* Guest post by SOCAP11 panelist Ross Baird

Socap 2011: The Importance of Language

Whenever I talk to someone new to the social capital markets, I feel like the first fifteen minutes of any conversation is a definition of terms.  A jargon-filled industry does no newcomers favors (and certainly wasn’t helpful to me when I was new to the space): in the spirit of making the social capital markets more accessible, I want to go through a quick definition of over-used and under-rated terms.

Top four over-used terms

“Social entrepreneur”: with apologies to Bill Drayton, every entrepreneur is a social entrepreneur.  Over-using the term makes the mainstream take the sector less seriously.  Just use “entrepreneur.” (Also, for the politically inclined, ‘social entrepreneur’ alienates 50% of the country, even though there are a lot of capitalism-loving liberals in the sector!)  Also see: “Serial social entrepreneur”

“Technical assistance”/”hand holding”: define what you mean: building financial models?  Helping companies raise money? Vague, general “consulting” is hard to rally behind (and entrepreneurs find it somewhat patronizing).

“Sustainability”:  Do you mean carbon-neutral or cash-flow positive?  Be specific about what you are talking about.  Maybe: “We are looking to take in more in revenues than it spends.”

“Skin in the game”: Another word for an indirect ask. Instead, say “I want to make sure you have the same incentives—financially, professionally—that I do to make this work.”

Top for under-rated terms

“Exit opportunity/liquidity event”: Entrepreneurs, if you don’t know what this means, find out.  Investors will want to know.

“Cash flow”: the most important part of an entrepreneur’s balance sheet. More important than projections or valuation.

“Human capital” (the term is overused, but the concept is not: it means HR, talent acquisition/management); with emphasis (often deservedly) placed on inspirational entrepreneurs, both companies and investors overlook the individual’s plan for building a team/network to execute the vision.

“Risk analysis”: Something all enterprises need to do: what can go wrong here (both internally and externally)? What worries your competitors? A proper assessment of risks (and plans to over-come them) brings a dose of realism to our over-hyped world and helps the mainstream take us more seriously.

Simple messaging is important to both explain what we do and translate what went on at the amazing rush of SoCap ’11 to the billions of people who weren’t there.

Are you curious about social finance or are you forging ahead with its growth in Canada? Are you dedicated to the idea of bringing about change through social innovation? If so, then you will want to spend time with us on SocialFinance.ca. You can join this community of practice by contributing as a Writer, posting an upcoming event relevant to the field of social finance or impact investing, or add your paper or article to our knowledge database.

The vision of SocialFinance.ca is a world in which the innovations and resources of finance are harnessed to produce positive social, environmental, and commercial advancements. Our mission is to catalyze and sustain a robust social finance marketplace in Canada, and currently acts as the leading hub of information and knowledge-sharing in the space.

SocialFinance.ca has four objectives:

• Support the community of people and organizations helping to make Canada a global leader in social finance;

• Promote learning through sharing of best practices, success stories, and challenges;

• Provide information and analysis on the key issues related to social finance in Canada and internationally; and

• Engage investors, entrepreneurs, and enablers in open discussion.

This year we launched Your Guide to Social Finance. Your Guide is the first of its kind to provide you with the what, why, who and most importantly the how of social finance in Canada. The Guide is packed with examples of social finance at work, highlighting Canadian examples of social finance in action. You can also check out the Meet the Investors video series, and learn what it takes to build the market in Canada.

SocialFinance.ca is also proud to serve as the online repository for information and discussions about the Task Force for Social Finance. The Task Force on Social Finance (TFSF) was assembled in 2010, seeking to fundamentally alter the way we think about investing and philanthropy in Canada. The TFSF mandate was to deliver recommendations to ignite the development of an investment marketplace dedicated to addressing Canada’s social and environmental challenges. The team’s efforts culminated in the Task Force for Social Finance Report, which outlines seven actions that Canada needs to undertake, in parallel, to mobilize new sources of capital, create an enabling tax and regulator environment, and build a pipeline of investment-ready social enterprises.

SocialFinance.ca is a program of Social Innovation Generation @ MaRS, Toronto, ON. The platform is supported by a leadership team composed of Joanna Reynolds, Adam Jagelewski, and SocialFinance.ca co-founder Karim Harji, with excellent support from our Editor Nabeel Ahmed. SocialFinance.ca is supported in part by the Ontario Trillium Foundation, Social Capital Partners and Social Innovation Generation.

As SoCap11 media partner, SocialFinance.ca published four posts on Social Capital Markets 2011, listed below. Do take a look at the Day 1 report and the reflections:

• Money, Meaning and Much More at Socal Capital Markets 2011
• Moving Beyond the Money: Addressing the Demand for Social Finance
• SoCap Day 1 Review: Moving Beyond the Money
• Reflections from SoCap11: A Focus on Entrepreneurs, Flexible Finance, and a Call to Action

California is on the edge of emerging corporate change. Assembly Bill 361, which allows for the creation of a new class of corporations -“Benefit Corporations”, has passed the Senate Floor and is on the Governor desk. More than 50 companies have weighed in showing their support for this bill, but opposition exists.

Current law requires that California companies exist to conduct business in a way that maximizes shareholder wealth. This new corporate form would provide legal protection for mission-minded companies wishing to pursue the triple bottom line of people, planet and profit. The bill will help California continue as a leader in the growing green and sustainable business economy while helping to expand a new sector of the economy which uses the power of business to solve social and environmental problems.

AB-361 is modeled after successful legislation in Hawaii, Maryland, New Jersey, New York, Vermont and Virginia.  Similar legislation has been introduced in Colorado, Michigan, North Carolina, and Pennsylvania. The B-Corp movement is well under way and represents a forward looking response to the underlying problems in our current financial crisis.

B Corporations create material positive impact on society and the environment by working for the good of all stakeholders, not just shareholders, and by meeting rigorous and independent standards of social and environmental performance, accountability, and transparency. The B Corporation status will help consumers recognize and support responsible businesses that are aligned with their values. Through partnerships with the  GIIRS rating system, impact investors will be able to measure impact and build standards towards best practices as this exciting asset class emerges to serve the worlds leading social entrepreneurs.

3 Key Differences between B-corp and Benefit Corporation

All things B-Corp

B-Corp Interview: Jonathan S. Storper from Compathos Productions on Vimeo.