor of the “how.” He urges us to hold a clear vision for why we are doing what we are doing, honoring our shared drive to raise humanity using purposeful capital structures. Without clarity of this embedded intentionality we may become prone to avoiding complexity in favor of “cheaper,” easier impact goals, a process which could ultimately compromise the reach and sustainability of that impact.

 

An actionable message: In your organization, your job, your life, with every decision you make, ask yourself, “Is this in alignment with my/our vision to our greater purpose?” It is a simple inquiry. The challenge lies not in asking it, but in acting always to affirm it. Jed challenges us to strive for the latter.

Supermodels: Constructing an Investment Portfolio With 100% Impact

John Kohler, Miller Center for Social Entrepreneurship

 

A key quote: “As we’ve observed over the past 10 to 15 years when a new entrant wants to combine money and meaning we invite them to invest in the very hardest place right off the bat, which is to invest in the small social enterprise 6,000 miles away making clean cookstoves, or providing clean water — which is good merit and high impact but very hard to manage right out of the box. So how do we make that much more approachable with people who are high net worth asset owners or institutional fund managers?”

 

A key insight: For new entrants to the impact investing sphere it is important to first clearly articulate your impact investment vision. I am moved to include this insight because of its evident alignment with Jed Emerson’s emphatic call to be guided by a greater “why.” Kohler echoes this emphasis suggesting that it will ultimately help inform which asset classes are most reasonable and available to you. With a clearly defined impact thesis or theory of change you can build out clear thematic choices (e.g. water, education), establish yourself on an impact-return spectrum, and ultimately determine an array of asset classes likely to be most effective in achieving your goals in alignment with an overall vision.

 

An actionable message: Begin modeling an impact portfolio that is structured around a theory of change model that speaks to what moves you or your organization. If you have already done so, or are in this process, perhaps share what you have learned along the way. It is important to collaborate on such best practices. Because as Kohler and others (e.g Toniic 100% IMPACT Network members) encourage such dialogue and act on it, we move more swiftly from conversation to effective action, implementation, and systemic change.

Paying For Impact: How New Kinds of Incentives Are Boosting Businesses That Serve The Poor

Rodrigo Villar Esquivel, New Ventures Mexico

 

A key quote: “One of the problems in raising money in Latin America is exits. Many entrepreneurs we have seen, great companies and great ideas, they are not thinking about selling their company. People build companies to have a solution to a problem or just to have a way of life, to have it for their family…So we created a way to invest in which people don’t have to sell.”

 

A key insight: Cultural and social norms may call for non-traditional investment models. Villar brings a perspective from Mexico and Latin America where impact investing remains a more nascent, albeit growing, field. While he acknowledged this perspective is not true for every single entrepreneur it sheds light on what is still a prevailing mindset. To meet these entrepreneurs where they are, in terms of values, can mean exploring things like social impact bonds, or other pay-for-success models. The ability to structure and implement such a process may depend on how directly you can measure the outcomes of a product or service. Indeed, Villar emphasizes the best companies for such models are those that have a product or service that is directly solving a social problem (e.g. providing affordable healthcare services for treatable blindness → you can measure how many people are able to see again).

 

An actionable message: One active and perhaps more subtle take-away from Villar’s insights is to embrace cultural sensitivity when approaching an impact investing opportunity. Instead of forcing a square peg in a round hole, try to explore and harness the cultural nuances of a region’s entrepreneurial consciousness. In doing so you might discover alignment and realize returns in places and in ways that expand opportunity, and impact, for all involved.

 

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Alan Pierce holds a master’s degree in Social Entrepreneurship from Hult International Business School. While at Hult he co-led the development of a student-run accelerator for local social enterprise startups, and received a management consulting certification. Prior to pursuing this degree Alan worked for a number of nonprofits in the SF Bay Area. This included an institute conducting research on individual and social transformation, at which he published several academic papers.