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Kevin Jones of SOCAP explains why big, bad capital markets should inspire hope instead of fear

   /   May 26th, 2011Europe, Interviews

Next week, SOCAP, promoting the flow of capital towards social good by bringing together social entrepreneurs, investors, and institutions, holds its fourth annual conference at Beurs Van Berlage in Amsterdam. Below founder Kevin Jones tells Dowser what’s in store for the event kicking off Monday and how the social capital field, harnessing the innovation and potential at the intersection of money and meaning, can go mainstream without selling out.

Dowser: The venue for SOCAP Europe is Beurs Van Berlage in Amsterdam, home to the creation of the first capital markets. Can you explain the significance of the venue?
Jones: People act like the market is this force of nature, this thing like a tsunami, or a tornado or a volcano; something that just happens and we have to cover up, or get out of the way or just get run over. Actually the market is our creation. People built it as a way to trust people you had not met, and to make risk and potential reward transparent. The market is our tool. We are not tools of the market. We built it. In fact, we built it right on the site where we are holding this conference. We’ve come back to the mother of markets to remind us all that what we built, we can rebuild. We can create a market that works for me, and for our children and grandchildren. It’s time to take back the market, make it our tool and remind us all that we are not tools of the market. Let’s unmask the boogeyman.

This is the first international SOCAP. Why did you pick Europe for the event?
I think the United States is the leader in the new way of thinking that is manifesting itself in what’s come to be called the social capital market — this way of mixing money with meaning, and investing with a desire for clear, measurable social and environmental impact. But in many ways the mix of acknowledging an obligation to the public good while you invest for private gain is more naturally at home in Europe than it is in America. I think we’ve helped make some of the connections here in Europe between the raw startups and the long-time players that are helping catalyze this mix of a movement and an asset class, a new way of thinking and acting with your money.

Tell us about some of the highlights for the two-and-a-half day event.
The social capital market is approaching the mainstream capital market; there are large funds of several hundred million dollars that are now dipping their toes into the market at the intersection of money and meaning. Yet we want to move from the niche to the mainstream capital market without losing the mission and without getting lost the way some of the larger microfinance companies have, where the money has obscured the mission on its way to just being about making money. So we will be working with the players who have grown some of the largest social enterprises — companies like Goodwell in the Netherlands, Better World Books in the U.S., and Leapfrog, the international microinsurance fund. They are all right on that border, moving tens of millions of dollars toward social impact at high impact and venture capital speed, while building in ways that make sure the mission, the reason for building a social enterprise, and the movement side of it does not get lost. That is the biggest dynamic that’s happening at SOCAPEurope — proving that impact investing will not lose its way in the way that some parts of microfinance did.

What types of conversations and discussions do you hope will emerge during the event?
Entrepreneurs will learn what investors are looking for, and new and experienced impact investors will learn about things like the $6.5 billion opportunity in renewable, locally produced microgrid energy in India and sub-Saharan Africa, and the $20 billion plus opportunity in medical devices for the base of the pyramid. The underlying theme of impact investing in Europe is social enterprise stepping into problems that either government used to solve but no longer has the money to fix, or new problems like economic integration of immigrants, that government has failed to solve.

I hope that we will help catalyze the building of a network between startups and long-term players across Europe, and help people focus on a common set of problems while also growing the movement of people putting their money where their mouth is. We set out to move minds in order to move money. If we do that, we will have succeeded. Since we launched our first international partnership we have been approached by groups in Dubai, Singapore, Hong Kong and Sweden about bringing SOCAP to them. We are in conversations with them trying to figure out if we can make that happen.

Who are some of the big players in the European and international social capitalist market, and why is their work important?
Goodwell
is important; they had an eight-fold return in three years with one of their investments in microfinance in India, but they safeguarded the mission and made sure they would not exploit the poor by voluntarily putting a cap on their return on equity at a reasonable 20 percent. Yet they made a lot of money because they picked a startup that grew from 1,000 customers to one million customers. So their profit and financial return was appropriate and reasonable. They did extraordinarily well by doing a great job with ethical limits set on how much they charged their borrowers. I also think Blue Orchard is important. After growing to $800 million in investments in microfinance, they started Bamboo, a $30 million or so impact investment fund, investing in renewable energy, water, health, etc. Now they are folding Bamboo back into Blue Orchard and getting some of the really huge fund of funds to invest in Bamboo. That act, while it may sound complicated, is basically a huge validation of social enterprise by major financial players; a real sign of reaching the mainstream and essentially adding a zero to the amount of money available to change the world through impact investing while preserving the mission.

Your SOCAP European partner for the event is Pymwymic, a company that has been involved in the impact investing space for more than a decade. What have you learned from them, and what has the partnership brought to the table?
I have learned from Frank van Beuningen, the founder of Pymwymic, (the name means Put Your Money Where Your Mouth Is Community) how to do business in Europe, through long-term relationships built over time within a network of trust. Europeans don’t move as quickly as Americans, but they keep their business relationships far longer once they are built. Seeing and being part of that has been a real learning experience for me.

In your last interview with Dowser on trends in social entrepreneurship this year, you discussed the increase of money and investment into the social impact sector. What do you think SOCAP’s role is in leading that movement for more money with meaning?
There are a lot of gatherings of people all over the world about impact investing. We are, I think, more intentional in making sure our conference is full of people you don’t run into at other conferences, people you would not meet in the normal process of doing business. We explicitly try to bring in the valuable stranger, the person you have not met but that might become a key co- investor, a partner, or an investee. Some conferences want to focus on getting the right people in the room. We think it’s more important to widen the network by helping people to get outside of their silos and find a bigger place to play.

What do you hope will be the takeaway for the social capitalist community after SOCAP Europe?
My goal in doing this for 10 years has been to accelerate the flow of capital to good. If people in Europe realize, down deep, that the market at the intersection of money and meaning is real, it’s big and it’s growing, and that it’s safe to come in and take action, then we will have all won.

This interview has been edited and condensed.

Follow Tamara Schweitzer @tschweitzer and Dowser @dowserDOTorg on Twitter

3 Responses

  1. Great interview Kevin. Recently share this idea with a friend: that anytime you hear someone liken a facet of human social reality to a separate biological process or detached from human agency, then you’re hearing a form of propaganda. This includes Adam Smith’s invisible hand of the market as well as Kevin Kelly’s concept of the technium.

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