In early October, Pacific Community Ventures had the opportunity to engage with panels at SOCAP in all capacities – as moderators, speakers, and attendees. SOCAP, which celebrated its 10th anniversary this year with a record gathering of 3,000 attendees, is the “largest impact investing capital markets gathering in the world.” As an organization with both a small business lending program and an impact investing consulting practice, we were eager to share our insights as well as learn from innovators in the Bay Area and across the world. Needless to say, we packed a lot of learning into four days. Here are our 6 top takeaways:
[custom_headline type=”left” level=”h3″ looks_like=”h4″]1. Current political circumstances are driving increased urgency and awareness[/custom_headline]
The current political climate is creating a sense of urgency that’s driving a booming interest in the impact investing industry. Panelists and attendees alike emphasized that the general public no longer believes we can necessarily rely on the government to solve our problems and address social inequalities. As a result, there’s a sense of urgency and desire to take action, creating an increased interest in using capital as a force for good.
[custom_headline type=”left” level=”h3″ looks_like=”h4″]2. Community and customer-centric approaches to investment are imperative[/custom_headline]
Human Centered Design and empathy were key themes heard throughout the conference. Entrepreneurs, funders, and intermediaries all emphasized the need to build a ground-up understanding of financing needs in order to provide effective investment products to communities in need. Whether it was a less burdensome due diligence process for early-stage entrepreneurs; empathy in product design for women; or a community-centric design of urban development initiatives; putting the beneficiary first was a central theme. This idea was pursued more deeply and rigorously at the COCAP conference – held the same week as SOCAP and which PCV also attended – whose focus was building a local regenerative economy that creates well-being and equity for all.
[custom_headline type=”left” level=”h3″ looks_like=”h4″]3. Impact capital needs to be deployed to help close the racial wealth gap[/custom_headline]
Panels in SOCAP’s Racial Equity track asked the question “How can impact capital be deployed in ways to close the racial wealth gap?” Discussions focused on topics including the need for investors to ensure that investments aren’t acting at cross purposes (e.g. investing in companies that indirectly continue the trend of mass incarceration), the imperative for applying a racial equity lens to all investments, and the role of policy in supporting capital to drive racial equity. The entirety of COCAP’s content was focused on the need for improved racial equity, with many panelists drawing attention to the industry’s push toward capital growth rather than focusing on intentionality and thoughtfulness.
[custom_headline type=”left” level=”h3″ looks_like=”h4″]4. Universities are playing an increasingly important role in the impact investing space[/custom_headline]
From conducting research, to creating tools, to building networks, universities are becoming key actors in the impact investing space. Universities across the world are working on a wide array of projects to help build the impact investing field:
- University of Pennsylvania’s Center for High Impact Philanthropy (CHIP) and Wharton Social Impact Initiative studied social impact funds seeking to improve women’s lives for the Tara Health Foundation
- Duke’s Case developed Smart Impact Capital to empower entrepreneurs seeking to raise investment capital
- The Bertha Centre for Social Innovation and Entrepreneurship at The University of Cape Town partnered with the World Bank to test an outcome-based funding mechanism to support small green businesses in South Africa
[custom_headline type=”left” level=”h3″ looks_like=”h4″]5. Innovative financing can drive progress toward Sustainable Development Goals[/custom_headline]
Alternative financing mechanisms such as blended financial instruments, risk guarantees, prizes, and Development Impact Bonds (DIBs) were recognized as powerful means of driving more capital to international investments, disrupting what we think of as typical “aid”. Organizations including the World Bank, Kois Invest, VilCap, USAID, Root Capital – and many others – believe these new approaches can help shrink the current $2.5 trillion development investment gap and drive progress toward the SDGs.
[custom_headline type=”left” level=”h3″ looks_like=”h4″]6. Impact measurement and management continue to be powerful tools for investors[/custom_headline]
As the impact investing field has grown, so too has the need and demand for rigorous impact measurement and transparency. Panelists across sessions emphasized the necessary shift from using metrics to fulfill funders’ reporting requirements to instead using metrics to drive data-driven decision making. As impact investing measurement consultants, we’re well familiar with the power of data and impact evaluation to encourage more rigorous impact and transparency. Initiatives such as the Case Foundation’s Impact Investing Network Map, B Lab’s GIIRS Ratings System, and Bridges’ Impact Management Project are helping to build cross-cutting field understanding to help investors leverage data to drive greater impact.