Social Impact Investing with Marc Blumenthal
Updated: Sep 2, 2020
It is our belief that some of the most cutting-edge solutions to the major problems the poor face are being developed in university-affiliated labs and social entrepreneurship business and engineering programs. The overriding challenge that most of these ventures will face is funding to commercially scale.
Most international development agencies like the World Bank, the International Finance Corporation, and the vast majority of social impact investors (ESG), are risk adverse, and utilize “top down” investment models. In essence, they enhance both the incomes and equity of the owners of larger infrastructure projects and small and medium enterprises. The investor expectations are that there will be a “trickle down” benefit to the poor.
The Social Ventures Foundations is focused on a “bottom up” strategy that “creates markets at the bottom of the pyramid by promoting social ventures which create jobs and equity for the poor by delivering sustainable social impact solutions to meet the needs of the poor at a price the poor can afford.” The Foundation believes that a combination of both increased wages and equity are important to raise living standards and help move people out of poverty.
Microcredit has allowed poor entrepreneurs to start their own businesses. However, it's left up to them to come up with their own ideas for a business which leads to a proliferation of similar types of enterprises such as small retail stands. Rather than break new technology ground on improving lives, most microcredit supported ventures all too often maintain the status quo and all too many are charge exceedingly high interest rates to do so.
The Foundation seeks to promote the “flip side” of microcredit by identifying and promoting environmentally and financially sustainable social ventures that can be franchised or micro-franchised, enabling fast scaling to impact millions of the world’s poor. Micro-franchising recognizes the reality of the poor at the bottom of the pyramid where 90% of the jobs are those of self-employment, not employment.
Social impact investing is limited in scope and funds. It is only capable of underwriting a very small percentage of those social ventures which have the potential to lift the livelihoods of the poor. The Social Ventures Foundation is in the process of forming an innovative investment vehicle focused on leveraging funds from the public as an alternative to charitable giving. It is called the EndPoverty Fund.
In the future, the fund will be a source of investment for the Winners of EPIC. Stay tuned, Planet.