Tuesday, October 4, 2016
Blessing Okorougo, Manager, Corporate Responsibility
Social Capital Markets (SOCAP) describes itself as ‘the conference at the intersection of money and meaning.’ It is a place where, “businesses can meet investors to seek funding or develop a partnership in support of ideas that will make a difference in the world.” Currently in its ninth year, the sheer energy that SOCAP generates is real and over four days it is alight with animated conversation among people from around the world. Held at the Fort Mason Center, a large venue overlooking the San Francisco Bay, young startups, nonprofits, corporations and seasoned entrepreneurs hold court with venture capitalists, philanthropists and potential partners to discuss various investment opportunities in social impact. It is electrifying!
While many SOCAP 2016 attendees were cultivating connections and taking advantage of networking opportunities, many were also there to learn. Throughout SOCAP 2016 various events took place for those interested in the entrepreneur experience such as pitch sessions and innovation showcases. There were also over a hundred breakout sessions covering themes such as impact investing, clean energy, sustainable food and agriculture, urban development and inclusive entrepreneurship. However, a common thread on tackling economic and social development while cultivating more diverse and inclusive opportunities for all underscored most discussions at SOCAP.
Pioneering Diverse Flow of Capital to Solve Urban Problems
In several panels, blended financing structures were discussed as a new approach that philanthropic organizations and governments are considering to both attract and increase the deployment of capital resources to low-income populations. While private Foundations such as the Chicago based MacArthur Foundation (“MacArthur”) have supported impact investments primarily through the use of PRIs (performance related investments), they are now looking into blended capital structures. Most recently, MacArthur has focused on affordable housing preservation and CDFIs (community development financial institutions); however, in seeking to push itself outside of its comfort zone it recently launched a new initiative called Benefit Chicago. Benefit Chicago is new $100 million impact collaboration that involves $50 million of MacArthur’s own PRI capital which is being blended with individual and institutional investor capital coming through donor advised funds (Chicago Community Trust) as well as the sale of individual notes through Calvert Foundation. Allison Clark with MacArthur shared this initiative during the Blended Capital: Making Impact Investing Flexible for Urban Initiatives panel discussion, which also included representatives from Living Cities, Deutsche Bank, Urban Innovation Fund and the City of San Francisco. According to MacArthur, this initiative proved the importance of bringing in other local investors in the form of donor advised funds, small banks and individuals and allowing them the opportunity to directly support the type of work that the Foundation typically does in improving education, affordable housing, energy conservation and job creation. It’s an exciting form of capital deployment that is supporting the delivery of meaningful impact to urban communities. The goal is to spur more organizations into leveraging such innovative forms of investment practice to support economic and community development.
Unpacking Uncomfortable Statistics to Discuss the Need for Inclusive Entrepreneurship
Culture change, especially when it comes to the entrepreneurial and investment ecosystem came up in many panel sessions. The conversations were predominantly framed around the barriers and obstacles faced by budding female and minority entrepreneurs interested in social impact. This issue was discussed from the incubator/accelerator (early stage startups) standpoint and from an access to capital point of view in which the cultural dynamics of the investor space was taken to task. At the From 1% to 10% - A Venture Call to Inclusive Action panel which included Edward Dugger III, President of Reinventure Capital, Mark Danchak, Managing Partner of Carbon6 Ventures and Russ Gaskin, Managing Director at CoCreative, statistics helped to drive a deep dive into inclusivity in the investing ecosystem. The stats that SOCAP moderator Jan Baker of Impact Hub DC rolled off in front of the venture capitalist panelists (all male, one black and two white) included the fact that only 1% of venture capital funded startup founders are black, that only 8% of fund founders are female, that unsurprisingly 92% of senior investment teams at top tier venture capitalist firms are male and 78% are white.
In addressing these uncomfortable statistics Mark Danchak agreed that the venture capital world needs a cultural shift in how it invests. For him, diversity needed to be seen as a high value target as well as in entrepreneurial teams. From his perspective, investment in diverse teams could yield diverse ideas and ideally lead the way towards diverse solutions. For Russ Gaskin, there was acknowledgment that there were higher hurdles placed on minorities and women when it came to access to capital. He also admitted that the process for receiving funding was indeed much slower for entrepreneurs coming from underrepresented backgrounds than it is for white males, especially those armed with top tier educational backgrounds. However, when SOCAP polling data was shared on whether government should be used to regulate the allocation of venture capitalist funding to minorities and women, the reaction was mixed from both the panelists and the audience. According to the poll taken before the panel discussion, the majority of respondents did not feel that government regulation was necessary. However, many agreed that there should be some form of funding specifically allocated to entrepreneurs of color and women. The prevailing consensus among the panelists seemed to point towards the value of having a wider lens and different networks in the venture capitalist space so that there aren’t always the same echo chambers of perspective. Ultimately it was agreed that diversity is a great way to get investors better returns and puts companies in a better flightpath of change. Hopefully, venture capitalists will heed this call to action.
SOCAP 16: Closing Plenary
From the need of more flexible financing, to the importance of inclusive investment cultures to how to go about changing implicit biases – SOCAP explored many heavy hitting subjects that impact its global community of innovators. Some panelists were armed with strategies; some were confessional and critical, while some took up the call to action. Not every subject discussed had an easy solution. However, what was clear was that through the aggregation and empowerment of diverse entrepreneurial voices, we might be able to accelerate our best chances at making an effective impact in the world.
For more information on how Silicon Valley Community Foundation supports impact investing, how we can help your organization engage effectively with your stakeholders, or for other corporate responsibility questions, please contact Donate@siliconvalleycf.org.