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.
I set off with Luisa Lombera and Gates Gooding, the founders of a company named Pixán, (which means happiness, soul or essence in Maya), joining them in their quest to find the raw material that had thus far eluded them. Fresh from Agora Partnerships’ Entrepreneur Retreat held in Granada, Nicaragua, we were infused with an invigorated sense of purpose.
Gates and Luisa applied to the Agora Accelerator with the aim of turning Pixán into a flourishing business that will double the income of coffee farmers in the Pixán supply chain. Searching for an opportunity to create impact in the coffee sector in Latin America, they were inspired by the Yemeni traditional practice of making a drink called kishr (or qishr), which is a kind of chai made with coffee fruit, ginger, cardamom and cinnamon. Luisa and Gates took to the idea and are now looking to produce a beverage made with an infusion of dried coffee fruit, also known as “cáscara” (skin or peel – in Spanish).
Marcelo Hernandez Mahecha y Alexander Valencia participaron en La Aceleradora Agora 2014. Su negocio, CAIA Ingeniería, provee servicios de consultoría de energía y emisiones para empresas en industrias de alto consumo energético en Colombia. Luego, CAIA brinda servicios para implementar las mejoras recomendadas, a través de innovadores contratos de rendimiento de ahorro energético, que reducen o hasta eliminan las salidas de flujos de sus clientes.
Hablamos con Marcelo sobre su experiencia en La Aceleradora Agora y esto fue lo que nos contó.
In Mexico, more than 3 million neonates die in their first month of life, almost 300,000 women from complications at birth, and more than 750,000 children die of diarrheal illness each year. And this is just the beginning. Haywood Hall, founder of PACE MD, discovered that a significant amount of these deaths can be averted with proper training. Mexico suffers from a “Medical Knowledge Gap” in which health care providers lack fundamental training and/or continuing medical education opportunities to provide consistent high quality care.
Vega is solving a major problem in the coffee industry: 80% of coffee farmers worldwide (20 million farmers) are trapped in a cycle of subsistence farming, earning around $1 per pound of coffee which is ultimately sold for upwards of $20 per pound. Typical coffee supply chains include around 20 middlemen and can take up to 6 months for the coffee bean to reach the consumer.
Vega empowers coffee farmers in Nicaragua to process their own premium beans, and connects them directly with coffee lovers on their online marketplace.
John Kohler, Co-Founder of Toniic and leader in the field of impact investing, stated it bluntly: “I’d rather fund a medium business plan with excellent people, rather than a great plan with medium people.” When it comes to entrepreneurship, particularly at the early stage, the founding team of entrepreneurs plays an absolutely indispensable role. They are the ones making the decisions, taking the risks, and creating businesses that have the potential to shift the way that business functions in society. They bring a unique energy that is truly indispensable, an energy that could be felt powerfully throughout the week of January 27 in Granada, Nicaragua during the Agora 2014 Entrepreneur Retreat.
The Entrepreneur Retreat serves as the launch event for the Agora Accelerator, an intensive, 3-stage program designed to give entrepreneurs access to the knowledge, networks, and capital they need to scale their business models and their impact. The 2014 Retreat was designed with the intent of strengthening three key components of the early stage ecosystem: the community, the business, the individual. The agenda challenged the entrepreneurs to dive deep into both their business models and their own decision-making as leaders. However, as the week came to a close, the development of the community became a top priority for many present
“Back home we are already feeling SAUDADES, a word in Portuguese that describes the feeling when you miss people who, for some period of time, were a part of your life, and for whom you will forever have wonderful memories,” Raquel Cruz, Co-Founder of Brasil Aromaticos, recalled. “I want to convey my gratitude for the opportunity to be with people so special. People who are ahead of the times with their businesses; who are creating both profit and impact…and above all, people who know that it is always possible to do more. I feel honored to have been in a group of people who believe, share their dreams, and are ready for action AGORA (Agora in Portuguese means NOW)”.
At Agora we believe that building this community is critical to accelerating the shift in business from business that focuses solely on profit creation to models that create value for all shareholders. Each of the entrepreneurs in our Accelerator is taking an enormous risk. They are challenging traditional models and building new approaches in some of the most difficult environments in the world. They are creating platforms for marginalized farmers to access and share invaluable data; they are employing prisoners to produce hammocks in high demand; they are bridging the gap between tourism, indigenous communities, and the exquisite natural beauty of Mexico; they are revolutionizing mobility in Brazil with the first ever electric car sharing program; and they are re-foresting Mexico by selling and re-planting carefully-extracted, live Christmas trees. These entrepreneurs are are doing it because they truly believe it is possible to build a dynamic, competitive, and inclusive economy that creates value for all and walks the often misunderstood line between purpose and profit. The Agora Retreat is just one step on the journey of these modern-day pioneers towards accelerating the full impact of that collective vision.
16 Entrepreneurs, One Retreat
For three days in March, the picturesque colonial town of Granada, Nicaragua, a centuries-old city on the shores of Lake Nicaragua, was home to 16 early-stage entrepreneurs who are working to create jobs and improve livelihoods in some of the poorest, most underdeveloped regions of the Western Hemisphere.
The entrepreneurs are participating in Agora’s Accelerator and collectively lead nine companies from throughout Central America and Mexico. They represent a range of industries from vermicomposting and recycling initiatives to telecommunication and financial services. Collectively, Agora’s Class of ’12 is on target to create more than 300 new jobs in the next three years and be a catalyst for wide-spread positive social, economic, and environmental impact in their local communities.
“A Spa for Entrepreneurship”
The retreat offered the opportunity for these impact entrepreneurs to begin preparing for the upcoming Investor Conference May 22-25: Impact Investing in Action. Over the course of the retreat, the entrepreneurs practiced presenting their pitches to their peers and gained instant feedback from fellow entrepreneurs, investors, and Agora staff.
The retreat aimed to help entrepreneurs better understand and clarify their business models, discuss what investors look for, and deepen their leadership skills in order to be able to better create impact through their business. As with the inaugural 2011 retreat, the event served as a unique platform for these often-isolated men and women to come together and learn from one another.
Aside from panels and workshops, the retreat was characterized by scenes of entrepreneurs meeting, talking, and collaborating with one another. “It’s difficult being a social entrepreneur at times,” Maria Pacheco, a member of Agora’s 2011 Class, reflected. “Getting the chance to meet with other entrepreneurs who are working on other great projects is so inspiring. It’s so great to know you’re not alone.”
The retreat laid the foundation for the development of a community among the entrepreneurs. Now they have stories, experiences, and visions that apply to each other on a variety of levels. They became more than just associates; they became connected by their common vision to use their businesses to make the world a better place. The retreat created a sense of trust and collaboration among the participants that prompted one entrepreneur to describe the event as a “spa for entrepreneurship.”
“It’s a great opportunity to get away from the day-to-day,” Francisco Cordero, the owner of 2012 Accelerator Class company Laudex, stated, “and recharge your energy with new insights, deep introspection, and a fresh outlook for the future of our companies.”
“The synergy created when people are working in the same direction creates a power rarely seen in other walks of life,” Ricardo Destarac of 2012 Class member DoGood, stated. “ It also entails an immense responsibility to remain committed.”
“Starting a relationship with an investor is like falling in love.”
The retreat was highlighted by panel discussions and presentations from various corners of the impact investing paradigm. Oftentimes, the most pressing questions on the minds of the entrepreneurs involved how to adequately attract investment. What are investors looking for? How can I best prepare myself to attract investment?
“I’m interested in companies that have decided to take a more difficult path in business terms but are doing a lot in social terms,” angel investor Marc Jacobson stated. “Does the business really have a significant social impact? We’re looking for passionate entrepreneurs. We are open to all sectors.”
“Our purpose in the last 10 years has been to push for a lot of growth in impact investing and to also make a lot of noise,” Morgan Simon, Executive Director of Toniic reflected. “We’ve been very happy with our experience with Agora. Through Agora, we’ve worked with some of the best impact entrepreneurs in Central America.”
“Agora’s role can be enormous,” Rahul Desai of the Inter-American Development Bank (IADB) added. “Starting a conversation with an investor is like falling in love. If you give a good impression, the whole relationship can go well. Sometimes, entrepreneurs are so involved in the business and stuck in the details. Agora can highlight the most important features for the investors and help entrepreneurs make a positive first impression.”
Impact Investing in Action
At dawn on March 10, the entrepreneurs began filing out of the stunning Hotel Granada and boarding vans and taxis destined for Managua International Airport. The late-night pool parties, evening galas, motivational talks, and coaching sessions were over. Now, each entrepreneur was tasked with taking what they had learned to further prepare themselves for May’s Impact Investing in Action.
Though the retreat was over, the chairs stacked, and caterers sent home, the entrepreneurs are left with an intangible, though very real community of support and inspiration that will help guide them along their respective journeys.
“The retreat was a unique gathering of inspiring and world changing entrepreneurs,” Maria Rodriquez, the owner of 2012 Class member ByoEarth, concluded. “These businesses are making the world a better place and bringing prosperity to Central America [and Mexico]. I am truly humbled to be a part of this.”
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What is the hardest kind of capital for entrepreneurs to find in the developing world?
A strong argument can be made that it’s social capital – basically a feeling of trust, community, and mutually agreed upon norms and expectations that together benefit the community. The complete lack of social capital has prevented many incredible entrepreneurs from realizing their potential, and for good reason. Without social capital, investors have a harder time building trust. Transactions that could be simple take forever, and information that should be cheap and easy to find simply isn’t.
A lack of social capital begets a lack of investment capital.
Without social capital, the law of reciprocity – one of the most powerful laws of leadership and getting things done – doesn’t work. Ultimately, where there is little social capital, opportunity and potential are squandered, which is why the societies with the most social capital in the world are also the most successful.
Did we build social capital at our first retreat? I think we made an excellent start, and we did it really only by creating a space and a frame for extraordinary people to realize just how extraordinary they are .
We are told that Central Americans, like many others in countries with significant problems like poverty and crime (in this case, violence indirectly caused by oblivious American illegal drug consumers) have a culture that is anti-entrepreneurial. Overly conservative, distrustful, stratified, fearful of change, afraid to fail, tied to the status quo – these are words that describe parts of the business culture in Central America, there’s no denying it. But as Jose Bolaños, (one of the most inspiring and thoughtful life coaches in the region), said as he wrapped up the retreat, “Here, the status quo has been broken .”
If there is a lack of social capital in Central America, it will not be found among the entrepreneurs I met at our retreat. If there is fear of failure, that fear was not evident. When you are part of a community, you know that you are not confronting all of the challenges solo.
“I realize I am not alone and that together we are more powerful than we are individually,” said Guillermo Jacoby of Ostuma Farms, the most sustainably managed family-owned farm in Nicaragua we know about.
Central America is one of the most unequal, socially stratified places on earth. That is not something you can change overnight. Agora has begun the process of creating a community that can overcome class background — one whose glue is values, not where you went to high school.
In fact, I think we have already assembled possibly the most diverse group of entrepreneurs ever to form one community. One received angel investment from top Wall Street investors; another got her first loan ever – $100 – from a local microfinance bank. Together, Agora and these entrepreneurs are helping to build a new entrepreneurial culture in Central America .
We just wrapped up our first Agora Entrepreneur retreat and I couldn’t be more pleased exhilarated, really. From our cabins we could see in the near distance the bay of San Juan del Sur, where Vanderbilt’s ships used to ferry people to San Francisco. Except for holidays when the town pulses with energy, San Juan is normally a pretty sleepy fishing village that attracts surfers, backpackers, and locals from Managua. But the last few days were anything but sleepy. In fact, if there was one thing noticeably missing from the retreat, it was sleep.
Our goal of the conference was to bring the best early stage entrepreneurs in Central America (selected as part of our Accelerator program) together, connect them with the best trainers and coaches we could, and hope we could build a real sense of community. Our theory was that bringing people together was critical to helping the entrepreneurs accelerate their ability to attract investment and increase their impact. What we ended up building went far beyond a sense of community.
The list of reasons why the entrepreneurial sector has been so unsuccessful in Central America is long and fairly well known. Aside from a general lack of good political leadership over many decades, the problem can be boiled down to three things: lack of human, financial and social capital.
Getting to know these entrepreneurs personally, I feel better than I ever have that we have the right human capital in our Accelerator program –these are the kind of men and women that smart impact investors will want to associate with and learn from. Critically, they have the absorptive capacity to take advantage of education and opportunity and put it to work for them. They are also surrounded by additional human capital – our great staff, our fellows, retreat participants like nearly the entire senior leadership of KPMG in Nicaragua or World Economic Forum Young Leader Felix Maradiaga whose own personal journey is worthy of a Hollywood movie. The human capital is there.
We are working hard to get the right impact investors to learn about our first nine Agora entrepreneurs and to help ensure that capital flows where it can make the most impact. We were incredibly fortunate benefit from the participation of world-class impact investors like Morgan Simon from Toniic, Jorge del Castillo from PymeCapital, Ernesto Gallo from MesoAmerica, Jaime Guzman-Fournier from AVINA, Eduardo Argüello from Amzak Capital Management and Sonny Singh, a Silicon Valley investor who took part of his vacation in San Juan to share his insights on the pitch process. We often see people through their labels – investors, entrepreneurs, staff – but ultimately we are all just people trying to do a job and make a difference. At the retreat, it was the people, not their role, that stood out strongest.
These representatives of the impact investment community showed that investing is not about “us versus them” but is a relationship that is built on mutual interest. And, like all good relationships, it’s built on trust, respect and a complete understanding of what each one wants and what makes each one happy.
“The investor process is like a marriage,” said Jorge Castillo, “but with a built-in dissolution clause.” Very few of the entrepreneurs at the retreat have received investment from investors who did not know them personally. Being able to tell their stories clearly, explain what they can do with investment and how they can create social, environmental, and financial returns for investors will be key to their future success. We have a few more months to work on this for our upcoming Investor gathering in July in Granada, and I am optimistic we will be able to help address the lack of investment capital.
The final kind of capital is perhaps the hardest to quantify and to create, but it may have the longest and most important impact. A month ago, at the Draper Richards Kaplan retreat in San Francisco, a phrase that resonated with all of us was this: “Culture eats strategy for lunch.”
How do you build culture? How do you create social capital? And why is it so fundamentally important to creating the change we need? The retreat had a lot of lessons about that. And for me, they were the most important lessons. Stay tuned for more.