By Matt Evans
At the beginning of this month, SOCAP Europe was hosted in the same area of Amsterdam where the very first capital markets were built over 400 years ago. Created to invest in the dangerous voyages of sea captains to the Far East to bring back spices, silk, and other revolutionary products, those markets were instrumental in the development of the Netherlands as an economic super-power and drove fundamental changes to the global economy.
The conveners of SOCAP, a conference with a mission to “accelerate the flow of capital to good,” noted on day one that Amsterdam is still pioneering in financial markets by hosting social entrepreneurs and investors from around the world. Kevin Jones of SOCAP and Frank van Beuningen of Put Your Money Where Your Mouth Is Company, a Dutch social investor, expressed hope that innovations in social impact investing will drive fundamental changes in the global economy.
These are grand ambitions for SOCAP which hosted its first conference just 3 years ago. However, in that time, conference attendance in San Francisco has grown to 1400 annual participants and SOCAP itself has become a global movement, bringing together pioneers of the social investment space.
In a field as broad as social capital, a consensus definition of social capital and social investing remains elusive. However, agreement was widespread that there is an emerging field of investors seeking both measurable social impacts and financial returns for the investments they make in for-profit and non-profit organizations.
These investors are grow ever more sophisticated and are organizing themselves into groups with such monikers as GIIN, the Global Impact Investing Network, and Toniic, an international impact investor network. They are also attending SOCAP. The inaugural SOCAP Europe had over 600 attendees from 50 countries and 6 continents. Apparently Antarctica continues to eschew social investment as legitimate practice that can achieve both social and financial goals.
Despite a lack of social entrepreneurship on the coldest continent, the number of social enterprises seeking capital for growth globally is exploding. The conference featured many social investors, and generously provided scholarships for 75 social entrepreneurs to attend. However, social entrepreneurs who had paid the admission price of over $1,500 were hard to come by. One participant noted that some social entrepreneurs had come to Amsterdam but did not attend the conference due to the high price, instead meeting with the investors they had come to see off-site.
With increasing supply and demand for social capital, the number of social investments is increasing quickly, though estimates of the number of deals or the value of the transactions that take place in the space varied widely. In the context of an increasing number of social investments, Princess Maxima of the Netherlands opened the conference with a call for transparency and the establishment of best practices for the field. Many at SOCAP speakers shared the perspective that the private nature of investment transactions and a lack of public information is impeding the ability of the industry to develop best practices.
Some participants expressed concern that this information deficit disadvantages social entrepreneurs who accept investment but cannot access the high quality investor management advice that other entrepreneurs in places like Silicon Valley are tapping into. Considering the good intentions of most social investors, this seems like an unlikely danger. The social entrepreneurs at SOCAP who had attracted social capital, like Peter Frykman of the innovative drip irrigation company Driptech, and Femi Akinde of the SMS startup Slimtrader, were happy with the support they had received.
As American and European social investors swapped experiences, the role of government in the space was an often discussed topic. In Europe there are high expectations that the government will finance social investments. A fascinating example of European governmental support for the space is that of BiD, the Business in Development Network. Every time a Dutchman or Dutchwoman buys a lottery ticket in Holland, a portion of the sale goes to finance BiD’s work to connect developing country social entrepreneurs to social investors. While American lotteries often support charitable causes like education, American social capital experts do not expect the same governmental coddling being discussed across the pond.
While a lack of governmental support may be a reality in the US, social impact investing is a congruous concept with both liberal and conservative ideologies – and one which seems here to stay. All one needs is an interest in making the world a better place and the willingness to take risk which doesn’t t even approach the risk taken Dutch investors in the scurvy-ridden mariners of yesteryear.