Today wraps up the Social Entrepreneur track of RISE, Austin’s SXSW-style conference for entrepreneurs. It was a lot of fun putting together the track with Jessica Shortall, with lots of help from Annie Frierson, Suzi Sosa, Andy White and the many amazing, inspiring social entrepreneurs in our area. I’m so impressed with the speakers and panelists that made up the track. From design-thinking for social entrepreneurs, to domestic microfinance, to technology for social impact, to social investing, to balancing mission and profit, and much, much more. It was so great to see those working in the gray area between social impact and entrepreneurship together sharing insights, ideas, knowledge, discussion, debate.
I couldn’t get to all of the sessions in the track, and so I’d love recordings of those I missed. But because RISE is a free conference there is little budget for “extras” like recording equipment and staff. However, I heard a rumor that some of the sessions were unofficial taped. If you know of any taped sessions, let me know, and I’ll post them to this blog. And I will definitely make the case to the organizers of RISE that next year we find a way to tape sessions. Because this content is just too rich to be shared by only the 25-40 people in the room.
So I wanted to share my takeaways from the RISE Social Entrepreneurship track and thoughts about where we go from here.
First, the takeaways:
- There is tremendous interest and energy around social entrepreneurship in Central Texas
- However, there is little infrastructure or eco-system to effectively support those entrepreneurs
- More social entrepreneurs in the track and attending sessions were women (that could entirely be based on the fact that the leaders of the track are women, but I think there’s more to it than that)
- There is a debate about whether social entrepreneurs need to bootstrap as long or as hard as traditional entrepreneurs since the same end reward (financial profit) does not really exist for SEs
- Funders of social entrepreneurs are not present in nearly as many numbers as social entrepreneurs
- An “investment banker” or “broker” vetting and connecting social entrepreneurs to potential investors is a key part of the needed ecosystem
And that’s just a beginning list. There were far too many conversations, insights, war stories, and needs to catalog here.
Which brings me to where we go from here. There is a disconnect for Austin in the realm of social innovation. When I talk with people in the social innovation space outside of Texas they are always interested to hear that I am from Austin and are sure that Austin is well along the path of launching and growing social entrepreneurs. Because of Austin’s reputation for progressive ideas, its wealth, its technology background and its rank as the third largest venture capital city in the country, people assume that social entrepreneurship, which often follows from these things, is burgeoning here. When I tell them that isn’t the case, they are shocked. What is holding Austin back?
We heard some provocative conversations this week and saw some inspiring examples of social entrepreneurs who are making it and funders who are helping them along. But that’s not enough, not even close.
Social entrepreneurs need access to significant funding at every step of the game from seed to growth, whether their model is nonprofit, for-profit or a hybrid. We need to give social entrepreneurs the skills to create solid business strategy around a great idea, language for creating a compelling pitch, infrastructure to grow results. We need to create communities for social entrepreneurs and social investors to interact, network, learn from each other, forge partnerships. But most of all we need to collectively say, it’s not enough. One week a year is not enough. A handful of social entrepreneurs and social investors in a city of 1.7 million is not enough. Social innovation is a growing industry, one that Austin should and must climb on board. I’m not satisfied. I want to see more. A lot more.
At the beginning of anything there is chaos, so it is with the creation of the social capital marketplace. Day 2 of SoCap was about understanding and starting to discuss the chaos that is emerging in this marketplace. As Antony Bugg-Levine from the Rockefeller Foundation said in the plenary about creating infrastructure for this new market, there are a lot of or’s right now, but we would like to make them and’s. He meant that there are opposing ways of thinking about and doing things in this emerging market, but we would like to be at a place where we don’t have to choose, where we can have both, instead of just one of the options. Some of the or’s he mentioned are:
- Knowing vs. believing
- Measuring vs. doing
- Mission vs. scale
- Story vs. substance
- Metaphor vs. methodology
And I would add to that:
- Nonprofit vs. for profit
- Financial investing vs. philanthropy
- Venture philanthropy vs. Social investing
- Government vs. private money
And the list goes on. The social capital market is emerging from a binary system of financial investment on one side and philanthropic donations on the other. Mission and money never mixed. That either-or, however, is becoming an and. So too, are so many other distinctions. It used to be that a nonprofit organization was about social impact and a for profit was about profit. Now it’s both. And so on.
But what we are talking about is a radical shift in so many areas. It can be overwhelming and chaotic.
But in order for this market to survive we need to organize it. And that list is long:
- We need to create metrics for determining social impact
- We have to create various financial vehicles for the various projects and organizations out there trying to survive
- We have to change the rules and laws to make them more accepting of these new entities
- We need to figure out what business models make sense and can thrive
- We have to determine how and when to scale great ideas
- We need to drive down the high transaction and search costs in the field
- We, as entrepreneurs who dislike the bureaucracy of government, have to engage on a policy level to make change
- We have to effectively market and communicate the benefits of social investing in order to broaden the reach of the market beyond the few who have tried it
The list goes on and will take time.
There is such diversity at SoCap and that diversity is representative of the social capital markets themselves. As one participant put it “We are 1,000 outliers.” There are bankers, college students, nonprofit execs, philanthropists, VCs all brought together by a single desire to make money work better for the world. But that tremendous diversity can create dichotomies, distance, tension.
For example, the session I moderated yesterday on Growth Capital for Nonprofit Social Entrepreneurs. I feared that because the nonprofit side of the market had been under-represented at last year’s conference that there may not be much interest in the topic. To my surprise, the room was absolutely full, with probably close to 80 people in attendance. And there was a palpable sense of hunger for information among the group about where nonprofits, who have been doing mission work for years, fit into this new market.
But day 3 of SoCap is about to start, so I will leave all of that for a later post.
Greenlights for Nonprofit Success, Austin’s nonprofit management assistance organization, today released the findings of a research study on the number of nonprofits in Central Texas. The results weren’t surprising: we have more nonprofits (over 6,300) per capita than any other large Texas city and any other city in the Southwest region. And our nonprofits tend to be small: 93% (compared to 89% nationally) have a budget under $1 million, and 89% have a budget under $500,000. In light of this study, Greenlights offers some good advice about looking towards cooperation, collaboration, and even mergers given the number of nonprofits that exist and the increasing competition for funding, especially given the current economy.
What is missing from the study, however, is an analysis of the overall social sector in Austin, including philanthropy and other funding mechanisms, other social impact organizations–like social enterprises (creating social impact through market-based activity)– and the role of the public sector in all of this. We need to take a bigger picture view and understand all of the elements and entities at play in the sector and how these elements could be better supported, analyzed, strengthened and winnowed, if necessary. We need to take a look, as I explained in an earlier post, at the overall ecosystem for social innovation (ideas that solve existing public challenges). And we need to look at similar cities (like Portland, Seattle, San Francisco, Denver, Pittsburgh) to understand how their social sector is innovating and thriving and what we could learn from them. The ecosystem for a thriving social innovation sector includes:
- An Engaged Public Sector: A city and/or state-level office for social innovation, similar to the White House Office of Social Innovation that puts public sector focus and resources toward strengthening an innovative social sector. One-Star Foundation is moving in this direction.
- Larger, Innovative Philanthropy: An increased number of area philanthropists, giving more grants for capacity-building, providing growth capital to scale great ideas, giving seed funding for ideas that have potential, using mission-related investing and program-related investments, working as a group to discuss innovations in philanthropy and share and leverage projects.
- Social Investment: Adding a social element to the entrepreneurial investing that is already rich in our area, investors could create innovative funds that provide nonprofits and social enterprises financial tools such as loan guarantees, quasi-equity deals, and networks, advice, and entrepreneurial knowledge.
- Colleges and Universities Encouraging Research: Our local colleges and universities could launch centers for research on social entrepreneurship and social innovation. The RGK Center is a good start, but I’d love to see more.
- Discussions and Experiments: More events, gatherings, workshops, think tanks and other activities that help social entrepreneurship and innovation take hold in our region.
I think to truly understand where the Austin social sector is and how the number and capacity of nonprofits fit into that, we need to understand the entire ecosystem. If we want to boast a thriving, innovative social sector we need to take a step back, analyze what we have and what we can do to encourage even more innovation. The end result is a stronger, healthier city that ties its spirit of entrepreneurship and innovation to its desire to give back and strengthen the communities in which we live. That is the Austin I envision.
Social innovation is gaining a lot of momentum along the two coasts of the country. San Francisco, Seattle, Boston, D.C., New York are just a few places where these new ideas are taking hold. The Bay Area alone seems to be a hotbed of social investing, venture philanthropy, social enterprise, etc. The Social Capital Markets Conference earlier this month in San Francisco brought together leaders in the social investing, philanthropy, nonprofit, social enterprise space to talk about how to create a social capital market (a market for capital employed towards solving social problems). You can read a roundup of different blogs on the conference here and see video of various sessions here.
At the same time, foundations in the Bay Area, New York, Boston understand this growing movement and are providing growth capital and other incentives to help social entrepreneurs find and solve the root causes of problems.
These cities are witnessing an exciting blend of talent, money, great ideas, energy, initiative and enthusiasm that is resulting in some new ways to tackle the many problems facing our country today.
I’d like to see that similar energy and enthusiasm here in Austin and in the Southwest region of our country. Austin is the 3rd largest venture capital city in the country. I would argue that being a venture capital center makes Austin a ripe candidate for social innovation. San Francisco and Seattle (venture capital cities #1 and #2) have embraced social innovation and are home to several venture philanthropy funds, capacity and growth capital-focused foundations, social entrepreneurs, social investment funds, and social enterprises. Over the last ten to fifteen years these communities have fostered a new way of thinking about and blending the for-profit, non-profit and government sectors in order to find solutions to complex social problems.
I see the same opportunity for Austin. We have a wealthy, talented entrepreneurial sector, a diverse nonprofit sector, and complex social problems. If we can embrace social innovation here we can not only solve our own problems, but also, and more importantly, we can add to the national conversation. We need to come together with new ideas that tackle our problems at the root. The problems of the economy, education, healthcare, poverty are too large for any single entity or sector to solve. These times call for bigger solutions. Social innovation provides those solutions.
If you are interested in the dramatic shifts the economy is currently undergoing and what it means for the long term, take a look at the article “Notes from the Leading Edge of Social Finance,” in the Fall issue of Green Money Journal written by Don Shaffer. Don Shaffer is the CEO of RSF Social Finance, a 20+ year-old, leading-edge, San Francisco foundation that makes loans and grants to nonprofits. He is also the former interim head of Investors Circle, a 200+ member giving circle of venture capitalists who invest in businesses working towards a sustainable economy (social and environmental issues). Don gives a very interesting overview of where the economy is heading, and I think he is right on.
He argues that we are no longer content with an economy focused solely on individual gain, rather there is a new convergence of financial, social and environmental gain, where what is good for the investor is also good for society as a whole. Ultimately he sees the new economy “harnessing the striving energy and entrepreneurial drive of the American people to move more towards collaboration and partnership, instead of maximum individual gain, while honoring the power of free markets.” Here’s an excerpt:
International microfinance is drawing a lot of interest this year from U.S. investors. For good reason, it’s great to see direct investment going to small, growing entrepreneurial ventures in the developing world. But what about our neighbors? As the wealth divide continues to widen in this country, both in urban and rural areas, we are asking ourselves at RSF, “How can our clients best support small and medium-sized, privately held companies in the U.S. that have strong community development and ecological sustainability goals?”…We are creating a learning community that asks hard questions about money and how we use it, acknowledging that money is simply a form of energy that creates a relationship between human beings. What is true wealth…What is the right balance between investment and philanthropy…What does it look like to re-imagine money to serve our highest aspirations? What, specifically, will it take to develop a network of risk and liquidity appropriate financial vehicles that are completely different from the products of Wall Street?
These thoughts and questions are very similar to the conversations that were going on at the Social Capital Markets Conference earlier this month and that are going on around the country. We are witnessing a pretty dramatic shift, and it is fascinating.
As I mentioned in my last post, in the past few years there has been a dramatic increase in the number of gatherings and conferences for those interested in social innovation. Here is just a sample of some of the most interesting conferences bringing together people working on and thinking about social entrepreneurship, social enterprise, social investing, and so on. Many of them are happening this month. Those that have already passed will likely hold them again around the same time next year, so check back.
Harvard Business School’s Social Enterprise Conference, March 2008
New Profit’s Gathering of Leaders, March 2008
The Feast in New York City, October 2008
Social Capital Markets 2008, October 2008
Social Venture Network’s Fall Conference, October 2008
Investor’s Circle Fall Conference and Venture Fair, November 2008
Net Impact Conference, November 2008
Social Enterprise Alliance’s 10th Annual Social Enterprise Summit, April 2009