What we see: Trends in social enterprise

Every six months, Investors’ Circle is afforded a unique look into the developments and trends in the social enterprise space as well as a gauge on how potential investors are reacting to new businesses. During our application screening process we get a high-level look at what’s popular, what’s no longer exciting, what spaces are too crowded, etc.  Below is a sketch of some of the trends and curiosities we’ve seen over the last six months:

Consistent and Lasting Trends:

-         Boom in biofuel projects including power generation, fuel production and the technologies in between. Proposals show exploration of new feedstocks including algae, jatropha, sewage oil, etc. Several projects are also looking to source feedstocks from the developing world. However, investors’ issues remain: Uncertain barriers to entry, questionable carbon equations, inputs that compete with food supplies.

-         Wind and Solar Power solutions are a consistent presence, and with good reason! There is still plenty of “room” for technologies and models that make solar more efficient and affordable, offer pricing and installation solutions to bring solar to a wider group of residential and commercial users, and determine how to locate and develop wind power projects to reach a critical scale.

-         Diverse and plentiful green transportation solutions: Everything from websites that help you plan trips to hydrogen fuel cell cars, better batteries and adult tricycles.  Some projects are simple and some quite farfetched. One thing we agree upon: someone will win this challenge, even if it means defying the entrenched car culture.  The “who” and the “how” remain to be seen.

-         Beverages, Beverages, Beverages. New teas, healthy sodas, sustainable coffee, exotic juice. We always see lots of beverage companies but few make a great case about their ability to compete in a difficult, crowded market.

-         The all-purpose GREEN website, complete with online sales of green products, green product ratings, social networking, compelling stories, tips on how to go green, etc. Proposals for these businesses are a dime a dozen.

New Trends:

-         Emergence of Carbon Credits as a revenue source. A number of businesses are being built around the model of selling carbon credits as a source of revenue, either directly or via consulting or software sales for businesses developing their own carbon accounting systems. The carbon market in the US, however, is very premature and our Investors are left asking: Where are carbon credits liquid? What will happen in Copenhagen? What entity does the external verification?

-         New lines of sustainable home-ware. Filling the space between organic food and green building products, a new range of brands and products are supplying environmentally friendly alternatives to your everyday products: toothbrushes, silverware, dishes, Tupperware, water bottles, plastic wrap, etc. They’re employing a number of materials including recycled plastics, biodegradable plastics, bamboo,  palm, sorghum, etc.

-         Alternative banking and lending services are cropping up left and right. Either as a response to the recent economic crisis or due to good timing, we’re seeing a lot of solutions for providing banking services to the unbanked and for providing lower interest loans from non-traditional lenders or with new lending models. Community development banks are not a new concept, but are now better positioned and offering more attractive value propositions.

-         Focus on kids’ nutrition. We’ve seen lots of companies focusing on healthier snacks and meals for kids at home and in schools, whether that means producing natural and nutritious packaged foods especially targeted at kids or overhauling the traditional school lunch.

-         Smart systems for managing building energy. A number of new technologies employ software, monitoring systems, automated adjustments, etc. to help both homeowners and commercial building operators reduce their energy use.

-         Tools and services for the elderly. We’re seeing new offerings enabling elderly people to live independently longer, to manage healthcare treatments, etc. In addition there’s a new focus on the elderly population as a specific target market for media.

-         Home, roof-top or backyard gardening tools. Businesses are capitalizing on the recent popularity of home gardening and providing a range of tools, kits, grow boxes, services, and even modular green houses to help the average American do as Michelle Obama does.

On the decline:

-         Website for personal healthcare and social networking around health topics. Whether it’s that people no longer trust the web for health-related advice, that there were simply too many sites launched around the same time, or that early models failed to become profitable businesses, we’re seeing less of these models among our proposals.

-         Organic as “enough” to create a successful brand. Compared to a few years ago, turning a conventional product into an organic one and naming it is no longer a sufficient strategy for creating a new food brand. The potential winners in the natural foods space seem to be those that also focus on the sourcing of their ingredients, especially in ensuring products are fair-trade, and those that are bringing a new ingredient to the market or re-introducing that ingredient based on its health benefits.

We have 22 outstanding companies presenting across several categories at our Fall Conference and Venture Fair. It will be exciting to see how the investors respond to these winning proposals.

The New Generation of Social Entrepreneurs

The explosion of social enterprise programs at the university level is radically changing the evolution of entrepreneurship.

When Investors’ Circle opened its doors to mission-driven companies in ‘92, for-profit social entrepreneurship was still in its infancy. Many IC entrepreneurs had ground-breaking ideas with the business experience and passion to break out from the pack and transform their respective industries (e.g. Stonyfield Farm, Zipcar, and Evergreen Solar). These companies came to the Investors’ Circle community because access to capital and general support for social entrepreneurship was largely underdeveloped.  These companies didn’t benefit from today’s progressive business networking groups like Net Impact, internship opportunities at world-renowned mission-driven businesses, and green MBA programs.

We are now on the brink of seeing a new generation of entrepreneurs who are armed with better access to resources and educational opportunities tailored to support their social endeavors. We tip our hat to a few (of the many!) stand-out universities and non-profits working to increase student interest in social entrepreneurship through competitions:

Academic Institution Competitions

1.) Carnegie Mellon: McGinnis Venture Competition

Prize: $20k, Sustainable Technology track

This competition revolves around new technologies and helping MBA students move from the dorm room to the board room, bringing new businesses to life.

2.) Duke: Duke Start Up Challenge

Prize: $5k, Social Entrepreneurship track

This entrepreneurship competition runs the course of the academic year and provides teams with feedback to help with development of the business concept into the next phase and beyond.

3.) Georgia Tech: Business Plan Competition

Prize: $4k (divided between 1^st, 2^nd, and 3^rd places), Ideas 2 Serve track

In the I2S Competition, teams develop an idea concept, initial business model, and feasibility analysis for venture concepts focused on the triple bottom line.

4.) Harvard: HBS Business Plan Contest

Prize: $25k for 1^st place and $10k for 2^nd place, Social Enterprise track

The Social Enterprise Track of the HBS Business Plan Contest aims to educate about the process of creating and evaluating new ventures that have a central focus on social value.

5.) James Madison University: Sustainable Business Plan Competition

Prize: up to $50k

This competition provides a forum for entrepreneurs to refine sustainable business concepts for ventures in seed, start-up or early-growth stages.

6.) MIT: MIT Enterprise Competition

Prize: $100k grand prize, features Development and Energy tracks

This competition encourages its participants to act on their talent, ideas and energy to produce tomorrow’s leading firms.

7.) Notre Dame: Social Venture Competition

Prize: $15k for 1^st place and $2k for 2^nd place

This competition focuses on business plans with social missions/purposes and fosters a spirit of collaboration between business and social ventures.

8.) NYU: Social Venture Competition

Prize: $100k

The NYU Stern Social Venture Competition was started to recognize and support the use of business and entrepreneurial skills to create innovative approaches to tackling social problems.

9.) Rice: Rice University Business Plan Competition

Prize: $20k, Dow Sustainability Award; $10k, Sheafor-Lindsay Social Venture Award

The Rice University Business Plan Competition (RBPC) simulates the real-world process of soliciting start-up funds from early-stage investors and venture capital firms.

10.) Seattle University: Harriet Stephenson Business Plan Competition

Prize: $2500, Social Venture Award

Seattle University’s annual Business Plan Competition is designed to helps launch new business ventures by providing an enhanced learning experience, generating feedback on ideas, and developing networks.

11.) Stanford: Stanford University Entrepreneurship Challenge

Prize: $50k

The Social E-Challenge is a business plan competition for entrepreneurial ventures whose primary goal is to effect social and/or environmental change.

12.) Tufts: $100k Business Plan Competition

Prize: $50k, Social Entrepreneurship track

The Social Entrepreneurship Competition was created to encourage thought on developing new ventures that benefit society.

13.) Tulane: Business Plan Competition

Prize: $20k, Social Entrepreneurship track

The Tulane Business Plan Competition has added a social entrepreneurship track to reward not-for-profit and for-profit organizations whose products or services serve the greater good.

14.) University of Colorado: Cleantech Venture Challenge

Prize: $25k

This competition features business plans that demonstrate venture-grade, for-profit business models that provide innovative solutions, services or products in the cleantech sector.

15.) University of Idaho: VIEW Business Plan Competition

Prize: $2k, Social Entrepreneurship track

The Social Entrepreneurship track is focused on developing innovative solutions for social or environmental problems at the local, national, and global levels.

16.) University of Michigan: Michigan Business Challenge

Prize: $5k, Erb Award for Sustainability

This competition stimulates the creation of new businesses that harmonize economic, environmental, and social considerations.

17.) University of Texas: Dell Social Innovation Competition

Prize: $50k for grand prize, $10k for environmental sustainability

This competition invites students to create change at home or worldwide with an innovation designed to tackle a significant social problem.

18.) University of Washington: Global Social Entrepreneurship Competition

Prize: up to $17k

The Global Social Entrepreneurship Competition (GSEC) engages creative minds around the world to encourage bolder and less conventional business solutions to global poverty.

19.) Wake Forest: Elevator Competition

Prize: $5k, Social Entrepreneurship Competition

The Elevator Competition for Social Entrepreneurship seeks socially-conscious entrepreneurs to share their world-changing ideas.

20.) Yale: Yes – Y50k

Prize: $1k, Social Venture Award

Each April, YES holds a two-day conference—the Innovation Summit—in New Haven to celebrate Yale’s dynamic entrepreneurship community.

Organizational Competitions

1.) AC-NET: Clean Tech Business Plan Competition

Prize: $25k for 1^st place, $10k for 2^nd place, and $5k for 3^rd Place

The Clean Tech Business Plan Competition supports ideas in energy and water technology.

2.) Global Social Venture Competition

Prize: $25k for 1st, $10k for 2^nd place, $5k for 3^rd place

The Global Social Venture Competition provides mentoring, exposure, and prizes for social ventures from around the world.

3.)     Clean Tech Open: Clean Tech Open Competition

Prize: $100k to 6 CA semifinalists, $50k to 3 Pacific NW semifinalists, and $50k to 3 Rocky Mountain Finalists

The Clean Tech Open Competition seeks out early stage clean technology companies and provides unique resources to empower these start-ups to become viable businesses.

4.)     DTE (with U of Michigan): Clean Energy Prize

Prize: $65k for 1^st place, $21k for 2^nd place, and $3400 for 3^rd and 4^th place

This competition calls for the best plan for bringing new clean-energy technologies to market in Michigan.

5.) Green Spaces: Green Business Competition

Prize: $8k for 1^st place and $1k for 2^nd place

The competition rewards investment funds to companies that have the ability to revolutionize their industry and create economic opportunities by working with NY ecological resources.

6.) MIT Enterprise Forum: Ignite Clean Energy

Prize: not listed

The Ignite Clean Energy Competition’s objective is to foster, nurture and energize the emergence of world-class renewable energy technology firms.

7.) NCIIA (with ASME): Green Business Competition

Prize: $10k for 1^st place, $7k for 2^nd place, and $5k for 3^rd place

ASME’s IShow provides the full experience of technology product commercialization, bridging the gap between engineering school practicum to business school theories.

8.) NCIIA (with U of Texas): IC2 Student Commercialization Plan Competition

Prize: $10k for 1^st place, $3k for 2^nd place, and $2k for 3^rd place

The IC2 competition’s goal is to encourage graduate students to commercialize technologies developed at their universities and to facilitate the resulting new ventures in obtaining funding.

9.) Walmart: Better Living Business Plan Competition

Prize: $20k for 1^st place, other $5k and $10k prizes

The Walmart Better Living Business Plan Challenge provides a forum for students to invent sustainable products or develop sustainable business solutions and present them to a panel of Walmart executives, suppliers, and environmental organizations.

10.) William James Foundation: Socially Responsible Business Plan Competition

Prize: $3k for 1^st place, $2k for 2^nd place, and $1k for 3^rd place

This competition supports the evolution of a sustainable global economy.

Getting ready for Washington DC, one funders outlook

As we prepare for our November Fall Conference in Washington DC we asked a few of  our members to provide context on our conference theme: Public and Private Partnership Opportunities.

Michael Gurau is Managing General Partner of Clear Venture Partner and an Investors’ Circle member.  He wrote this piece for our Fall Print Newsletter.

Stimulating the Small Businesses Market

As has been well covered by the business press, the current economic environment has dampened not only the business outlook for large and small companies but also their access to capital, both debt and equity.    This pullback comes at the very time when the need for capital is at its greatest.  Small companies have planned for revenue growth that may not arrive in the near term, exacerbating their capital requirement.  Small “capital gap” funding has never been easy to access—today’s economy has made the gap even wider.  With private markets out of the funding market in the near term, small companies must look to federal and state government programs for what equity, credit and grant funding might be available.

Your Tax Dollars at Work for Small Businesses.

In good economic times, the US government has played an important role in lending and equity markets, whether stimulating lending by lowering interest rates, providing SBA- and USDA-backed loans, offering Treasury sponsored tax credits, and—with the exception of the last eight years of the (recent) Bush Administration– matching private equity capital through SBA’s (www.sba.gov) Small Business Investment Company  (SBIC) program.    Since 1994, the US Treasury’s Community Development Financial Institution’s (CDFI’s) Fund has provided equity and grant capital to mission-centric community development organizations; the equity funding enables certified CDFI’s to leverage their private equity capital with that of the CDFI Fund (www.cdfifund.gov) for the benefit of small businesses in which they invest.

On the grant side, the feds have long provided early stage grant money in several forms: SBA’s Small Business Innovation Research (SBIR)  and Small Business Technology Transfer programs provide sizable R&D grants to small businesses (under 500 employees) so that these companies can get their share (alongside universities and larger corporations) from government-funded research dollars.  The US Department of Agriculture (www.rurdev.usda.gov) too, supports small businesses with its Rural Business Enterprise Grant programs, that support value-added agricultural businesses, including natural products businesses such as those my fund and IC has supported.

Stimulus for small businesses

The American Recovery and Reinvestment Act (ARRA) of 2009 is providing considerable stimulus dollars to and through those existing agencies that support small business–SBA, DOE, CDFI, USDA and Department of Commerce.   ARRA’s lending support comes in several forms—in some cases increasing capital to (and improving terms and rates) for existing borrowers; in other providing new and varied grant pools to address the impact of the downturn.    As part of its renewable energy push, the Obama administration also allocated grant funds to support small businesses’ efforts to improve their companies’ energy efficiency; USDA has loan and grant funds that support small businesses’ energy systems and efficiency.   Department of Energy (DOE) and Treasury offer tax credits and loan guarantees for commercial energy projects that leverage renewable. This would seem good news for clean energy investors such as my new fund-in-formation and IC investors. Recovery.gov is a supersite for recovery related info, while each agency has—on their relevant home pages—information related to its allocation of ARRA.

The State of the States

While most state economies have suffered budget contraction due to the downturn, many states have something to offer small businesses.  In my home state of Maine, the Maine Technology Institute (MTI—www.mainetechnology.org) provides both grants and (limited) early stage equity to companies that fall within its target technology clusters.  Maine and many other states offer early stage investment tax credits that provides incentives to individual and state-based entity investors to provide equity to early stage (often pre-revenue) companies.   Many states also fund –typically through a bond-issue–early stage venture capital programs—e.g. Small Enterprise Growth Fund (SEGF in ME), Massachusetts Technology Development Corporation (MTDC in MA).  While these program are facing many of the same issues as their private sector VC brethren, some (including  SEGF) are pursuing new state funding.

Outlook for 2009 and 2010

From an investors’ perspective, it is the best and worst of times–worst for investors who have existing fund commitments and no path to liquidity in their portfolio; best for investors—whether VC or individuals—with liquid capital in a market in which demand has never been greater.   The venture capital fund that I’ve been managing since 2001 is an SBIC-like program, called the New Markets Venture Capital (NMVC) program; the NMVC scheme mandates that fund managers drive eighty percent of their capital into federally designated underserved communities—in CEI Community Ventures’ case, in northern New England.  On March 12^th, the bi-partisan Congressional duo that advocated for that program in 2000 announced a bill (HR 1491) to refund the NMVC program so that regions less well served by capital may see resource for growth.   The new fund I am setting out to raise will pursue this capital for New England, should the bill pass.

For small companies, it’s going to be a rough couple years, marked by contraction, survival and fewer capital sources than any other in modern memory.  Early stage equity is going to be very hard to come by, but for the most promising opportunities.  Accordingly, small businesses need to look to federal and state sources coupled with some creative bootstrapping.

Michael Gurau is Managing General Partner of Clear Venture Partners (www.clearvcs.com), an early stage venture capital fund-in-formation targeting a $50-75M pool targeting select sectors (clean energy, health and wellness and IT) in underserved and distressed secondary New England cities and towns.  Clear is a new fund, wholly unaffiliated with CEI Community Ventures and CEI.   You can reach Michael at mg@clearvcs.com.

A New Measure of Success: Investors’ Circle Launches the IC 20

By Molly Deringer

As a network of entrepreneurs and angel investors, Investors’ Circle is acutely aware of the fact that launching and growing a business is an uphill battle. According to the Small Business Administration, less than half of all start-ups survive beyond four years after their launch.

Despite this humbling fact, social entrepreneurs continue to break new bounds and redefine success. It is clear that entrepreneurial spirit is alive and well. In the last 12 months, Investors’ Circle—an organization serving 200 accredited investors and 2,400 entrepreneurs—received over 600 entrepreneur applications to present to the progressive-minded investors in attendance at their exclusive Spring and Fall National Conferences.

Every six months, the organization screens deals, sends them on to investors, and supports them through the fund raising process. Since its inception, Investors’ Circle has funded $131 million into 212 firms. But where are these high-growth-potential firms today?  How have they grown and profited—and more importantly—how have they realized their human and environmental missions?

Compared to Venture Capital Funds, angel investor groups (Investors’ Circle included) tend to be notoriously poor at tracking the success of their investments, since each group’s “portfolio” is a mix of its various angels’ individual portfolios. As Jean-Luc Park of Calvert Social Investment Fund explains, “Angel investors have only themselves to answer to.  It is their money, and they can do what they want.  It is human nature to highlight the wins and diminish the losses.”

As an organization advocating for the crucial role that angel investors play in promoting social enterprise, Investors’ Circle recognizes that it is important to look back, assess its collective successes and failures, and draw inspiration from these lessons.

At the Fall 2009 Conference in Washington DC, IC will announce the IC 20: a list of the top twenty high-impact and profitable firms that have come through the IC network.  Covering seventeen years of ventures and accounting for financial, environmental, and social results, this unique list will be the main source for profiling fast-growing companies that are beneficial for both investors and society. Companies surveyed will be asked to report on several factors, including:

• Revenue Growth
• Job Creation
• Board and Employee Diversity
• Energy and Water Use

The importance of tracking the growth of a business is understood as fundamental to finance. Inc. Magazine has been profiling the top 500 fastest growing companies every year since 1982. Increasingly, however, businesses and entrepreneurship organizations are recognizing the importance of measuring a company’s social and environmental impact in addition to their financial success. Rockefeller Foundation, B Corporation, HIP Investor Inc, and Social Venture Technology Group are leading the effort to determine how to assess business impact. At the same time, a growing number of S&P 500 companies are self-reporting their companies’ impact on their business websites and to company shareholders. Today, Investors’ Circle is reconnecting with companies that approached the organization years ago with, for example—a two-person team, $50K in capital from the founders, a sound model, and a laudable mission—to find out where they are now. Are the “winners” the companies that were expected to take off all along? Are the pioneers of social impact also companies with the greatest revenue growth?

Ultimately, Investors’ Circle hopes that the IC 20 will help inspire a new generation of entrepreneurs. “The IC 20, like the Inc 500 and Fortune’s Best Companies to Work For, will highlight the new ventures that provide high growth, great jobs, inspiring products, and ultimately an attractive financial return and significant benefits for society. What could be better?” – Paul Herman, HIP Investor, IC Member.

• Visit investorscircle.net to see who’s been funded through the IC network.
• If you have your own business venture that delivers profit and impact, submit a proposal by July 31^st.
• Be a part of Investors’ Circle this November in D.C.

One Month Left to Apply for IC Fall ‘09

Investors’ Circle is currently accepting applications for our Fall Conference and Venture Fair to be held November 15th – 17th  in Washington, DC.

To apply, please submit an application by July 31st.

BENEFITS OF CIRCULATION:

• Your company summary will be posted on IC’s secure online deal database for its investors to search and view.

• Your company will be highlighted in the next monthly e-newsletter sent to IC’s entire investor network.

• Your company will automatically be considered for a presentation opportunity at the Fall Venture Fair.

BENEFITS OF BEING SELECTED TO PRESENT:

• Presentation of your investment opportunity to an exclusive audience of angel and institutional investors, including both IC-members and non-members.

• Pre-event coaching on your presentation from IC investors.

• Extensive formal networking opportunities with investors.

TO APPLY

• Click here for information on who should apply.
• Click here for information on the application format and process.
• Click here to submit an application through our Angelsoft application system.

Contact inbox@investorscircle.net for more information on how to apply.

Click here to view a list of recent presenters.

Lipstick Economics

by Kelsi Boyle, Communications Associate

Last week, Business Matters interviewed 5 women entrepreneurs to find out how they approach business, stay true to their values, and achieve positive financial results. I was especially pleased to see two of Investors’ Circle’s ★superstar entrepreneurs★ (and spring presenters) on the list: Karen Bantuveris of VolunteerSpot and Jody Weiss of PeaceKeeper Cause-Metics.

Karen, a management consultant and working mom, got the idea for her business after encountering so many hurdles in the volunteer space. She was passionate about getting involved in her daughter’s school community but not pleased with countless “reply-all” emails and other spam. Karen decided to fix this problem with web-based software and voilà … the tech start-up to mobilize community helpers—VolunteerSpot—was born.

In its first few months in business, VolunteerSpot already has a database of over 30,000 volunteers mobilizing around various issues such as: animal rights, day laborer breakfast preparation, voter registration, community festivals, etc. When posed with  the question “How difficult has it been for you to find funding?,” Karen replies that although VolunteerSpot received national attention when chosen as one of Investors’ Circle’s 20 hottest social venture start-ups this spring, the market is still incredibly tough. Moreover, angel groups are predominately male and typically less familiar with the volunteering space. With a 27% female membership base, IC is one of the most gender-diverse investment groups, but there is still opportunity for our organization to diversify. Fortunately, VolunteerSpot has been able to find some good angel matches despite the fact that they are “pitching in high heels!”

What is Karen’s advice for budding women entrepreneurs?

“Find something you’re passionately interested in, intersect that with your skill set, and then you’ve got the recipe for moving forward. Getting a good team and surrounding yourself with board members that are experts in industries that can support your business—I think that’s the secret sauce.”

I’ve had the pleasure of interacting with Jody Weiss over the years at Investors’ Circle. This former sports agent who decided to dedicate her life to promoting peace and justice has presented at multiple IC Venture Fairs and worked with our investor members to expand her business and create positive change in our world. Peacekeeper Cause-Metics, a socially conscious cosmetics company, raises awareness and dollars towards urgent human rights issues affecting women across the globe.

In her interview, Jody discusses the type of investors she has worked with and how they’ve used money as a tool towards good. In comparison to traditional venture capitalism, socially responsible investing (SRI) has distinct differences. Jody explains that investment in a company like PeaceKeeper means the return is often less and often slower, while the risk just as high as with traditional start-ups. However, “planting seeds of change with your investment dollars is the highest use of money,” she proclaims.

Her story is yet another example of a company struggling between the necessity of giving investors what they want in exchange for the dollars required to create more good, but not at the risk of compromising mission. Jody believes that the answer to this dilemma begins with building discourse about recognizing the bigger picture. Return does not necessarily need to be strictly defined by finance, but by how well it addresses your various concerns. Interviewer Thomas White adds in his own beautiful sentiment, “money can disappear, but the good works we do are always with us.”

Jody’s advice for a woman starting her own business?

• Don’t focus on money, focus on your buyer
• Learn finance, or get someone you trust to manage this piece
• Realize launching is going to cost quadruple the amount you originally thought
• Be ready… because your business will take over your life!

Listen to the full interviews here.

Unlikely Revolutionary or New Age Activist?

by Kelsi Boyle, Communications Associate

As I sip my  mug of Salt Spring Coffee this morning, I give a little a nod of thanks to  Renewal/Renewal2 Investment Fund for supporting such an overall responsible company (fair trade, organic, carbon neutral, reforestation programs… the list goes on).  Joel Solomon, CEO of Renewal2 and an Investors’ Circle Member since our inception in 1992, was recently profiled in Vancouver Magazine.  Frances Bula’s article explores the green movement that Solomon has been inconspicuously developing for almost two decades.

Joel Solomon, IC Member

Described as “tall and lanky, with rectangular metal glasses, shapeless black jeans, black runners, and a nondescript suit jacket,” Solomon doesn’t seem to fit the mold of someone driving Vancouver towards sustainable business.  However, that is exactly the revolution he has been building.  With the help of the foundation co-founded with Rubbermaid heiress Carol Newell and an uncanny knack to build enthusiasm around “for-benefit” businesses, he has influenced countless high-net-worth individuals to put capital into just causes.

More than a connector, Solomon also backs his passion with his own dollars, pouring money into enterprises across the fields of organic food, holistic health, eco-consumer products, and more.  His passion for environmental and social justice sets him apart from the business types typically found in Vancouver: “the rich and powerful, who dominate business with a little philanthropy on the side; [or] the earnest and well-meaning, who dominate the social movements and low-income tax brackets.”  Solomon, to me, represents what is possible in our rapidly-evolving and evermore aware capital market.  Sustainability and success can and DO go hand in hand.

Social Stock Exchange: The Next Stage of Sustainability?

By Kelsi Boyle, Communications Associate

A recent Ode Magazine article discusses the opportunities and potential pitfalls of social stock markets.  This fall in the U.S., IC Member Michael Van Patten plans to launch Mission Markets. Similar to those social stock markets in Brazil and South Africa, Mission Markets would be a private, unregulated exchange designed to connect social-purpose businesses and accredited investors.

As consumer consciousness around environmental and humanitarian issues is on the rise, we find more and more emerging businesses dedicated to solving such global problems.  What used to be solely the work of non-profit organizations is now being embraced by for-profit mission-based enterprises–the type of companies who seek funding through IC’s mission-based investor network.  Daniel Crisafulli, Director of Ecosystem Investments and Partnerships at the Skoll Foundation, explains that “you have a lot of people coming from business school, or the business sector, and they want to take their knowledge and the language they’re comfortable with and bring it into the social sector.”  In the social stock market, companies that incorporate social or environmental missions into their bottom lines meet investors and donors interested in enterprises and non-profits that satisfy business standards.  Interested investors would receive a full profile of the undertaking, an itemized budget, evaluation of the project’s risks, and the organization’s strengths and weaknesses. Every item that can be measured is measured, including a project’s impact on beneficiaries’ quality of life.

But what are the effects of imposing market metrics on social activism?

Michael Edwards, author of Just Another Emperor?, a book on what he terms “philanthrocapitalism,” is not convinced this is the direction modern enterprises should be headed.  He fears that a blurred line between non-profit and for-profit sectors means merging conflicts and negative values of traditional business with the non-profit sector. “In the future, will there be anyone left who responds to something other than a market incentive?” he asks.  Moreover, if non-profit and for-profits go head-to-head in an open market without an accurate method of quantifying social benefit, will greenwashing for-profits with measurable financial return simply crush the competition?

Then again, there are people out there determined to help these for-profit/non-profit/mission-driven/hybrid companies succeed.  B Corporation, a pioneering organization that seeks to measure the impact of social enterprises through their “B Survey,” is one such vehicle working to standardize and legitimize social impact.  IC Member Andrew Kassoy, co-founder of B Corp, says the current credit crisis may be an opportunity to do just that. “The markets focus on the short term, and now everyone realizes that’s not always good for the long term,” he says. “Investors are hungry for something new.”

While a mission-based company may flourish in a social stock exchange, it also has the potential to lose or lessen its social/environmental impact once it grows or goes public.  Success in the market results in an ability to garner more investors, but not necessarily the type of investors with goals beyond maximizing returns.  Pradeep Jethi, a veteran of the London Stock Exchange, believes that “most social entrepreneurs stay away from the capital markets because they fear mission drift.”  Investors’ Circle addressed this exact concern during our Spring Conference Debate: “The Sell Out.”  You can watch panelists and audience voice their perspectives here.

Ultimately, isn’t our goal all the same—to make our world a better place by harnessing the power of capital?  So what is the answer to this non-profit/for-profit question?

We at IC welcome your insights, concerns, and solutions.

Call For Applicants: SVN 2009 Innovation Awards

Social Venture Network (SVN), the country’s leading network of socially responsible entrepreneurs, is currently accepting applications for their 2009 SVN Innovation Awards. The Innovation Awards program supports the “next generation” of socially responsible business and nonprofit leaders by providing them access to the people and resources to help develop and grow their enterprises. Investors’ Circle has a long history with this member organization of 500 CEO’s, investors, and nonprofit leaders of cutting-edge socially responsible businesses and nonprofits. Not only was IC sprung from a core group of SVN investors in 1992, our organizations have both spent the past 17 years nurturing the growth of socially responsible investing, sustainable economies, fair trade and organic/eco living.

“SVN is, for a third time, inviting the next generation of socially responsible entrepreneurs to apply for the SVN Innovation Awards,” said Deborah Nelson, Executive Director of Social Venture Network. “We were very impressed by our six winners from 2008; even in a challenging economy, they have expanded their impact in creating a more just and sustainable world.  We look forward to welcoming this year’s winners into the SVN community.”

SVN is accepting Innovation Awards applications from May 1 through June 15 at: www.svn.org/awards.  Finalists will be selected and announced in August.  After a second round of judging that will include phone interviews, the judges will select the 2009 Innovation Award winners in late September. Winners will be honored during an Awards ceremony during the SVN 2009 Fall Conference at the Estancia La Jolla from October 22-25 just outside San Diego, CA.

The 2009 winners will each receive a one-year membership to SVN as well as registration, travel expenses, and special recognition at the invitation-only SVN Fall 2009 Conference. The winners will be honored during a special ceremony on Friday, October 23^rd, where they will have a chance to share their work with an audience of successful socially responsible business leaders, investors and nonprofit leaders.  The Innovation Award winners will also be promoted for a full year on the SVN Website and in media outlets and will receive free registration to the Spring 2010 SVN Member Gathering.

“Being honored as an SVN Innovation Awards winner made a huge difference to REC. I’ve made a lot of great connections, received mentoring from several SVN members, and have partnered with a number of the network’s leaders who are helping me think strategically about how to achieve greater social impact,” commented 2007 SVN Innovation Awards recipient, Morgan Simon, the co-founder and Executive Director of Responsible Endowments Coalition (REC).

2008 Innovation Award winners included: Timothy O’Shea (CleanFish), Kirsten Tobey and Kristin Richmond (Revolution Foods), Michelle Kaufmann (Michelle Kaufmann Designs), Jonathan Lewis (MicroCredit Enterprises), Jeannine Jacokes (Partners for the Common Good), and Willy Foote (Root Capital).

2009 Annual Innovation Awards Eligibility: To be eligible for the 2009 Innovation Awards, applicants must currently hold positions as C-level executives (CEOs, executive directors, founders, etc.) of businesses or nonprofit organizations implementing an idea that is having a positive social or environmental impact on the business sector.  Eligible applicants will be leading an organization that is less than five years old.

The application process includes providing thoughtful answers to several essay questions and presenting relevant metrics describing the enterprise or organization. For a 2009 SVN Innovation Awards application, complete program information, and additional information about SVN, please visit: http://www.svn.org/awards.

Short, Sweet and Smart: The Essentials of an Investment Application

By Molly Deringer, Entrepreneur Services, Investors’ Circle

Selling your business concept to investors is not simply a matter of solid revenues figures and hockey stick projections. Language and description matter. Your ability to thoughtfully describe the basics of your business will reflect upon your skills and sophistication as an entrepreneur to investors who read your profile.

One of the most important requirements of an application is that it succinctly and thoroughly describes the product or service offered. Although this may seem like a simple task, those who’ve been thinking and talking about their business 24/7 may have trouble describing the basics to an unfamiliar audience.

It’s also important not to underestimate one’s competition or overstate competitive advantages. Do your research before claiming that you’re “the first and only business to combine a green product certification and rating program with retail sales in one online location.” Try to be specific. Your true addressable market is likely smaller than “the LOHAS market” as a whole or simply “women ages 20-50.” If you haven’t conducted market analysis yourself, use available reports from comparable businesses.

At the risk of stating the obvious, it’s also crucial that you tell investors how your business will make money. Believe it or not, we’ve seen plenty of applications at Investors’ Circle that fail to do just that. Don’t assume that since you’re developing a new technology your

audience will automatically understand that you’ll be licensing it, or conversely manufacturing and selling it. If you’re creating a web application, don’t assume we’ll know your revenues will be based in advertising; Tell us. Similarly, it’s important to make it clear who your direct customers are. If you are in retail, who will be selling your products to the end consumer? If you’re making solar optics, who will purchase or license that technology? The question of who will be putting money in your hands is not always covered in your market section.

In the end, of course, numbers are also important. The amount of money you seek to raise, how you will use that capital, and the reasonableness of your revenue projections will all be evaluated by investors. There is obviously no “right” answer about how much capital you should raise: it should be enough to cover your current growth needs. If you’re seeking capital for a new manufacturing plant that will likely cost $2 million and you’re only raising $500k, investors may be wary. On the other hand, if you’re a pre-revenue company that has not raised prior financing from friends or family or put in money of your own, you might not want to ask for $3 million.  Similarly, be careful not to project excessive first-year revenues. Investors know that growing a business takes time and will fault you if you project a million in revenues in your first year of business. All of this is to say that your projections and the size of your raise all speak to your credibility as an entrepreneur.

Possibly the most important aspect of your business proposal is your management team. Investors need to see not only that your business proposition is smart and viable, but also that you are the right people to pull it off. Ideally, a team should have combined experience in the industry that the company occupies and a proven record of entrepreneurial success. If there are holes in your team, acknowledge them, and try to fill them with advisers that can guide you while your business develops.

When all is said and done, it may feel impossible to describe the essentials of your business in a limited framework. Indeed, it’s a challenge, but trust that thousands of entrepreneurs have accomplished the task before you. Think about what is, indeed essential and what’s merely a colorful detail. Remove language that is vague and replace it with concrete information. Be careful to avoid repetition. Cut out summary statements like “We are committed to scaling a sustainable business by marketing a diverse product line to our loyal customer base” that don’t really add value to your profile.

Finally, we encourage you to visit your application a few separate times, with fresh eyes on each draft. (Note this may require you to begin your application earlier than the last three hours before an application deadline.) We hope than in the end, you’ll find this to be a helpful exercise in brevity and precision.