On 30 May 2011, the inaugural conference of SOCAP Europe took place in Amsterdam, at the site of the world’s first stock market at Beurs van Berlage. Over 650 individuals from the social investment world, representing some 50 countries, gathered together for three days to exchange ideas under the theme of ‘Moving Minds and Moving Money: bringing together people who are changing the way they act and the way we all think about investing’.
The conference was notable for its ability to get down to detailed discussions about what is actually happening in social investment – examples of completed investments and real accomplishments, rather than mere cheerleading and idle aspiration. There was a real desire among participants to move from ideas to impact, and to show actual results.
Her Royal Highness Princess Máxima of the Netherlands opened the conference with a brilliant delivered speech that showed both her social investment expertise and her grasp of detail. We rarely hear VIPs talk knowledgeably about how loan repayments can be designed to match a client’s cashflow profile – but Princess Máxima did just that. Perhaps this should not have been surprising, given her role as Special Advocate for Inclusive Finance for Development of the Secretary General of the United Nations.
She then outlined her perspective on money and meaning. She argued that there is no silver bullet by which financial mechanism will solve development challenges. The question is not about microfinance or impact investing; it is about creating sustainable value by providing access to finance, meeting real needs, providing non-financial assistance and engaging in a socially responsible manner with the vulnerable.
Responsible finance, she explained, is essentially built on three pillars: appropriate regulations need to be in place to create a level playing field; consumers need to be financially literate; and the investment industry needs to be self-regulated. Princess Máxima called upon investors and shareholders more broadly to advocate for self-regulation through platforms such as the UN Principles for Responsible Investment, which were recently signed by 40 pioneering investors.
Over the next couple of days, some notable themes kept recurring. One was the importance of collaboration. Social entrepreneurship has traditionally focused on charismatic individuals, but long-term value is created through teams. Kevin Jones, the founder of SOCAP, remarked: “We’re beyond the hero. Heroes are not investable.’
Another theme was transparency. Both investors and investees urged each other to be clearer about their business models (either of their fund or their social enterprise) so that capital could be more effectively matched with the appropriate opportunities.
This need for clarity was echoed through numerous panels including ‘Layer Cake Deals’, chaired by Danyal Sattar of the Esmee Fairbairn Foundation, which looked at how philanthropic capital could be blended with commercial capital in the same investment vehicles; ‘Lessons from the World of Microfinance’, chaired by CAF Venturesome, which discussed how social investment could learn from the microfinance industry; and ‘Refining your Revenue Model’, in which Mark Cheng of Chelwood Capital gave details of the ground-breaking social investment into the London-based microcredit lender Fair Finance Ltd by a group of commercial and investment banks.
Moreover, the conference demonstrated that there is a useful distinction to be drawn between ‘social banking’ and ‘social investment’. The former refers mainly to secured lending products from regulated banks, while the latter encompasses a range of risk capital investments from a variety of providers. Continental Europe leads the way in social banking (indeed, Triodos Bank was the main sponsor of the conference). However, the UK stands out as the global leader in social investment. It is unfortunate that confusion around terminology continues to bedevil the sector.
For those who are new to social investment, Jonathan Jenkins of UnLtd Ventures gave the best advice: ‘find your battle’, focus on a specific issue that resonates with you such as angel investing or engaged grantmaking, and seek out those in the market who are already engaged in that work.
Paul Cheng is senior investment manager at CAF Venturesome and chair of the European Social Investment Taskforce