All posts by Ben Powell

This post was written by Ben Powell, the Founder and CEO of Agora Partnerships. Ben is an Ashoka Fellow and a Draper Richards Kaplan Foundation Entrepreneur and received the inaugural Alumni Social Innovation Award from Columbia Business School.

Is Philanthropy Ready For System Change?

On July 26th, 2013 Peter Buffett wrote an opinion piece in the New York Times that caused a little brouhaha in the philanthropy and social entrepreneurship worlds. The piece drew praise and criticism, notably from Matthew Bishop, and some buzz for a time, and then faded away.  For me, the criticism missed the point, which I thought was right on.  I decided to write about the topic when one of our young team members from Nicaragua forwarded the op-ed to our whole team. The piece did for him what every good piece will do: it made him feel and it made him think. Even better, it energized him and made him realize that he was not alone.

Continue reading Is Philanthropy Ready For System Change?

Shared Values: what we look for when selecting entrepreneurs for the Agora Accelerator

Ben Powell - Impact Investing in Action 2013 (1)The Agora Accelerator is designed for entrepreneurs with real potential to make a significant positive contribution to the world. When we select our classes, we look at a number of factors including business model innovation, scalability, and social impact. But the most important factor by far is the quality of the entrepreneur.  Figuring out who are the most promising entrepreneurs for the accelerator is one of our hardest jobs, especially given the tremendous energy and innovation we are seeing among entrepreneurs working throughout Latin America.  We don’t pretend to have all the answers, but we have found that using core values as a framework can be incredibly helpful in understanding the power an entrepreneur will eventually wield to propel his/her company to success.

Continue reading Shared Values: what we look for when selecting entrepreneurs for the Agora Accelerator

Valores Fundamentales – lo que buscamos cuando se seleccionan emprendedores

Ben Powell - Impact Investing in Action 2013 (1)La Aceleradora Agora está diseñada para emprendedores con potencial real para hacer una contribución importante y positiva al mundo. Cuando se seleccionan nuestras clases, nos fijamos en una serie de factores que incluyen que tan innovador es el modelo de negocio, la escalabilidad y el impacto social; pero el factor más importante es la calidad del emprendedor. Averiguar quienes son los emprendedores más prometedores para la Aceleradora es una de nuestras tareas más difíciles, sobre todo en vista de la enorme energía y la innovación que estamos viendo entre emprendedores que trabajan en América Latina. No pretendemos tener todas las respuestas, pero hemos encontrado que el uso de una serie de valores fundamentales como marco puede ser increíblemente útil para comprender la motivación de un emprendedor, para impulsar su empresa al éxito.

Continue reading Valores Fundamentales – lo que buscamos cuando se seleccionan emprendedores

Reflections on Agora’s 2013 Entrepreneur Retreat

Agora's Accelerator Class of '13
Agora’s Accelerator Class of ’13

It’s been about 2 weeks week since I returned from Agora’s Entrepreneur Retreat in Nicaragua, and I am still processing the experience.  During a week of many powerful moments and intimate conversations, a few stand out. They stand out for me not just because of their poignancy, but because they show the powerful, disruptive potential of the accelerator model for creating and scaling change.

The Ambassador’s Address

South Korean Ambassador to Nicaragua Soon Tae Kim at Agora’s 2013 Entrepreneur Retreat
South Korean Ambassador to Nicaragua Soon Tae Kim at Agora’s 2013 Entrepreneur Retreat

It’s Thursday, January 31 at the Casa Dingledine, a beautiful old house perched on a cliff overlooking Managua and the surrounding lake.  About 60 people are packed into the living room – many of them are entrepreneurs. Entrepreneurs representing 27 businesses stand up, one by one. They introduce themselves, explain their business, and state their commitment to creating a better Latin America. I glance around at the people watching the entrepreneurs talk.

The room is filled with members of the Managua business and diplomatic community. The head of the World Bank for Nicaragua, the DCM (#2) of the US Embassy, And Agora co-founder Ricardo Teran’s entire family are there to support us.  And so is Soon Tae Kim, the Ambassador of South Korea to Nicaragua.

The fact that Ambassador Kim is present is by no means random. We invited him and are delighted he was able to make it. It’s taken us nearly 7 years, but we finally received a grant of about $230,000 from the Inter-American Development Bank to help support the Agora Class of 2013. The actual source of the funding comes not from the bank itself, but from the Government of South Korea. There is something very special about this money. It feels hard earned, both by us and by the Koreans. The Koreans have talked the talk and walked the walk. The most successful and sustained assault on poverty in human history was launched by the Koreans in the 1960s and continues to this day.

In 1960, Korea had a GDP per capita of $79, compared to $128 in Nicaragua and $13,414 for the U.S. After the Korean War, the country was in shambles. Today the country has a GDP per capita of about $32,100, ten times that of Nicaragua and, among many accomplishments, has created the only product that can compete with the iPhone (the Samsung Galaxy). All of us at Agora feel honored to be receiving this funding from the people of South Korea – funding that was generated through incredible hard work and a focus on innovation by a people with no natural resources to speak of, bordered by a hostile, totalitarian regime.

Agora’s Entrepreneurs

As the entrepreneurs are introducing themselves one by one, I steal a glance at the Ambassador, who is standing by the wall, listening intently – what does he make of this scene of entrepreneurs from 13 Latin American countries talking about their vision and

An Agora entrepreneur presents his business to the crowd at Casa Ding
An Agora entrepreneur presents his business to the crowd at Casa Dingledine in Managua, Nicaragua.

commitment? The entrepreneurs continue talking. They are on a roll; the energy in the room is building. The businesses are all unique, representing 10 distinct impact areas, but the sum is greater than its parts. The introductions form a collective voice, the voice of a new generation that has taken it upon themselves to create the change they want to see in the world. All of a sudden, anything seems possible. After the last entrepreneur sits down, we invite Maria Pacheco, a Guatemalan from Agora’s Class of ’11, to say a few words.  Listening to her, I hear, this time in Spanish, some of the words she spoke in San Francisco at the main stage at SoCap 2011. Maria finishes speaking and Ricardo tells everyone we will soon be showing a short video of last year’s Impact Investing in Action conference. He thanks the guests and the Ambassador. And then it happens. Ambassador Kim steps forward and asks if he can say a few words. The room falls silent.  He thanks us, and praises the entrepreneurs. Then he says,  “50 years ago we were one of the poorest countries in the world – poorer than most countries in Africa; Poorer than Nicaragua. What we did to grow was to come together and to focus on entrepreneurship and innovation.  You are doing exactly what we did. You are coming together as a community. This is the right way to create development.”

He spoke for about 10 minutes and talked about his life and his work throughout Latin America. It turns out that 20 years ago he helped start the program that is now funding us. Listening to Ambassador Kim – representing a people who have learned how to develop through iteration, innovation, and partnership among government, civil society, and business  — was a welcome tonic.  Change can happen – it has happened – it is happening – and everything is possible.

The Importance of Community

It all starts with people coming together. Before you can quantify impact, before you can conduct randomized double blind studies, before you can have a chance of creating long lasting change, you need first to get people together in a room and commit to a shared vision of the future.  That commitment, from entrepreneurs and then eventually from government and other actors, is the basic soil from which the seeds of change can grow.

When I was in college, we learned that most of the problems in Latin America boiled down to an underdeveloped civil society. But the definition we learned of civil society usually excluded the markets and business. Business was not seen as a key component of civil society. In many places this is still the rule, but it’s a rule whose time has come and gone. Now it’s time to create a new rule. Ambassador Kim and the amazing entrepreneurs of the Class of 2013 are telling us that entrepreneurship must be an important part of civil society for real growth to happen. When people come together with a shared vision of the future and support each other – whether they are entrepreneurs, investors, mentors, consultants, or ambassadors, change accelerates. It happened in South Korea. And it’s happening right now in Latin America.

Why Small Business Growth Matters, How Agora helps


Ben Powell, CEO and Founder of Agora Partnerships

My interest in entrepreneurship as a tool for development began after I started a miniature golf business in Puebla Mexico. I learned a lot about business by launching that venture, but what surprised me most about the experience was how much I learned about the impact of business—about how it can improve lives.

As I was growing up, I never thought much about business as a place where social impact happened. But that is precisely where it happens most.

After seeing one of my team members, Maribel, get a loan to buy a small apartment for herself and her daughter—to see that sense of in

dependence and confidence on her face—I knew that something powerful was happening.

She didn’t have credit history before she worked for us. She didn’t have a bank account or a steady job. That one job changed everything for her. I guess it did for me too.

That experience led me to start Agora Partnerships with Ricardo Teran, an entrepreneur from Nicaragua, the second poorest country in the Western Hemisphere. We wanted to build an organization to support and celebrate early-stage entrepreneurs that were operating in difficult business environments and focusing on creating value for the common good.

Today, we are building a global community of impact investors, early stage

Entrepreneurs from Agora’s Class of ’12.

entrepreneurs, and partners that are focused on using business to solve our common challenges. The impact of the companies in our growing community never ceases to amaze me.

Entrepreneurs like Ben Sandzer-Bell, who is developing an entire bamboo industry in Nicaragua while building sustainable houses for extremely low-income populations in the RAAN part of that country; Maria Pacheco, who employs hundreds of women in rural Guatemala to make incredible bracelets and fashion accessories that people throughout the world want to buy; Chris and Will Huaghey, who are bringing world-class wood manufacturing to Honduras to create desperately needed jobs in the process.

All of these entrepreneurs, and many more across the world, are blazing a new path—a path that reconciles profits with impact. They are the new heroes of development—they put it all on the line to bring something entirely new into existence by sheer force of will.

And they, like you, can’t do it alone. The good news is that more and more people are understanding the incredible leverage of supporting small business development—a leverage that grows even greater when a company is designed and managed to create social impact for all of its key stakeholders.

I believe in the power of small. Specifically, I believe in giving more power and opportunity to small, helping accelerate small, and celebrating small. Everything important that has ever happened started small—it started with an idea.

Part 3: The Missing Middle of the Missing Middle

Debates on impact investing are not focused enough on system change.

The recent publication of Blueprint (exec summary here and full report here) comes at an important time for the industry and makes a powerful case for the continuing need for philanthropy in the space.

The report did an excellent job of explaining that there are business models out there that can create massive impact at a fraction of the cost of traditional donor programs, but these models need time to scale before they can be profitable, just like Amazon. What the report alluded to, but did not discuss as much, is an even more important system-change question: how can philanthropy create the Stanford – the fertile ground where an Amazon can not only be scaled, but can take root in the first place?

What is Impact?

Blueprint informs a larger discussion of the meaning of impact investing, a meaning that is increasingly broad as different actors have adopted the term. There are now two generally established camps based on which word you prioritize in impact investing.  The first camp (because it came first) sees business as merely the most efficient tool for achieving the only goal that matters – getting the best impact return for the buck. Acumen Fund is one of the most well known of the proponents of this approach, which also tends to define “impact” in terms of products or services sold to the Bottom of the Pyramid (BoP), the poorest of the poor.

One of the most articulate and well-respected organizations in this camp is the Mulago Foundation. In a series of great pieces in SSIR, foundation officers caution philanthropists new to the impact industry to take the time to truly understand what they are trying to accomplish and to be wary of chasing returns in the name of impact. Laura Hattendorf poses a simple question to all would-be impact investors.

Are you a private equity investor in emerging markets? Or are you focused on solving an important social problem at the base of the pyramid?

This question gets to the heart of the simmering battle for the soul of impact investing – is it a radical new way to invest for maximum impact, or is it an asset class (as Wall Street would like to see it) that refuses to cede an inch of profitability?  Are impact investors “putting money—loans or equity—into impact-focused organizations, while expecting less than a market rate of return” (Mulago’s working definition) or are they people who recognize  “the importance of integrating sustainability themes into their investment portfolios” (Morgan Stanley)?

The Middle of the Bell Curve

Both sides of this debate are doing good work and have perfectly reasonable positions based on their corporate mission. It’s good to have debates to air the issues and create better understanding around the term. But here’s the problem: lost in this debate are the actual entrepreneurs who will determine the long-term success of the impact investing movement. The question of whether you are focused on the BOP or focused on profits is too binary; it omits everyone in the middle. Most of the human potential out there is in the middle of the bell curve, but the debate is focused on the tails.

The Bell Curve

The vast majority of investible entrepreneurial ventures that are solving social problems are not ones that, with just a little subsidy, can save one million lives in five years or provide Google-like returns.  Entrepreneurs who can create those kinds of social or financial returns are few and far between. If you are one of them, and have gotten investment from Mulago or Kliener, then good for you. However, if you aren’t going to create tens of thousands of jobs, but just a couple dozen? What if your product merely addresses existing customer demand, like, say a locally produced vanilla wafer, even though you are operating in one of the poorest regions in the western hemisphere and transforming your community?

Mulago or Morgan?

The fact is, there are many, many entrepreneurs out there who fail the Mulago or Morgan Stanley test for impact and risk/return, but who are nonetheless consciously creating net positive impact, even measuring it — and they don’t need any operating subsidies to have an impact.  Many of these entrepreneurs, like dozens we have worked with in Central America, could provide a return of 5% – 15% while generating huge impact in their local community – and maybe eventually the whole region or the world. They may never make it on the conference circuit, but they need to be a part of this conversation. They may not be able to give the perfect reply to a donor’s question on quantitative impact or an investor’s question about risk, other than that they live with these two challenges every day.

It is in these individuals’ attitudes and decision-making ability where transformative impact occurs. Through their success, important things can happen, like building an entrepreneurial middle class, supporting democratic capitalism, empowering citizens and redefining the role of business in society.

Good companies with good managers that judge success based on impact, not just short terms profits, need to be supported just as much as the poster entrepreneurs that win all of the awards. Without direct impact for the BOP crowd, and too small and risky for the market returns crowd, these entrepreneurs struggle to access opportunity.

This is concerning, because they represent the future of business. Whether they collectively decide to incorporate impact into their decisions making  — and can access opportunity as a result — will likely determine the long-term success of impact investing.  That’s why our debates and reports must arrive at actions that drive capital to this core group.

The Missing Middle of the Missing Middle

The impact investing movement is a big tent, and it’s been stretched as far as it can go with different versions of impact investing. This is a good thing, but let’s remember that most of the entrepreneurs who will create impact with their business lie in the middle of the tent. They are the missing middle of the missing middle – not as sexy or impact-focused as the Stanford or MIT entrepreneurs and they are too small and risky to access any of the capital being channeled by Wall Street into the space. But we overlook this group of entrepreneurs at our peril. System change doesn’t happen without them.


The Role of Philanthropy in Impact Investing Part 2: Silicon Valley Without Stanford

Lack of Pipeline is Impact Investing’s Biggest Problem

The conversation surrounding the recent Monitor report (From Blueprint to Scale: The Case for Philanthropy in Impact Investing) focuses on the role of philanthropy in supporting game-changing business models that might not get to scale without some initial subsidy. In these cases, impact-maximizing investors – that is, investors focused on maximizing impact per dollar invested – need to focus on the goal and not get distracted trying to chase higher financial returns. For example, pretty much all of Acumen Fund’s deals involved some blend of philanthropy and investment, and there should be no apology for this.

But this focus on the proper mixing of philanthropy and investment at the individual deal level can obscure even bigger and, I’d argue, more important issues facing the impact investment industry – lack of good deal flow. Lack of good deal flow will become a bigger problem as more capital is mobilized, but it is only a symptom of a larger problem – the general lack of a support system to generate deal flow at scale.

Imagine Silicon Valley without Stanford. That is the state of the early-stage impact investing movement today. If the metaphor is not clear, read Ken Auleta’s recent piece in the New Yorker.

We need to build Stanford

Just five years in, the impact investing industry has developed a great recruitment strategy for investors, but there is no similar recruitment strategy for entrepreneurs. It’s a reason why many in the industry are worried that impact investing won’t get transformative capital to those entrepreneurs solving problems in the poorest communities and at the earliest stages of their growth – the kind of entrepreneur that can disrupt the status quo. These are the kinds of entrepreneurs for whom the term impact investing was invented. Unfortunately, as Acumen has discovered, analyzing over 5000 companies to invest in just 65, entrepreneurs of this caliber don’t grow on trees.
The success of this movement hinges on the entrepreneurial management team of these impact companies and the collective decisions they make everyday. These are the actions that determine whether the company succeeds or fails and if an investment reaches its full potential.

Impact investing is a team sport consisting of both investors and entrepreneurs. We have built a field of dreams for investors, and they have come and are still coming – more and more every day wanting to be more ambitious with their capital. From Kiva lenders to the sons and daughters of billionaires to college endowments and faith based groups, increasing numbers of individuals, groups and institutions want their money to work harder to solve our collective social and environmental challenges. The stage is set, but if the right entrepreneurs don’t know about it and are uninspired, untrained and unprepared, then all the blended capital strategies in the world won’t make a difference. You can’t complete the impact investing puzzle without good entrepreneurs who share the same vision.

So how do we recruit the best entrepreneurs into the sector and prepare them for investment, especially ones from particularly underserved communities poised for transformative change? How do we build Stanford for the industry? The answers are not easy, and they will be a major topic of discussion at the upcoming Impact Investing In Action conference later this month.  With that said, there are many promising solutions that have yet to be explored.

The Need to Accelerate

Agora entrepreneurs work together at a retreat in Granada, NIcaragua. The retreat is part of Agora's Accelerator Program.

So, how does the philanthropic community fit into all this? It can help by directly challenging cultural attitudes that are toxic for entrepreneurship and to build formal and informal systems that can filter and sort talent at the local level, like we do in the U.S. New Accelerator models that seek to partner with investors by doing the difficult, early-stage work at scale are a promising development. They develop entrepreneurs while also lowering transactions costs for investors, making it easier for investors to do smaller deals. Ultimately we need to directly recruit entrepreneurs to be co-creators in the success of the industry, in much the same way B Lab has rallied U.S. entrepreneurs.

It is only partially true that we need to inspire more donors and more “impact-maximizing” impact investors to build the industry. What we really need to do is inspire, develop, equip and accelerate more impact entrepreneurs.

The Case for Philanthropy in Impact investing

The Report

The latest must-read report on impact investing suggests the field needs to invest more philanthropy into building a market for early-stage entrepreneurship. Philanthropic investors should listen.

From Blueprint to Scale: The Role of Philanthropy in Impact Investing, written by Monitor consultants, in collaboration with Acumen Fund and funded by the Gates Foundation, deserves a close read by anyone looking to understand the key challenges and opportunities facing the impact investing field.

The Key Points

The key conclusions of the report are straightforward:

1. Much “impact capital” has been raised, little has been deployed.
There are now over 200 impact investing funds with billions of dollars ready to deploy – but most of that is on the sidelines due to lack of deal flow.

2. Investments that are flowing are increasingly moving toward later-stage businesses rather than to “pioneer” firms, which are often the most innovative and risky.
Case in point: Acumen Fund invested 64 percent of its portfolio between 2001-2004 in early “blueprint” stage companies and none in businesses ready to scale. Between 2009-2011, it was investing twice as much in companies poised to scale rather than in early-stage companies. Why? An axiom of investing: it’s a lot easier to make (and not lose) money the later stage you go. With more impact investors looking for market returns, fewer are willing to take the risks on investing in newer companies.

3. This “pioneer gap” is a serious problem for the industry.
So much of the game-changing innovation happens with new companies, new entrepreneurs, and new models. Socio-economic mobility happens when new entrants are allowed to participate in the market. But if the impact investing industry doesn’t have a pipeline for these pioneer companies, if investors become too impatient for returns and are unwilling or unable to find the right ways to finance companies that need subsidy in order to reach scale, then the part of the industry most focused on impact (the pioneer group) is going to be left behind. This is a major concern right now for many of the original organizations that launched the impact investing movement.

4. There is a huge opportunity/necessity for philanthropy to address this gap and help the industry as it evolves.  After all, the report reminds us, it’s estimated that over $20 billion in grants were invested in the microfinance industry before it finally became sustainable and profitable. More capital is needed to grow the institutions that can make the early-stage impact investing market work.

The authors are absolutely correct in identifying some of the key challenges facing the industry: lack of deal flow, lack of absorptive capacity among enterprises, and detrimental business factors (low margins, little IP) that make it hard for investors to make money. Being an impact investor is not easy, you need a stomach of steel and an extraordinarily clear agreement with your LPs on what success means. The report seems to ask impact investors to spend a little more time thinking about what social change really means to them.

We have come to an important inflection point in our industry with the publication of this study. If it does anything, it reminds us that investment capital alone, no matter how much is raised, cannot create the impact investing market. It’s a team effort between all of the industry’s key players: investors, large and small donors, strategic partners like universities, law firms that deploy pro bono hours to the industry, and social entrepreneurs who are working to align the incentives of all these key stakeholders.

The Future of Impact Investing

The report’s recommendations for investors boils down to this: work with funders to help generate more deal flow and think hard about your impact investing thesis because market dynamics make it very difficult to serve the BOP (if that is your goal) and make market returns. For philanthropic investors they recommend basically two things:

  1. Understand how and when to support individual firms to get to scale including the need to coordinate different kinds of capital.
  2. Learn how to improve the market for early-stage pioneer companies to create and surface better deal flow. We are still in the nascent stages for both approaches.

The report raises good questions. How do we increase the quality of early-stage deal flow? How do we better coordinate the different types of capital that are often needed to turn a new idea into reality? These questions beg yet another, perhaps more fundamental question: how do we organize this emerging, and still niche, industry into functional sub-divisions that work together? How do we oxygenate it with the trust and data needed to create an efficient market? Put another way, what is the path forward for impact investing so it can meet its promise of creating impact through entrepreneurship?

I’ll try to give some answers to those questions in the second part of this post. For now, the authors of Blueprint  (Harvey Koh, Ashish Karamchandani Robert Katz) all deserve our thanks for raising the right questions at the right time.


The most important impact investing conference….that has nothing to do with impact investing

Ben Powell, Founder and Managing Partner of Agora Partnerships

“The purpose of the university…is impact, not output.”

– Michael Crow, President, Arizona State University.

I’ve just returned from the future, and I’m pumped. Ashoka U Exchange 2012 was a fantastic conference. Unlike many conferences out there, this one had a clear point of view: today’s university needs to change – fast – to meet the challenges of our times.

The conference, hosted February 10-11 at Arizona State University – a university that has integrated entrepreneurship throughout its entire curriculum – promises to have tremendous long-term influence on the impact investing movement.

Begun in 2008, Ashoka U is a relatively new initiative of DC-based Ashoka. In the hands of Marina Kim, one of the ablest social entrepreneurs working today, and her team it can now be called a huge success, albeit one that is just getting started. Its purpose is to revolutionize the way higher education works by infusing social innovation, real-world problem solving, radical collaboration, and entrepreneurship (in the fullest sense of the word) into the DNA of college life.

Today, too many universities are stuck with old ways of thinking – professors have PhD’s but little practical experience, learning is silo-ed, and students have few ways of actively using their skills to make a difference in the world. Even innovations like internships and experiential learning can be updated for the times  – why, for example, do internships need to end after the summer – why can’t they be continued during class? If practitioners are just as good if not better than tenured faculty at teaching leadership, teamwork, creativity, and empathy – four critical skills for the 21st Century – then why aren’t there more of them teaching? What I learned is that increasingly they are – and the trend is deepening.

What I found so powerful about the conference – aside from the meticulous curation of the panels and relentless focus on the need for change – were its implications for impact investing, especially Agora’s focus on early stage entrepreneurship.


In the not-so-distant future, students at the best-run schools are going to have the chance to become true partners with real world organizations in a variety of fields – especially impact investing. We already know that MBA students are becoming an increasingly important part of international development – providing key consulting to organizations and small businesses alike, and in the future this work will only deepen and expand to undergraduates as well. Student-run investment funds, research and assessment projects, entrepreneur support initiatives, incubators and accelerators, and the development of long-term partnerships between universities and civil society organizations, including businesses, are only a few of the many ways universities will engage in the impact investing space.

Universities are increasingly teeming hubs of impatient students who are eager to get out of the ivory tower and into the field.

Universities are increasingly teeming hubs of impatient students who are eager to get out of the ivory tower and into the field. The amount of human, social, and financial capital at universities is staggering – how much of it is being channeled to address our most pressing problems? Does anyone seriously believe universities are doing enough, given their tremendous resources?

Visionary students and faculty today are re-imaging the structure and role of the university and creating new ways to collaborate with non-profit leaders seeking targeted, skilled support. In a world obsessed with massive scale, universities and small businesses have the potential to create human scale partnerships that provide more transformative educational experience than any classroom alone ever could, while also improving the human condition. Now, that is something to get excited about.

Three Key Camps at the Heart of the Impact Investing Movement

Ben Powell, Founder and Managing Partner of Agora Partnerships

If you are like many people, you are new to impact investing, have a mild notion of what it is, and believe that it could be important, maybe even revolutionary. But this notion is tempered by massive confusion surrounding the term.

Understanding the different agendas of the three key camps under the impact-investing umbrella can help you navigate this complex conversation.

Impact-First Investors (also called “Social-First”)
The origins of the term impact investing begin with a handful of foundations and non-profit organizations (incidentally, nearly all of which were founded by entrepreneurs). These groups believed that investing in entrepreneurs was a better way to solve social problems around the globe rather than the project-based approach that has dominated development assistance since the 1960s. These foundations wanted to get affordable, “patient” capital to real entrepreneurs who could then turn it into measurable impact. For this group, which includes most of the founding members of ANDE, the primary purpose of impact investing is social – to serve the needs of society, as quickly and tangibly as possible

A good example of an impact-first investor is Kevin Starr at the Mulago Foundation, author of an excellent recent post on the dangers of impact investors chasing returns over impact. His definition of impact investing is:

The practice of putting money—loans or equity—into impact-focused organizations, while expecting less than a market rate of return

Return-First Investors (also called “Finance-First”)
This is a group of mostly mainstream investors interested in creating products for their clients that allow their money to generate a triple bottom line return – meaning a market rate of return and a measurable (or at least ratable) social and environmental return. Much of the attention around impact investing has been focused on these big players like JP Morgan and Prudential. The hope is that traditional finance companies will unlock billions in investment capital that also demands to know its social impact.  Return-first investors are trained in closing deals that make money. For them, the defining feature of an impact investment is that it can favorably compete with the financial returns of a traditional investment. Ignia Fund is a good example of this approach, as is the official definition of impact investing from the GIIN.

Entrepreneurs and Field Builders
The third group doesn’t consist of investors at all, but of non-profits and some foundations that are focused on entrepreneurial eco-system development and supporting the field at the entrepreneur level. This group includes many of the founding ANDE members and smaller start-ups.  As a whole, this group believes that the key drivers of development are entrepreneurs, not investors, and that now is the time to focus our efforts on entrepreneurs. For this group, impact investors are key allies, but they lament that not enough of them are yet willing to pull the trigger, especially with smaller, angel deals, where their impact can be greatest.  The basic allegiance of this group is to the entrepreneurs on the ground. An impact investor might ask, “How can I find good deals that created blended value?” The entrepreneur camp, on the other hand, asks, “How can we help entrepreneurs make better decisions that result in increased growth and increased impact?” B Lab is a great example of this camp.

A working definition of impact investing for this group is Agora’s own:

The practice of investing in impact entrepreneurs.

Working Together
While each group has its own motivations and agendas, they must all rely on one another if we are to put ourselves on the path to a more sustainable capitalism for the 21st Century. Whether these groups can coordinate their resources effectively and work together is one of the most fundamental questions facing the movement today.