How Gift Capital Can Catalyze Even For-Profit Social Enterprises

Posted by on October 1st, 2015

How Gift Capital Can Catalyze Even For-Profit Social Enterprises

by Alex Haber

alex-haberGift is an often overlooked form of social capital—yet it can make an enormous difference in the success of a social enterprise, in terms of both its community benefits and its economic health. This is true of for-profit as well as nonprofit social enterprises.

In the Philanthropic Services department at RSF Social Finance, where I work, our purpose is to cultivate gift as the source of economic life. This purpose shows up in many ways, as we work to underscore how gift is used not only in charitable activities, but also in market-driven ones. Our Program Related Investment (PRI) platform, for example, pools charitable dollars from foundations and lends them to catalytic enterprises working in sustainable food and agriculture. We find that this can have far-reaching effects.

Eastern Carolina Organics (ECO), one of our PRI program borrowers, provides an excellent case study. Our PRI investment is not the only place that the power of gift shows up in the story of this for-profit enterprise. In fact, its first funding came in the form of a grant, and the spirit of that initial gift has rippled through its success and its business model.

ECO was founded in 2004 to support emerging organic farmers and organic tobacco growers while improving the supply of local organic produce. In the last ten years, ECO has grown almost four-fold, and is now working with over 40 growers and over 100 customers. By working as an intermediary between organic growers and customers, including retailers and farm-to-table restaurants, ECO provides a steady supply of high-quality, seasonal, local, organic produce while creating stability for farmers and efficiency for buyers. Since ECO is a largely farmer-owned enterprise, the farmer-owners have a level of commitment to the business that allows ECO to feel confident in future sales and provide support in a way that is also responsive to the demands of the market.

Sandi Kronick, Eastern Carolina Organics, Durham, NCIn 2004, though, ECO was just an experiment. Sandi Kronick, ECO’s co-founder, felt confident that the business model could work, but she didn’t want to ask farmers to invest in an untested enterprise. Instead of seeking start-up financing in the form of debt, she applied for a grant from the Tobacco Trust Fund Commission with the help of a nonprofit partner, the Carolina Farm Stewardship Association. The Commission’s mission is to support the economic livelihood of current and former tobacco farmers, and ECO served just that purpose.

Sandi hoped that ECO could prove that organic produce could be the “new tobacco” for North Carolina agriculture, and not just a passing fad. But she knew that to demonstrate this, ECO would have to operate as a market-driven business and not as a charitable endeavor. On this point, the grant application to the Tobacco Commission was explicit: if the model worked, ECO would seek to incorporate as a for-profit, farmer-owned company at the end of the one-year grant term. The application was successful, and ECO received a modest grant of $48,000 (most of the other Tobacco Commission grants were in the six-figure range). In retrospect, Sandi says, that relatively small grant was a blessing: “Because the gift was small, we came into it with humble goals, and a humble sense of our ability to achieve those goals. We didn’t know if this was going to work.”

In that first, grant-funded year, ECO ended with an $11,000 margin. Seeing that the model would work, the enterprise incorporated in 2005 with 13 farmer-owners and two manager-owners. There were many reasons ECO chose to incorporate as a for-profit enterprise. Perhaps most importantly, a for-profit model with farmer ownership at its core demonstrated to farmers that this was a sustainable way to make a living, which in turn created a sense of security that, as Sandi says, farmers were able to “plant in the ground.” This was a key factor in ECO’s early success. In addition, incorporating as a for-profit allowed ECO to operate with little overhead and focus on its core work of aggregating and distributing organic produce. If fundraising had been at the heart of the business model, staff would have been distracted by donor cultivation and at the mercy of the latest trends in philanthropy. The wisdom of this decision became starkly clear during the economic downturn that hit in 2008, when many of ECO’s non-profit partners suffered while ECO’s business remained relatively steady.

Although ECO has thrived in the marketplace, the spirit of that initial gift has been essential to its business model. Sandi believes that the enterprise could not have survived if it took on debt at its founding: “We wouldn’t have been able to make payments on a loan back then. It was absolutely necessary to get that initial gift.” In 2012, ECO received another grant from the City of Durham to aid in the rehabilitation of an industrial building that now serves as its home. ECO knew the expanded facility would help its business, but it couldn’t justify the expense on its operational budget. Again, a gift was catalytic for ECO’s growth—and the owners felt comfortable accepting it because it was clear, after so many years of successful operations, that ECO was not in danger of becoming grant dependent. The market-driven, core work was still successful; the new gift helped ECO to grow and expand, just like the first.

The initial gift also ripples through ECO’s work. The $11,000 margin that ECO was able to retain its first year was crucial to helping it weather the challenging second winter of operations. A company making goods in a factory and working in “industrial time,” to borrow a concept from Wendell Berry, can balance between supply and demand on a thin margin. Being in tune with the natural rhythms of “agricultural time,” though, requires a farmer-driven business to have the cushion and balance of resources that gift provides. The founding gift capital allowed ECO’s business model to survive and thrive by providing the flexibility and trust needed in a cyclical, land-driven business. Along with the farmer-ownership, it was that trust, the spirit of that initial gift, which was planted into the ground and cycled back into the business through the gifts of the land itself.

ECO may be a for-profit company, but as a social enterprise driven by the gifts from the land, and catalyzed by a gift of capital, the spirit and value of gift is crucial to the business’s success. Even today, over 10 years after the initial grant that made the business possible, Sandi says: “I really feel a certain level of responsibility to steward that gift, because it had several incarnations. I see all of that as a blessing.”

Alex Haber is Program Manager, Philanthropic Services at RSF Social Finance, a pioneering funder of social enterprises based in San Francisco.



RSF Social Finance is a longtime friend of the Social Capital Markets Conference that is supporting SOCAP15 as a Pitch Partner.  Don Shaffer, President & CEO of RSF Social Finance, will be speaking on three panels at SOCAP15:  The New MBA, Why Place Matters, and Facilitating Flow.

Kate Danaher, a Senior Lending Associate at RSF Social Finance, will moderate two SOCAP15 panels: Funding Fair Trade: Gaps & Opportunities in the Supply Chain, and Cool Companies with Cool Impact Funds.

Entrepreneurs Worldwide Are Taking on Seafood Sustainability

Posted by on September 29th, 2015

At SOCAP13, with support from the David and Lucile Packard Foundation, we focused almost 20% of our programming on investing in oceans, to raise awareness among the SOCAP community of the many ways that investors and entrepreneurs can improve ocean health through market-based solutions. Monica Jain is a leader within sustainable seafood who has continued building the marketplace for sustainable ocean solutions, at SOCAP and through the Fish 2.0 business competition.

Entrepreneurs Worldwide Are Taking on Seafood Sustainability  

By Monica Jain

It’s no secret that our oceans and the people who depend on them are in trouble. According to the United Nations Food and Agriculture Organization, about 70 percent of the world’s fisheries are fully exploited, overexploited or suffering a collapse under the pressure of a $390 billion global seafood market. Yet analysts expect seafood demand to double by 2050, while island and coastal communities around the world remain dependent on seafood for both sustenance and economic health.

This situation demands business and technology innovation throughout seafood supply chains to improve use of the resources we still have and to sustainably produce seafood to meet growing demand. Simply improving one element of the supply chain in isolation will not get us to healthier oceans. Without businesses throughout the supply chain that fully value and differentiate sustainable seafood from pirated, illegal, or wastefully processed products, consumers cannot identify sustainable products. And without the ability to identify sustainable products, consumers can’t create market incentives for fish farmers or fishers to change their production or capture practices.

New approaches are needed at every stage of the supply chain: pre-production inputs, such as fishing and farming materials or data collection and analysis; the capture of wild fish at sea or production of fish and shellfish on farms; the purchase and collection of seafood at docks or farms; preparation of value-added consumer products; distribution and logistics; and the sales environment—the restaurants and supermarkets that are the only part of the supply chain most of us see.

Fishers and farmers must have accurate data and cost-effective sustainable options for their gear and supplies. Then they must be able to sell their products up the supply chain to a distributor or processor that values sustainability enough to sort and differentiate sustainable fish from other fish that look the same but were not captured or farmed sustainably. In turn, this distributor or processor must be able to partner with or sell to others who value sustainable seafood, uphold its integrity, and ideally, pay a bit more for it. If any piece of the chain does not value or distinguish sustainable seafood from traditional products, it is difficult for the businesses at the beginning of the chain to survive and compete in the marketplace.

New businesses develop seafood solutions

Fortunately, there’s an enormous amount of entrepreneurial energy going into developing better technology, practices and business models at all stages of the supply chain—and while this activity has been happening under the radar, the “stealth mode”  won’t last for long. When I started the Fish 2.0 business competition, many investors, foundations and even seafood experts said it would be difficult to get more than 50 initial entries in a competition for sustainable seafood businesses. They were not seeing many innovative seafood businesses, and they believed most of those they did see were not looking for investment. The inaugural competition in 2013 showed that assessment was off the mark: it drew 83 entries. This year’s competition more than doubled in size, drawing 170 entries. We just recently winnowed the field to 37 businesses that will pitch to investors at Stanford Nov. 10–11.

The diversity of these businesses—in terms of both geography and business focus—is heartening. The group is notably international: only 17 businesses are based in the United States, including two with operations in Chile; six are in Canada; four are based in Latin America; five operate in the South Pacific; two are based in Europe; and three are in Southeast Asia. It’s exciting to see sustainability and invention taking root in the markets where the fish are coming from, not just where they are consumed—and to see change happening on so many levels.

Finalists include companies focused on aquaculture, aquaponics, technology, wild capture products, traceability and consumer products. Some of these businesses are shortening supply chains for value-added sustainable seafood products in the Pacific Islands, Alaska and Thailand. Some are using advanced aquaculture techniques to reduce energy costs, wastes and loss from disease, or are developing new fish feeds that reduce pressure on wild fishery stocks. Others are improving seafood storage systems to reduce waste and logistics costs, improve quality and open new markets. Still others are bringing convenient branded sustainable seafood products to consumers, developing new technology to make supply chains traceable, or providing healthy foods and income to communities that have few other options.

It’s also important that sustainable seafood businesses show they can carve out market share or expand markets, and I see that happening too. Nearly two-thirds (23) of Fish 2.0 finalists and runners-up are post-revenue ventures that can demonstrate a market for their products.

The opportunity is growing

Impact investors and traditional investors who are interested in food systems, community development, supply chain innovation, aquaculture and other areas touched by seafood businesses should take note of this growing opportunity.

The World Bank projects that sustainably managed fisheries could boost annual seafood harvests by as much as 95 million tons, worth $72 billion. Governments are starting to insist that seafood be captured legally, farmed sustainably and traded transparently. And public interest in the oceans, sustainable products and healthy foods continues to drive demand for sustainable seafood. To be sure that this demand has a positive influence on large-scale fishing and farming, we must continue to grow and connect businesses around the world that value and enhance social and environmental sustainability throughout seafood supply chains.


Monica JainMonica Jain is the founder and executive director of Fish 2.0 and Manta Consulting Inc. She has worked for over 20 years in the private sector and philanthropy, and specializes in creating innovative financing strategies and structures for impact investors, foundations, and private sector–nonprofit partnerships. Follow her @fish20org.



Investors interested in attending the finals should email the Fish 2.0 team.

SOCAP Conversations: Echoing Green President Cheryl Dorsey and Entrepreneur Michael Wilkerson

Posted by on September 28th, 2015

Echoing Green logoEchoing Green is a pioneering organization dedicated to creating positive systemic change by supporting innovative entrepreneurs. Echoing Green has long been a friend and partner to SOCAP. Our conference provides a space for members of the Echoing Green community to gather, share ideas, collaborate, and engage with members of their own community as well as a variety of other players within the impact space. We recently sat down to record a conversation between Cheryl Dorsey, President of Echoing Green, and Michael Wilkerson, 2014 Echoing Green Fellow and Co-Founder and CEO of the for-profit social venture Tugende. Both Cheryl and Michael will be speaking at SOCAP15.

Michael Wilkerson: What is unique about Echoing Green’s role in the world of social entrepreneurship, especially now that the field is experiencing such rapid growth?

Cheryl Dorsey: Echoing Green is all about talent. Our capital goes where the talent is, whereas a lot of investment dollars follow business plans or scale propositions. It is our belief that when we invest in next generation leaders, we are really making a bet on finding and supporting transformative and disruptive leaders who will fundamentally change the way we address and solve social issues. So I think our focus on talent, as well as the patience and risk tolerance of our capital, continue to be differentiating factors for us. Philanthropy in general is seen as a sort of risk capital to bring to bear against major social issues, but I’ve been shocked over the years that there is still not enough capital that invests early, patiently, and takes risks for potentially huge rewards. That is a piece of why I believe, now almost 30 years down the line, there continues to be a critical role for Echoing Green.

Michael Wilkerson: How do you view the apparent growth in interest in social entrepreneurship? I’m 28, so I guess I’m a “millennial.” I recall an increased interest in social entrepreneurship when I was at Stanford in 2007 and 2008 and it seems to me that some of the growth, especially on the for-profit side of social entrepreneurship, came out of the financial crisis and is in a way a repudiation of the notion that we should make as much money as possible by grinding out your 20s and then do something later that helps people.

Cheryl Dorsey: Yes I think that is absolutely right, Michael. We have seen this trend reflected in our applicant pool. Why don’t you describe Tugende for us in a little more detail so we can see that demonstrated through the power of your work. What were the financial tools and other things you looked to as you set out to build this social enterprise?

Michael Wilkerson: Motorcycle taxis, or boda-bodas, are the lifeblood of the economy in Uganda. They help people get through traffic, as there is pretty bad gridlock and underinvestment in public infrastructure, but they also help people get to and from rural areas where there is no public transportation or roads that a car or bus could navigate. I started taking motorcycle taxis in 2006, when I was 19 and working as a journalist here at the local newspaper The Daily Monitor. In talking to my taxi drivers I learned that the average motorcycle taxi driver does not own the vehicle and has to pay the owner a daily or weekly rate. I was fortunate enough to meet a talented boda-boda driver who was able to get help so he could own his own motorcycle. He was able to build a house for his mother with the proceeds and savings from owning his own motorcycle instead of paying a landlord every day. That rang a bell in my head that everyone should have this opportunity.

After finishing my undergraduate degree I came back to Uganda as a Fulbright Scholar to research media and public policy. I took part of my Fulbright check and then part of some stock that I used to own and bought a couple of motorcycles. I had an amazing experience doing my media work during my Fulbright year, but I also started investing in motorcycle taxi drivers. My founding partners and I decided to make Tugende a for-profit business because we couldn’t afford to give away the money we were buying motorcycles with. We hoped that if the money was repaid we would be able to recycle it and expand the offering.

For us, Tugende was always a for-profit business because we were working with business people at the very bottom of the pyramid who didn’t want or need a handout I often say that we are not really doing anything other than providing an opportunity. And our customers seize that opportunity and use it to move up the economic ladder. But in our absence they would still be hustling to improve their own lives. So it’s not thanks to us that they are improving their own lives, it’s thanks to us that they can do it on a faster trajectory.

Cheryl Dorsey: Other than Echoing Green where did you get a lot of your early stage investment for the company?

Michael Wilkerson: My first serious investors came through participation in the Unreasonable Institute in 2012, a community I’m looking forward to spending time with at SOCAP. I was fortunate to get a few angel investors on board through the Institute. Then I was more comfortable turning to some friends and family because I felt that I could sell it as an opportunity. We raised enough money for me to move back to Uganda with no exit date in October of 2012. We had about 30 active customers paying at that time and a waiting list of about 50. As of today we have 1300 paying, in 3 locations and more than 400 have already successfully paid off their motorcycles in addition to that. And now we are thinking how do we get to 10,000? How do we get to 100,000?

Cheryl Dorsey: When you look at your early funding was there an equal measure of grants and equity? How did that shake out for you?

Michael Wilkerson: It was almost entirely convertible debt. I think I actually missed the boat on some grant opportunities that were out there simply because I was very focused on the question of “How do I make this an investable opportunity?” We were fortunate enough to have a couple of key grants early on in the range of ten to twenty thousand dollars that helped us invest in things like teaching me accounting. That made us more investable once I had good financial records. It’s interesting though because Echoing Green definitely focuses on trying to invest in a way that can help draw future funding for the organization. I wouldn’t say it’s been easier, but my fundraising since receiving the Echoing Green award has been higher velocity and higher impact, partly because of Echoing Green’s cachet and track record.

We’re poised to start growing really fast but we’re struggling to raise enough money to stop fundraising, and yet we’ve more or less proved the model. There’s no operational barrier to doing it, it’s that we’re starting to be too big for some of the early stage funding but too small for some of the multimillion dollar development financing institutions and other large scale social fundraisers. Is that something you are seeing with other organizations?

Cheryl Dorsey: Absolutely – Tugende is not alone in that challenge. Starting in 2006, we started to see about 15% of our applicant pool proposing for-profit or hybrid social enterprises and that number has only continued to grow. About 40-50% of our applicant pool is now comprised of those proposing for-profits or hybrids. Because we get in excess of 3000 proposals for our Fellowship from 150 plus countries around the world, we have thousands of data points about early stage social enterprise. For the past couple of years we’ve been working with USAID and a couple of other partners to help build out our pipeline for early stage social innovators in emerging markets around the world.

We are about to release, in partnership with USAID, a white paper called Deviation from the Standard: Funding and Supporting Emerging Social Entrepreneurs. (For more information on the whitepaper visit the impact investing page of the Echoing Green website.) It looks at some of the data from our Fellowship applicant pool to codify and analyze what we are seeing. In the earlier stage and even as you are starting to get traction it is just so hard for you guys to access capital. There’s this low risk tolerance among funders, a diversity of funding sources and there being no one hub, or easy hub, to access it. Investors have trouble understanding the risk profile of social enterprises. There is a lack of transparency about where you as an entrepreneur should go for your particular business model, and it’s improtant to be in the right network and have the right connections to get to the right investor at the stage you need it when you need it. The data from Deviation from the Standard underscores these points.

Michael Wilkerson: My experience with social impact investors has been that there are a lot of great people out there looking for ways to deploy money but that they are often constrained in various ways that actually makes them less risk tolerant and slower moving than pure private funding.

Cheryl Dorsey: Yes. In most ways, what we do is in response to the support that we think you all need as best in class, next generation social entrepreneurs. We must educate not only social entrepreneurs, but also the broader field about what impact investing means for the business as well as the investor. I think that there is also the opportunity for supporting ecosystems that bring entrepreneurs and investors together and also leveraging Echoing Green networks, because I do think networks are key drivers of seed funding. We’re also working on figuring out how we can facilitate seamless connections and hand offs to next space funders when entrepreneurs like you finish an experience like Echoing Green or Unreasonable Institute. We’re asking ourselves, how are we codifying this marketplace in a way that VCs and more traditional for-profit actors have done?

Michael Wilkerson: That’s great. So thank you again on behalf of the whole Tugende team which is now 26 people. It was six or seven, fifteen months ago when we were awarded the fellowship. We hope to keep growing and are so thrilled and honored to have Echoing Green with us on that journey. And thank you for spending the time talking to me today. I can’t wait to see you at SOCAP.

Cheryl Dorsey: We’ll have a great time in San Francisco. Cannot wait for SOCAP!

Cheryl Dorsey is the President of Echoing Green and a pioneer in the social entrepreneurship movement. Prior to leading Echoing Green, Cheryl was a social entrepreneur herself and received an Echoing Green Fellowship in 1992 to help launch The Family Van, a community-based mobile health unit in Boston. Cheryl has served in two presidential administrations as a White House Fellow and Special Assistant to the U.S. Secretary of Labor (1997-98); Special Assistant to the Director of the Women’s Bureau of the U.S. Labor Department (1998-99); and Vice Chair for the President’s Commission on White House Fellowships (2009-present). She has a medical degree from Harvard Medical School and her Master’s in Public Policy from Harvard Kennedy School and received her Bachelor’s degree in History and Science magna cum laude with highest honors from Harvard-Radcliffe Colleges.

Michael Wilkerson is Co-Founder and CEO of Tugende. Michael holds a BA with honors and University Distinction from Stanford and an MPhil from Oxford. Michael is 2014 Echoing Green Fellow and a 2012 Unreasonable Fellow.

Cheryl Dorsey will appear as part of the SOCAP15 plenary session Wednesday 10/07 at 8:30am.

Watch Michael Wilkerson present, More than Motorcycles: Small Asset Ownership and a Bottom Up Economic Revolution, at the SOCAPTV Funding session Thursday 10/08 at 4pm.

Read about all the Echoing Green Fellows who will be at SOCAP15 here.

SOCAP Conversations: Fran Seegull on Impact Investing in 2015

Posted by on September 16th, 2015

Emerging Trends in the Impact Space

Fran Seegull is the Chief Investment Officer and Managing Director at ImpactAssets, a non-profit investment firm that seeks to increase the flow of capital to impact investing. She also teaches impact investing at USC’s Marshall School of Business. Seegull will lead the Impact Investing: State of the Field session at SOCAP15. We recently sat down for a conversation to hear her thoughts on the impact investing space in 2015 and to get a preview of some of what will be discussed at SOCAP this year.

This is your third year in a row leading the state of the field session on impact investing at SOCAP. What do you anticipate will be big topics of conversation at SOCAP15?

The mainstreaming of impact investing will be an overarching conversation at SOCAP15. Cambridge Associates and the GIIN recently launched a private equity impact benchmark, which signals a kind of “coming of age” for the field. We have started seeing some traditional asset managers launch impact investing initiatives (e.g. BlackRock and Bain Capital) and some of the wire houses and other financial institutions, including Goldman Sachs, JP Morgan, Morgan Stanley, Merrill Lynch, BNY Mellon and others, are deepening their commitments to the field through both acquiring and building assets, products and capabilities.

However, this sort of mainstreaming doesn’t necessarily extend to Main Street. Much of the expansion we have discussed benefits institutional investors (foundations, pension funds, university endowments) and high net worth families. However, we are starting to see the development of some products and services for retail investors. This democratization of impact investing is something that I am very interested in and is poised to transform impact investing.

Are there any affordable impact investment products, either in development or available now that you wish more individual investors were aware of?

Recently, I wrote a piece for Conscious Company Magazine called Impact Investing for the Rest of Us to highlight opportunities for retail or unaccredited investors. These include depository assets at community banks, ESG-screened mutual funds (Calvert Investments, Pax, Domini and others) and private debt offerings (Calvert Foundation Community Investment Note, for example). And, of course, there is the potential of equity crowdfunding for retail investors which may very well alter the landscape of funding for entrepreneurs.

You’ve also added your voice to the conversation around Gender Lens Investing and will be moderating a panel on the subject at SOCAP. What do you see as the relationship between investing with a gender lens and impact investing?

Gender Lens Investing focuses on supporting companies that are founded by women, or exhibit gender equity in the workplace (including on boards) or serve women consumers. I am excited to be organizing and moderating a panel at SOCAP on women entrepreneurs’ capital access, especially access to venture capital. Surprisingly and disappointingly, the percentage of women-owned business receiving venture capital hasn’t increased much since I started studying the subject in business school.

Women (and minority) entrepreneurs are disenfranchised from the power circles of funding in many ways. There are gaps in communication, knowledge, education, training and networking. The good news is that we are starting to see some of those gaps closing. There are a handful of venture capital funds, angel groups, accelerators and networking groups targeting women- owned businesses exclusively. Access to capital is a part of financial inclusion, which links gender lens investing to impact investing.

You will be interviewing Arjan Shutte of Core Innovation Capital at SOCAP15. Can you give us a sneak preview of some of the topics you plan to touch on during your conversation with him?

Arjan and I plan to speak about the tremendous impact and returns opportunities of investing in financial inclusion for the domestic unbanked and underbanked. We will also touch on Core Innovation Capital’s compensation scheme which links manager remuneration, in part, to the achievement of specific impact objectives—something we have discussed as a field, but unfortunately, rarely see in practice.

What is inspiring you in your work? What is giving you hope?

I teach a graduate-level class on impact investing at USC’s Marshall School of Business. Some of my students are MBAs and Public Policy students, but the majority of them are working toward a Master’s of Science in Social Entrepreneurship. It is one of the first social entrepreneurship master’s degree programs in the country. The mix of students in my class and the dialog we are having is tremendous. It is so exciting to see the interest level in the field among the millennial generation. My students have an unequivocal belief that we must have a more expansive notion of value—one that goes beyond shareholder value to include stakeholder value. I realize the students in my class are self-selecting, but I am heartened by their general understanding that the world cannot continue on its current path without major consequences.

2015 will be your seventh year at SOCAP. Can you share any tips for investors on how to get the most of out of SOCAP?

It is so tempting to attend to the SOCAP sessions that are directly relevant to your interests and professional situation—for investors to go only to the impact investing track, for example. That is fine, but what I recommend is to pick a couple of wildcard sessions, topics that you don’t know much about, sessions that maybe aren’t directly related to your job or your objective (like raising capital). Mixing it up can really be a terrific way to meet new people and spur new ideas.

Don’t always sit with the same people at meals. SOCAP can be overwhelming, and it is human nature to flock to the folks you know, to use them unconsciously as your social life raft. But the beautiful thing about SOCAP is that the community is really open. So try sitting with different people at every meal and engage them in a dialog.

In part, I use SOCAP for professional “speed dating.” I live in Los Angeles. There are some impact investors and fund managers who come through LA, but I don’t see nearly as many as if I worked at the Impact Hub in San Francisco. So I use SOCAP as a way of convening with folks with whom I have phone or email relationships, but have never met or rarely meet in person. I schedule and conduct 20-30 minute meetings with fund managers and others. So, I supplement the content of SOCAP with the community at SOCAP which I highly recommend.

If I had to pick one conference to go to annually, it would be SOCAP. To me, there is no other impact industry conference like it.

Learn more about Impact Investing in 2015: a Panoramic View of the Field or add this session to your schedule on Pathable.

Seegull 4Fran Seegull is Chief Investment Officer and Managing Director at ImpactAssets. She oversees firm product development and investment management (including investment selection, monitoring and reporting) for The Giving Fund—a $200 million impact investing donor advised fund. Seegull has a BS in Economics from Barnard College/Columbia University and an MBA from Harvard University. She is an Adjunct Professor at the Lloyd Greif Center for Entrepreneurial Studies and Senior Fellow at the Brittingham Social Enterprise Lab, both at USC’s Marshall School of Business. Seegull also serves on the Investment Committee of the Goldhirsh Foundation.

The Next Frontier: Building the Impact Ecosystem Across Africa

Posted by on September 2nd, 2015

Kampala Africa Induction Meeting

A Conversation with Natalie Miller of Impact Hub’s Africa Support Team

SOCAP has a long time affiliation with the global Impact Hub Network. We have been following Impact Hub’s recent expansion in Africa with great interest. To facilitate sustainable business ideas and creation across the continent, Impact Hub’s Africa Seed Program supports entrepreneurial teams interested in starting Impact Hubs in their cities. Impact Hub hopes to catalyze change in Africa by helping local entrepreneurs develop the skills to scale their enterprises while connecting them with the global impact community. To learn more we talked to Natalie Miller, Head of Strategy and Business Development for Impact Hub in Africa, to hear her perspective on recent developments and her projections for the future in the impact ecosystem in Africa.

SOCAP: There is a growing momentum towards investment in Africa and social entrepreneurship as a means of creating change. You have lived in South Africa since 2006. Can you give us an on the ground perspective?

Natalie Miller: I have lived here for almost 10 years, and have worked across Africa in nearly twenty countries, mostly while in the global non-profit space. I would say beginning about five to ten years ago people started looking at Africa, instead of as the “dark continent”, as the next frontier. There has definitely been an increase in interest as well as engagement in the region from the more risk tolerant and adventuresome investors, and more focus from impact investors and foundations on the innovative methods entrepreneurs are using to solve local problems through market-driven approaches.

There is still caution and question marks and a huge lack of venture capital.  Most self-proclaimed VCs are more private equity investors and so there is a significant lack of support and funding for ideation stage entrepreneurs. But, there is a growing emphasis now on Africa and people are starting to realize that if they are running multi-national companies, part of global organizations, or an investor and they’re not really looking at the African markets, then they’re gonna quickly lose out.

SOCAP: What are some of the current challenges to building a robust impact ecosystem in Africa?

Lack of access to finance is always professed to be the main issue for entrepreneurs. It is to some degree, but capacity development support and access to markets is more so. If there is an investment-ready enterprise, there will be investors ready to throw money their way. It’s getting them to investment-ready stage. There is a significant need to support entrepreneurs to develop their idea, build a prototype, get it to market and only then, when they can prove the market value and business case, will investors be ready to hand over cash. Access to finance during ideation stage and the mentorship and coaching to help the entrepreneurs get to market is what I believe is currently the main challenge on this continent, in this space.

This is the value that Impact Hub and similar eco-system builders bring, but we do not yet capitalize on it well. Our pipelines are heavily sought after by investors but as a community, hubs, makerspaces, incubation programs and accelerators, we do not always monetize the value we bring to investors. Many would say eco-system builders’ lack of sustainability is a big issue in this space in Africa. Impact Hub is about creating impact-driven, financially viable Impact Hubs so we hope to be part of changing that dynamic.

Another issue is lack of international awareness. It’s buzzing here, and things like the Global Entrepreneurship Summit, and Obama’s visit to Kenya are perpetuating it, but there’s so much happening of which there’s little knowledge, besides amongst Africa-focused players. There’s a huge international focus on only a few countries, so people might know what’s going on in Kenya, possibly Nigeria and South Africa and maybe even in Rwanda and Ghana as well. Outside of that people do not think anything is happening, but if you look at Impact Hub’s new teams, it’s super exciting. We have teams in some of the better known markets like Ghana and Rwanda but also in Mali, Sudan, and Zimbabwe and Candidate teams in Burundi, DRC (Congo), Ethiopia, Sierra Leone as well as Kenya. We hope these teams will be part of making their entrepreneurial communities more visible and a larger focus for investors.

How can the American, or global, impact community, get involved in the movement to overcome those challenges?

There is still a great need for risk tolerant investors to fund early stage entrepreneurs. At the same time we need partnerships and investment into the ecosystem builders who develop and support these entrepreneurs. We need venture philanthropy and access to working capital to enable the capacity building of entrepreneurs and the interconnectivity we are trying to develop between innovation spaces and support entities across the continent.

I recently met with a fund connected to the US government focused on investing in SMEs. They had 40 million dollars to invest in Tanzanian startups. They wanted us to provide them with a pipeline yet they had no capacity development funding to help in building the ecosystem or to invest in those that are doing so. Many groups know that if they go through an organization like Impact Hub, they’ll find a higher caliber of start ups and more investment-ready projects and yet, they don’t invest in us. That does not seem to be a sustainable system.

If we weren’t there, they would have to invest much more in sourcing, vetting, and doing their own capacity building efforts. Supporting the ecosystem builders, those that are turning out these entrepreneurs, is critical. Help us to ensure that the accelerators and the innovation spaces can do the job investors and other players in the space need us to do.

How many Impact Hubs are operating or developing in Africa now, and where are they located?

Over 45 teams from 26 countries expressed interest in the inaugural Africa Seed Program.  Seven were chosen for the program and five were approved: Accra, Ghana; Bamako, Mali; Harare, Zimbabwe, Kigali, Rwanda and Khartoum, Sudan.

Our Resilience Africa program which includes the second Africa Seed Program is currently working with five new Candidate teams to support them in applying to the network.  Impact Hub Candidate teams are in Addis Ababa, Ethiopia, Bujumbura, Burundi; Freetown, Sierra Leone; Kinshasa, Democratic Republic of Congo (DRC) and Nairobi, Kenya.

Until this year the only Impact Hub in Africa was Impact Hub Johannesburg, which has been operating since 2005.

Can you describe the application process the teams go through to become an Impact Hub?

There are two application processes. First, teams apply to become candidates. They provide a short introductory video showcasing the team of a minimum of three co-founders, a brief market analysis of the entrepreneurial space in their city and a write up of a Hackathon they are to conduct within their communities focused on sustainable business models. They also pay an application fee that will cover the cost of their mentor’s time who is an Impact Hub Founder from another city. If they are not accepted as a candidate, their money is reimbursed.

Once candidacy is approved, teams have six months to submit a comprehensive feasibility study including a large scale market analysis and an extensive business plan. If the global network of Impact Hubs then votes to approve that candidate, the team is officially named an Impact Hub initiative and they are given 18 months find a space, secure startup capital and launch.

Is there a story that comes to mind that illustrates the outcome you’re working towards in developing this infrastructure in Africa?

Impact Hub Accra (Ghana) recently held a well attended event, Pitch for Accra, co-hosted by Steve and Jean Case of the Case Foundation. It was exciting that there were so many large players at their first event as an Impact Hub. They had an impressive group of local startups that pitched, a variety of players from both from other hubs and accelerator programs and from the investment community and it was a great show of collaboration amongst a variety of groups with one well-deserved enterprise going home with $25,000.

Overall, we have high caliber, impressive teams. One of the cofounders of Impact Hub Bamako, in Mali, Issam Chleuh, was just voted one of the top 30 Young African entrepreneurs by Forbes. Another cofounder, Kadidia Konare, has been with World Bank for ten years and is currently on leave to serve as Special Investment Advisor to the President of Mali.

The Khartoum team is made up of six rock star Sudanese entrepreneurs including Ihab Osman, former CEO of Sudatel, the biggest telecommunications company in the country.

Our Zimbabwe team is an all women’s rock star team, focused heavily on women’s entrepreneurship and youth. Both our Kigali and Accra teams were running spaces prior to applying to Impact Hub, but saw the value of being part of the network.

Where do you hope to be 5 years from now?

What I hope is that by utilizing the network, both regionally and globally, we will really be able to bridge some of the current gaps, and interconnect these incredible individuals and Impact Hubs, to a degree that we are providing access to markets to the entrepreneurs within our Impact Hub communities. So, an entrepreneur in Harare can get access to market in Accra for example, and then, even to Amsterdam or Berlin.

I hope that we’re looked at as a go-to when it comes to pipeline, and in a way that adds value to our structure as well. That we are creating a solution for supporting very early, ideation stage enterprises and bringing them to investment level. That we are able to provide a safety net to investors and players both inside and also outside of Africa who are keen to get in the African entrepreneurship space but don’t necessarily know how or are scared off by the perceived risk. Hopefully, we can really build this ecosystem up and not just in a couple of the focus countries, but across the continent.

What’s inspiring you in your work right now? What’s giving you hope for the future?

The rockstar teams are inspiring me. They are already doing amazing things and most teams have not launched their Impact Hub yet. They’re locally rooted and therefore tuned into local realities and opportunities. These are amazing individuals who want to be part of the growth and strengthening of the continent through producing locally-grounded, locally-developed solutions and supporting entrepreneurs who are leading the leapfrogging efforts. The teams are incredibly passionate and hard working and make me confident that the hard work we are putting into this will all be very worthwhile.

What subject is too often left out of conversations surrounding impact in Africa?

If you really want to support large scale growth of entrepreneurs then you have to support ecosystem builders as well.

The only other thing I would stress is that when something works and it’s exciting, it starts to become trendy and everyone tries to recreate it. We are seeing some governments, development aid agencies and companies coming in and trying to build their own innovation spaces instead of supporting the grassroots ones that already exist, even when they don’t necessarily have the expertise and experience in running a space. Lets try to work together and see how we can build the entrepreneurial ecosystem in Africa, together.

rsz_nat_profile_picNatalie Miller serves as Head of Strategy and Business Development for Impact Hub in Africa. Miller earned her MBA at Saïd Business School at Oxford University where she was co-chair of the Africa Business Group and was selected as a Skoll Associate with the Skoll Centre for Social Entrepreneurship. Miller formerly served as Vice President, Africa of the global nonprofit organization Operation Smile and later founded the nonprofit NeedLinkage and the consultancy firm ZARUS Group, whose clients have included Greenpeace Africa, The Business Bridge Initiative, Oxfam, Salamanca Group, and Save the Children.

MissionHUB, which owns and operates the SOCAP conference, also operates five Impact Hub locations (San Francisco, Berkeley, Philadelphia, New York City, and Washington, D.C.) in the global Impact Hub network.