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.

Making “Selling Out” “In”

The closing session at the Investor’s Circle Spring Conference was initially entitled “The Sell Out.” Just before coming on stage however, one of the panelists surfaced to tell us, in a joking yet serious tone, that it would now be entitled “Maintaining Mission in Act 2.” This abrupt change of plans was surprisingly fitting. Why should selling a company have to mean “selling out?” This is a theme that almost anyone who has ever been passionate about a particular social enterprise has debated. How do we sell, or even scale, our companies without muddling the social mission?

Judy Wicks, founder of White Dog Cafe in Philadelphia, suggests that we may not be able to scale in such a way that the social mission is kept solid. Wicks developed a model that strictly sells the brand of her company. All who operate under the White Dog Cafe brand must be locally-owned, and adhere to an extensive social contract dictating ethical and sustainable business practices. Wicks states that “business is about relationships, and money is simply a tool.” The development of her locally-owned model was, in part, to reduce the risk of losing the authenticity of relationships in her business. A question still remains with Wicks’ model however—what will happen when she is no longer around to oversee the integrity of her brand? Wicks has explored multiple options, but has yet to come to just the right conclusion.

A Wicks-type supervision of business’ ideals is catching on in the operation of many modern businesses. All panelists seemed to agree that decreasing violence in capitalism and balancing it with consideration for the planet’s suffering may be our only option in saving capitalism. Connection, compassion, and care of others are necessary parts of this new, sustainable model.

But where is the balance between increasing such values and still allowing for profitable business? Things are complicated more when business needs to be scaled internationally, and/or quickly, both for social and fiscal reasons. Though no one has yet molded a way to do this while still maintaining perfection of social mission, it is reassuring to see that many organizations are working toward such a model. Perhaps it is not a question of perfection, but rather what is right for each individual company and its leader.

Even Judy of White Dog agrees that her model does not provide the highest financial return for herself (as a licensing of a brand means that she does not receive all of its value up front) although the financial return it brings to individual communities is higher this way. For her personally, it is the most appropriate way to uphold her values. Maybe that is what we’re all looking for—the most appropriate way to uphold value on the levels that meant the most to us. And as the creators and keepers of social mission, we wish pioneering entrepreneurs the best of luck. Let’s work together to keep our standards high.

Is a Successful, Mission-Aligned Exit Possible?

Judy Wicks, Mark Albion and Pierre Ferrari tackle the big issues of scaling a mission-driven business at the Investor’s Circle Spring 2009 Conference in San Francisco.

And Ethical Markets caught it all on tape!

Watch here.

Social Enterprise: Too Many Cooks in the Kitchen?

The plenary session at the Investors’ Circle 2009 Spring Conference was sprinkled with panelists representing different entities. With delegates to cover the perspective of the entrepreneur, the government, education, and large financial institutions, we were given perspectives of social enterprise from multiple angles. Traditionally, these different entities have kept to themselves in the development of the sphere and their role in it. If it is true that we now live in a world full of collaboration, one in which a down economy encourages people to truly see the value in teamwork, what is the potential for collaboration between entities working to create social enterprise?

Prior to the session, this question was posed to a few audience members. Not all too surprisingly, it received a series of skeptical responses. The consensus was a fear that combining efforts would result in “too many cooks in the kitchen.” But, let’s use this analogy in a different light. If these cooks are already finding success in their own respective kitchens, why not put them all into the same kitchen to ensure that the food being created is not duplicated? Besides, when combining the best chefs from multiple restaurants, would we not simply get far higher quality food?

Perhaps the answer to that would depend upon the type of collaboration between entities. David Crane, who serves as Special Advisor to the Governor for Jobs and Economic Growth discussed one way in which the government is currently working to help the business and social enterprise sectors. Crane stated that the “number one goal from a policy standpoint is to create long term sustainable demand for products, without picking winners.” Crane suggests that it is the government’s responsibility to create an environment in which our policies maintain demand for sustainable products, thereby creating demand for social enterprise itself. But while the government is busy working on such policies, what can entrepreneurs do to create demand for their products or services? The panel provided a perfect example of an entrepreneur who has created a company to meet already existing demand for a product. Peter Frykman, founder of Driptech, a company providing low cost and more appropriate irrigation systems for developing countries, spoke of the already-existing demand for his services upon his company’s launch, with a viable financial return as well. And for Driptech, sales to, and even partnerships with, the government are not out of the question.

Driptech’s story mirrors many of the existing social enterprises that come through the Investors’ Circle network. If IC-type companies work to solve the social and environmental concerns also held by government, large financial institutions, non-profits and for-profits alike, then can’t we seek out more ways for these entities to work together? If, as moderator Jerry Engel suggested, the endgame is economic viability, through which long term sustainability both economically and culturally are the imperative of success, then why aren’t we seeking alternative ways to increase this success? Yes, there is the potential for further red tape created by such collaboration, but isn’t the reduction of red tape always a necessary step in creating partnerships? If, as Engel states, innovation responds to challenges, then let’s take this one on together.

Social Enterprise: Our New Collective Consciousness

In yesterday’s article in Reuters, “Perfect Storm,” writer Deborah Cohen highlights the fastest growing sector in venture capital investment: cleantech.

The rapidly growing success of this sector can be attributed to a number of things: improved technology, government recognizing the need for alternative energy solutions, as well as consumer demand.

Sky Lance, manager of the Patient Capital Collaborative (PCC), a fund incubated by Investors’ Circle that invests in our venture fair presenters, explains a recent paradigm shift: “the ideas of global warming and one’s carbon footprint all the way to recycling and the War on Iraq [are] part of everybody’s consciousness now.”  This collective consciousness and heightened awareness is, fortunately, resulting in concrete action towards preserving our world’s resources.  Investors’ Circle is pleased to be a renowned resource during this transition.

What is unique about the field of social enterprise is that it addresses two of our most pertinent needs–the need to solve our world’s environmental and social problems, and the need to drive money into our unstable economy.

Rather than working on getting their 501c3 statuses, many companies with social missions are going the for-profit route these days.  Bikestation, an organization that builds urban bike-transit centers for cyclists looking to store their bikes and gear in a secure environment, profiled in the Reuters’ article, is one such company that has made this choice.  After operating 13 years as a non-profit, Bikestation realized they could grow more rapidly and create more impact with the help of funding intermediaries.  With new investment dollars, they are on a mission grow their 11 facilities to 200 by 2014, generating $30 million in annual revenue.

Here at Investors’ Circle, we have also seen the pool of mission-driven entrepreneurs explode over the last few months.  Our spring application round was the largest in the history of the organization!  Business Development Director, Deb Parsons, attributes the stepped up activity in part to the tightening of the credit markets, noting more activity from established players in the sector.  “It could be an indication of the maturity of the businesses, the types of companies that are joining the sector,” she says. “I think it’s also an indication of the debt markets being locked up.”  Thankfully, our network of angel investors, VCs, small funds, and family foundations can offer their support when traditional avenues are not available.

Although a long and difficult process, our diligent selection committees have selected the top companies and these 21 superstars are ready to take the stage in two short weeks!  In this fiercely competitive landscape, we can rest assured that our spring presenters are certainly something special–companies serving a purpose, seizing emergent opportunities.

Learn more about our upcoming venture fair and conference here.

Ethical Markets Covering THE IC DEBATE: “The Sell Out”

This April, Ethical Markets will attend the Investors’ Circle Spring Conference to provide exclusive coverage of a provocative addition to their program—THE IC Debate: “The Sell Out.” This session will get to the heart of one of the biggest tensions among mission-focused investors – the question of the liquidity event or rather, the exit.

This interactive session will be moderated by Mark Albion, the founder of Net Impact and best-selling author of such titles as Making a Life: Making a Living. With over twenty years experience balancing business with community and personal happiness, Mr. Albion will urge the panelists and audience to tackle the big issues of scaling a mission-driven business. Is a successful, mission-aligned exit possible? If so, how can we get there?

The hot seats belong to Judy Wicks—Founder of White Dog Café and Co-Founder of Business Alliance for Local Living Economies (BALLE) and Pierre Ferrari— Board Chair of Ben & Jerry’s and Co-Founder of EthixVentures. Pierre’s experience during the sale of a truly iconic mission focused business (Ben & Jerry’s) to a multi-national (Unilever) versus Judy’s mission-first exit strategy is sure to deliver some heat. How can the investor, the entrepreneur and the stakeholders achieve their triple-bottom-line mission in a way where everyone comes out ahead?

More information about the Investors’ Circle Spring Conference can be found here.

**Advanced registration discounts are available until April 14th.**

The Prosperous Cycle of Social Enterprise: Investors’ Circle Will Hold First 100% Carbon Neutral Event

In today’s economic downturn, where the fall of one big domino in the financial system forecasts the fall of several others, it’s important to also take a look at the positive feedback cycles spinning up among the new models of a triple-bottom-line enterprise. At the Investors’ Circle conference and venture fair this past November in Boston MA, 20 early-stage companies in cleantech, alternative media, sustainable consumer products, and healthcare presented to a room of 150+ investors specifically interested in socially responsible investment opportunities. 

One of those companies was Renewable Choice Energy, a full-service supplier of voluntary carbon credits and renewable energy credits. In 2007 alone, the company sold over 1 million Renewable Energy Credits which is the equivalent of taking over 110 thousand cars off the road or planting 5.5 million trees. At the IC conference, the company’s CEO connected with an IC angel investor who later invested 100k in the company. This capital has helped Renewable Choice meet the growing demand for carbon credits.

This season, Investors’ Circle and Renewable Choice will be teaming-up again: The company has agreed to sponsor the Investors’ Circle Spring Conference and Venture Fair to make the event carbon neutral for the first time in the organization’s history. Although Investors’ Circle has been working since its inception to green its events through local and organic catering, waste reduction processes, opt-in carbon offsetting, and other measures, this is the first time that Renewable Energy Certificates (RECs) will be used to offset the entire event’s carbon use, including flying attendees and presenters from across the country to converge in San Francisco.

As a network of socially and environmentally mission-driven businesses and investors, this is exactly the type of long-term partnership that Investors’ Circle strives to achieve. The organization’s ideal relationship with an entrepreneur is one where she receives support from the membership early on, finds growth capital through the network, goes on to prosper and expand successfully, and then comes back to us to tell her company’s story, share services, support newer entrepreneurs, and ultimately become a member angel investor herself.

The 2009 Spring Investors’ Circle Conference and Venture Fair will feature presentations from 21 new companies, a debate on mission aligned exits, a panel discussion on the prospects of social enterprise for the new decade, as well as a number of focused breakout sessions. For more information, please visit the Investors’ Circle website at www.investorscircle.net

Social Enterprise: Fulfilling Needs

A recent New York Times article covers the surge of sprouting mission-based businesses. But rather than focusing purely on the fact that our world is becoming more responsible-minded, writer Marci Alboher explores another trend… need.

D.Light founder Sam Goldman not only had a great solution to the kerosene problems he witnessed in developing countries, but also the passion to get it his technology into the most hands as soon as possible. We all know that money makes the world go round, even in these times of economic hardship. Money makes the wheels move and money keeps the gears oiled. Like many of the companies Investors’ Circle sees, Goldman’s decision to go the for-profit route was driven by immediate need. “We could have done it as a nonprofit over a hundred years, but if we wanted to do it in five or 10 years, then we believed it needed to be fueled by profit. That’s the way to grow.”

Those who have been involved in the social enterprise sector understand the benefit of harnessing the power of capitalism to achieve positive and rapid growth. Investors’ Circle member Kevin Jones, who recently hosted the memorable SoCap event, witnessed first-hand a larger public “flocking to what he calls a new asset class.”

Another IC Member, Jonathan Storper of Hanson Bridgett Law Firm, is quoted in the article as well. Storper explains that social and legal norms for mission-driven for-profit companies are adapting to this new landscape of social responsibility. “These lines have blurred and converged as the business world attempts to respond to the modern culture’s demand that businesses be good stewards of the environment and society.” With shareholders to consider, for-profit companies doing good work may soon be looking at tax exemptions, tax deductibility of donations, and other benefits that non-profit orgs require to keep afloat. This is fabulous news for innovative Investors’ Circle companies who are still trudging through this recession with the dream of radical change.

Be sure to check out Sam Goldman’s blog on Social Edge.

Capital Efficiency: A Core Value of Social Enterprise

In the social enterprise space, we hear of a number of businesses whose missions are to do good, primarily by using less and wasting less.  New companies are sprouting up every day with products and technologies that are more energy efficient, save water, preserve the integrity of the soil, or use less petroleum.  These tenants of conservation and stewardship have become central values of social enterprise, as well they should!

In today’s troubled economy, it’s even harder than usual for a start-up company to make it.  However, those that can build a business and see it through to the other side of the storm will be positioned for great success when markets recover and the playing field is markedly less crowded.  It is crucial that these winners be social entrepreneurs. We need the movement to build steam through this recession rather than fizzle out.

As Inc. magazine assures us, there is money out there for early stage ventures.  In the second quarter of 2008, $12.4 billion was invested in early stage deals.  But even angels who are risk-takers by nature are taking caution…either by investing in syndicated (and therefore pre-screened) deals or by looking for deals that are more conservative.

This month, our member led selection committees have been diligently evaluating the hundreds of deals submitted for consideration for our April Venture Fair.  In their discussions, I’ve observed a strong preference toward companies that are seeking modest raises that make sense compared to the money they’ve raised to date and their current yearly revenues.  Companies like Federspiel Corporation, New Leaf Paper, Cardinal Resources, and Cowgirl Creamery are rising to the front of the competition, given their proven records and continued promises of capital efficiency.  Meanwhile, companies seeking rounds that are several magnitudes larger than their revenues to build on a low margin model are being discarded rather quickly from consideration.

For the social enterprise movement to prosper in the long run, we need it to survive (and even prosper) today.  We need start-up companies in the space to refocus and re-strategize to reduce their burn rates and do more on less.  Just as we’ve proven the potential success of a business model built on the values of improved energy efficiency and reduced material waste, it’s time we put forth examples of companies built upon capital efficiency.  While the financing pool is crunched and weary, social enterprises should be careful to also conserve capital—for the movement and for their own benefits.

Molly Deringer

Entrepreneur Services

Investors’ Circle

molly@investorscircle.net