SEWF 2012 provides meeting ground for investors and social entrepreneurs

 

Isabel Medem

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Isabel Medem

From 16 to 18 October, NESsT organized a global forum on social entrepreneurship in Rio de Janeiro, Brazil. As manager of the social enterprise x-runner Venture in Peru, I attended this conference to learn more about the social enterprise sector in Latin America, and to get in contact with foundations, funds and philanthropists.

The goal of the Social Enterprise World Forum 2012 (SEWF 2012) was to build global awareness of the effectiveness of social enterprise in solving critical social problems, and to bring together funders and social entrepreneurs.

On the first day of the conference, NESsT organized a so-called Investor Day, gathering a large group of investors and donors, both those who are already involved with social enterprises and those wanting to learn about this new field. The discussion revolved around how to make use of philanthropic and investment capital to help develop and grow social enterprises. Participants included UBS, Coca Cola, the Rockefeller Foundation, the Lemelson Foundation, AVINA and many more.

In his opening keynote about impact investing in social enterprises, Anthony Bugg-Levine (CEO of Nonprofit Finance Fund and co-author of Impact Investing: Transforming how we make money while making a difference) talked about how we are moving from an old world to a new one. He defined the old world as a place where making business means making money, and investing means making a profit. We are now moving into a new world, where impact investors can solve problems and where social entrepreneurs know that the business approach works. According to Bugg-Levine, among the difficulties of this new world are the yet-to-be-established regulations for this novel approach, as well as the immense talent required to solve problems: social entrepreneurs must be as good as business people and be non-profit experts at the same time. Bugg-Levine concluded that impact investing makes sense when government cannot solve the problem alone, and that it is therefore better to give money to an organization that at least recovers some costs.

The opening panel discussion about the emerging market and social enterprises around the world discussed the importance of aligning the expectations of investors and social entrepreneurs. In the words of Nicole Etchart, NESsT co-founder and CEO, ‘Donors and investors need to be patient on the financing needs of social enterprises, the amount of time that it takes them to reach break-even and generate profit, and if and when they can really begin to scale. The expected financial return needs to be reasonable, particularly the need to cover the many social costs of social enterprise. And the social sector also needs to provide clear metrics and to spend time educating the philanthropic and investing communities on what they should expect in terms of social impact. A variety of instruments are needed, and they need to be mixed, and used for the appropriate financing needs.’

Throughout the three days of the conference, one of the workshops concentrated entirely on pitching – entrepreneurs could pitch their business to diverse panels of possible investors (foundations, funds, philanthropists, etc), receiving objective feedback as well as the opportunity to interact directly with potential investors. As a social entrepreneur looking for funding, this was a great place to practise and learn to pitch your business to individuals and organizations that might be interested in investing.

I attended various other sessions and workshops, ranging from ‘Accelerating and incubating social enterprises’ and ‘Stimulating majority markets at the bottom of the pyramid’ to ‘Designing for Scale: preparing social enterprises for expansion and growth’. Given that my focus was on topics revolving around how to grow your start-up and what kind of financing is available, I learned a lot about the impact investing field in Latin America. The region has shown considerable economic growth, and a number of funds and foundations located in Latin America are actively involved in the social enterprise sector. Funds like Bamboo Finance support established social enterprises, and foundations such as AVINA concentrate on pushing early-stage start-ups through their first growth phase. But many early-stage start-ups find themselves in a situation where they have accomplished their proof of concept and are ready to start building an initial business basis, but are not yet at a point where they can say that they’ve been operating for five years and with considerable growth. This leads to a lack of social enterprises in the pipeline for venture philanthropists, and it is there that more activity and funding, probably through grants but also through debt or equity, is needed. So, while the impact investment field is growing and supporting great social enterprises in Latin America, there is a need for foundations, philanthropists and funds to take a closer look at supporting very early-stage start-ups.

Isabel Medem is manager of x-runner Venture in Peru.

Tagged in: CSR Impact investing SEWF social enterprise


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