I joined Agora because I was inspired by its work to promote the development of social entrepreneurs in Latin America. After selecting entrepreneurs generating positive social impact in Latin America, Agora facilitates these entrepreneurs’ access to financial, social, and human capital to increase their success and impact. I am currently advising four social social enterprises in Peru: two in clean cookstoves, one in solar lamps, and one in organic smallholder agriculture.
Having worked in microenterprise, small business training, and consulting in Africa and Latin America, I believe human and social capital are even more important to individual, company, and country development than financial capital. Here are the most important verbs I have identified for successful entrepreneurs:
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).
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.
In part two of our “4 Influential People in Impact Investing You Need to Know” series, we talk with Richard Ambrose of Pomona Impact, a pioneering angel investment group that targets small- to medium-sized impact businesses across Central America and Ecuador.
1. How important are accelerators to the future of impact investing?
Accelerators are the linchpin to the development of the social business ecosystem, the bridge that links and prepares social entrepreneurs to partner with impact investors. Without accelerators, many social entrepreneurs with very good ideas would flounder and fail and many small impact investors, like Pomona Impact, would simply not have the capacity and reach to execute on their missions. Accelerators are the single greatest catalysts to the growth of the industry.
Impact Investing in Action has done much of the heavy lifting to assemble the infrastructure necessary to propel social entrepreneurs in Central America forward and attract impact investors to the region. It has helped to identify businesses that create real impact and show potential for strong growth, and provided entrepreneurs with skills-building training and coaching on how to ready their businesses for outside investors. This improves the landscape of investable social businesses considerably.
In addition to generating a compelling pipeline and providing a platform for them to present to investors, Impact Investing in Action has enabled Pomona Impact to connect with a number of other investors with a similar mission and interest in Central America. This has sparked efforts for greater collaboration (among investors) and an exchange of best practices that is certain to increase investment to the region.
3. What are the main challenges facing impact investing?
In my view, the two largest challenges are 1) investment pipeline and 2) involvement/investment in earlier-stage companies. With the help of Agora, other accelerators, and the increasing availability of investment capital targeting the region, we feel pipeline will continue to grow and become less of a problem. The larger hurdle is getting investment to seed and early-stage social businesses. Early-stage companies require much more work and oversight from accelerators and technical consultants and yet do not have the funds to pay for it. The risk/return profiles of these firms also make them tough cases for investment, even for impact investors with highly concessionary return targets.
4. What does the future hold for the impact investing movement?
I think we’ll see greater collaboration between impact investing and sources of philanthropic capital. The Monitor report titled “Blueprint to Scale” highlights many ways this can take form. One of the most compelling ideas is using philanthropic capital to invest along side impact investors on a given project while serving as a first loss tranche. This improves risk-adjusted returns (for investors), ultimately encouraging greater flows of investment to higher risk ventures, such as start-ups and early-stage businesses, as well as businesses operating in volatile countries.
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
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.
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 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.”
To see more photos of the Retreat, like us on Facebook page HERE.
Recently, I walked into one of the most beautiful and magnificent rooms I have ever seen – the walls were completely covered in vines and flowers. In front of me were three charming men, each offering me and the other guests in the room a class of wine. Their names were Jay, Bart, and Andrew, the founders of the B Corp movement.
For those who don’t know B Corp, it’s an incredible community of businesses that commit to operating at a higher level of impact, accountability, and transparency than what society has come to expect from business. B Corps represent a new kind of business led by a new kind of entrepreneur – they represent in the established market of the U.S. exactly the same ethos around the role business must play that we advocate in Central America and Mexico. Agora Partnerships is proud to be a founding B Corp.
A few weeks ago, I attended the opening reception of the B Corp Champions Retreat, an annual gathering of B Corps. Seeing Jay, Bart, and Andrew welcoming us got me thinking about how far the organization has come since it was launched in 2006, about a year after Agora.
In a year with so much bad news, pessimism, and uncertainly, the B Corp gathering was marked by determination, resilience, and even optimism. It’s an optimism born out of the conviction that business must do more to solve our common problems –that it can do more, and that, at least when B Corps are concerned, it is doing more. As business as usual and government as usual fail to address our common challenges, there’s a growing recognition that the B Corp-way is the future of business. What’s so powerful about the B Corp vision (to use business to solve social and environmental problems) is that this movement is something we can be for, as opposed to all of the things we are against.
As I entered the room in opulent Longwood Gardens outside of Philadelphia, the simple collective gesture of Bart, Andrew, and Jay personally welcoming everyone and offering them food and drink seemed to express, in a snapshot, everything that has made B Lab so successful (a level of civilization that contrasted distinctly to the legendary first B Corp retreat held amid the rugged sands dunes near California’s Salton Sea.). What has made the B Corp community so successful is the servant leadership of the founders.
Servant leadership, for those unfamiliar with the term, is a leadership style that prioritizes the needs of the team or the customer over that of the individual leaders. These guys bring a humility and service ethic that always puts the B Community first. Their leadership – and the work of the great team they have assembled – has led B Lab to accomplish more than most non-profits, with less money, and within shorter increments of time.
It’s time to call out these humble guys for what they are – some of the most effective, high-impact social entrepreneurs operating today.
The following overview will give you a sense of the momentum that B Lab is helping to create:
To date, 892 legislators voted in favor of Benefit Corp Legislation, 62 voted against. There are presently 470 B Corps, up from 339 at the close of 2010. B Labs is on pace to certify 500 B Corps by January 1, 2012, and in the next 12 months, will be targeting major Legislative wins in New York, Pennsylvania, North Carolina, Michigan, Washington State, and Oregon. The GIIRS impact rating system it developed is being used by dozens of funds and could become a global standard for impact investing.
All of this happened because a lot of people have come together to make it happen. But there were a few ambitious servant leaders – Bart, Andrew, and Jay – who have gone above and beyond the call of duty to spearhead this community. It’s hard to thank them because when you try, they instinctively thank you.
The absolute commitment to the B Community and the elite entrepreneurial and management skills this trio brings have turned a timely idea into a vibrant community powered by an inspired and growing professional staff. Nothing was assured when B Lab was founded, but it’s flourishing – it’s potential only just becoming truly visible to those who care to look. However, none of this happened by accident.
During this time of Thanksgiving, I think Bart, Jay, and Andrew deserve a collective “Thank You.” They have rallied other like-minded entrepreneurs to build something that is exactly what the world needs today. More than just an important idea, B Lab is an important idea with great leadership and a great team. I, for one, am very thankful.
The Development Marketplace (DM) is a grant program led by the World Bank, and supported by different organizations such as IDB, Young Americas Business Trust (YABT), OAS, amongst others.
The DM identifies and finances innovative projects in their early stages with the potential to create a positive impact in the development of their communities. This year’s focus is on opportunities for the development of youth under the theme: Entrepreneurship, Innovation and Sustainability.
The LAC DM brought around 500 ideas in the region, 44 finalists went into the final round of selection which included an exhibition booth, workshops and an wonderful award ceremony. The majority of finalists were NGOs, government entities, academics and private sector. The first friends I made at the conference were all the winners! I guess I brought them good luck!
Amongst the highlights, I was glad to meet again Kevin Marinacci and Rafael Merchan, from Asociacion Familia Padre Fabretto, not only did I get to spend some time with them exchanging experiences, but also, seeing them win the grant they had applied for was such a wonderful thing to share. Even better… we’re meeting again this week to figure out how Agora can collaborate with the project they submitted “Sustainable livelihoods in coffee-growing regions; improvement of the productivity and competitiveness for young coffee growers in Nicaragua’s rural zones”. I am really excited to become an active part of this challenge!
I was also excited to see the number of innovative start-up organization working in South America. I was so pleased to learn what a fantastic job these programs are doing. To name just a few: Agroinnova in Colombia , Cidades Sem Fome in Brazil and Instituto del Emprendedor in Mexico all in the lines of supporting socially responsible business and encouraging entrepreneurship.
Hopefully we’ll be able to work with them as we expand our programs.