Frontier Market Scouts

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Frontier Market Scouts

Moving the Needle

February 17th, 2015 · No Comments · FMS in Action, Frontier Market Scouts, Socent, Uncategorized

moving the needle

This post was submitted by MPA student and FMS alumna Nicole Manapol

“How do we move the needle?” is a question participants will hear often during their two weeks in the Frontier Market Scouts training program. In a program designed to enable social enterprise and promote impact investing the question is not intended to be rhetorical – it’s a straight up challenge.

According to a 2014 report released by J.P. Morgan and the Global Impact Investing Network there is currently about $46 billion of social impact money under management.[1] As FMS instructor Rob Lalka from Village Capital pointed out “that’s a drop in the bucket when you compare it to the total size of global financial markets” estimated to be over $87 trillion.[2]

FMS instructor Amit Sharma, Co-Founder of Empowerment Capital and Wall Street veteran concurs:

“It is mind boggling that we can create the most esoteric, complex, opaque, multi-dimensional financial products that conceivably diversify risk and drive profits. Yet we do not apply that same talent and energy innovating financial enabling instruments that grow social enterprise.”

Sharma who teaches a module on impact metrics and social venture profiling argues that by definition social enterprise is wealth accretive and risk reductive—it can bring in 2.9 billion people living under $2 / day into the market place as consumers, producers, and market participants. “Social enterprise creates value and yet the amount of innovation in the financial and capital markets currently does not comport to this immense commercial potential.”

So what is preventing more mainstream capital from flowing into the impact space?

As another FMS Instructor and Invested Development Senior Investment Manager, Alex Bashian, explained, “the problem is matching a fragmented supply of deals with the right financially and mission-aligned counterparts on the investment side” The majority of impact investors are not willing to invest in seed-stage enterprises. Without the requisite data and metrics we all depend on in well-established financial markets (like credit history) most investors find it too risky. The majority will choose to invest when an enterprise is ready to scale. Yet without seed-stage capital few social ventures ever reach that point. Essentially it’s a Catch 22 – on the one hand you have investors that are risk averse on the other hand you have seed-stage entrepreneurs unable to assume the burden of traditional debt and equity financing. As Alex points out, “it’s difficult to move money into seed stage enterprises in many emerging markets given the existing system. As an impact fund we need to try and match the different needs for capital with appropriate financing products and other creative mechanisms to help enable growth in this space.”

When it comes to managing risk – metrics matter

One of the main barriers to mobilizing more investment capital into social enterprise is the lack of data and metrics that help investors understand and hedge their risk. Standard metrics for quantifying social impact and assessing risk in this space are difficult given the diversity of contexts in which these enterprises exist. As Sharma explains to students – “although we talk about social impact we continue to benchmark the majority of impact performance through solely monetized value.”

With the proliferation of ESG (Environmental, Social, and Governmental) measurements like the Global Reporting Initiative, GIIRS, B Corporations and others it’s hard not to be overwhelmed. Sharma sees the proliferation of these impact metrics as a positive development but a symptom of the same disease that has caused failure in the mainstream – overly complex metrics that are difficult to translate across sectors and cultures, useful to some social enterprises and exclusionary to others, particularly in emerging market contexts. As Sharma emphasizes to students –

“we have to remember that impact, return and wealth creation are contextual, any model of metrics we create has to be dynamic, simple, user friendly, and in a language that the financial purist, socially neutral investor or institutional capital markets can use…as well as the philanthropist.”

No one understands this challenge better than Sharma whose career has straddled the non-profit, government and private sectors. Amit began his career in grass roots international development and social enterprise with the Peace Corps. After receiving an MBA and MA in International Policy Studies from the Monterey Institute of International Studies (MIIS), Amit worked at the U.S. Department of the Treasury where he served as a Senior Advisor in the Office of Terrorism and Financial Intelligence, which began as a special task force unit established post 9/11 to develop and execute anti-money laundering and counter-terrorist financing strategies. He later served as a member of the Department’s senior team, and Chief of Staff to the Deputy Secretary. He then moved on to Wall Street where he joined Mitsubishi UFJ Securities (USA) as their Chief of Staff and Project Management Head to their Global Markets Unit. It was during this period that Amit saw first-hand the power of capital markets as an engine for innovation and growth. Leaving Wall Street in 2013 he transitioned to a boutique consulting firm, Command Global Services (CGS), where he managed the investigation, intervention and recovery of stolen foreign assets from rogue states, as well as the strengthening of financial integrity and regulatory controls.

AmitSharma_Headshot

Amit Sharma, Co-Founder of Empowerment Capital and FMS Instructor shares the importance of impact metrics

Developing a common language

Recognizing the need to develop a common language between the impact and mainstream investment spaces, FMS Co-Founder Yuwei Shi approached Amit in 2014 to create a new FMS training module devoted to impact metrics.

In June 2014 the two collaborators launched Profiling Ventures for Impact Investing a two-day workshop led by Sharma that takes students through the current system of ESG ratings and analytics, including the ones commonly used in impact investing such as GIIRS. FMS participants then compare those metrics with established commercial financial rating systems and analytics to understand the complexity of “impact risks” more comprehensively, and in a manner that enables greater engagement with mainstream financial participants and stores of capital. Importantly, the workshop emphasizes the recognition and growth of social enterprise across all sectors, including among mainstream corporate entities.

Using what he calls “the five bucket approach” Sharma boils down five core aspects of venture profiling that any social entrepreneur, fiduciary, government regulator, investor or philanthropist is really concerned with – wealth, risk, market, assets and leverage – “how does one leverage their assets to mitigate or diversify their risks and service their respective markets to achieve their impact / wealth objectives?”

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FMS Fellows at Winter 2015 Training in Monterey, CA

As Sharma emphasizes, “the purpose of this approach is to help students avoid getting pigeon holed in their thinking, which only contributes to the bifurcation between the social impact and corporate activities.” Instead of spending energy on trying to distinguish impact investing from mainstream investing the module encourages students to take a step back and see how they fundamentally relate. As Sharma points out, “the basis of all investing whether you’re a philanthropist or financial purist is to advance a particular objective to maximize returns in a manner commensurate with their deployed risk (this puts an emphasis on how “returns” are defined, and how risk is understood). We would be selling ourselves short by not engaging global commercial and financial entities and figuring out how to mobilize the power and influence of those markets to advance social enterprise as viable commercial endeavors.”

Impact Venture Profiling

Perhaps the most exciting opportunity the new module brings to FMS is the chance for fellows to contribute to the development of a more comprehensive solution to impact analytics that they can then go out and test in the field. Impact Venture Profiles is a new research-based initiative for select fellows heading out on 6-12 month field assignments in emerging markets. During their time in the field working with seed stage entrepreneurs, fellows will develop impact venture profiles to better understand the nature of social enterprise creation and operations, the universe of risk influencing social ventures, and to better refine the metrics and benchmarks that are required to grow impact activities.

Coreyell_Kenya

FMS Fellow Coryell Stout with colleagues at One Degree Solar – Nairobi, Kenya

As Sharma explains, “we [at FMS and the Center for Social Impact Learning] have a tremendous opportunity with this research initiative to help overcome current bottlenecks in this space by providing crucial data and metrics to the impact venture community that are needed to redefine, validate and grow the ecosystem around social enterprise. The potential of these profiles is enormous—they can be used to create case studies for research and academic purposes, conduct deep dive due diligence for investors seeking a pipeline of deals, and as real-time management tools for scaling social enterprise. But most importantly it brings multiple stakeholders to the table, including those from the corporate arenas, to recognize social enterprise as profitable business –
to really move the needle.”

 

[1] Saltuk, Y., Idrissi, A., Bouri, A., Mudaliar, A., & Schiff, H. (2014). Spotlight on the market: The impact investor survey. Global Social Finance, JP Morgan and the Global Impact Investing Network, London, 2.

[2] https://www.cia.gov/library/publications/the-world-factbook/geos/xx.html

 

 

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Reese Hodges

January 30th, 2015 · No Comments · Winter 2015

MTY_W2015 Reese Hodges

Reese’s leadership experience as an outdoor professional and educator, both abroad and in the US, have given him a diverse skillet to bring to village capital. The skills gained as a whitewater rafting guide and field studies assistant instructor are complemented by his skillset gained in pursuing an MBA/MA in International Environmental Policy. Reese is proficient in Spanish language speaking and writing, and has worked with several organizations in Latin America. As a professional guide, Reese has excellent communication, management, and problem-solving skills, enabling him to play a vital role in business developments and strategy.

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Laura Benoit

January 30th, 2015 · No Comments · Winter 2015

MTY_W2015 Laura Benoit

Laura is interested in strengthening rural communities in Latin America through the creation of economic opportunities and social enterprises. Laura has experience in business strategy and program design for an artisan development organization transitioning from being a nonprofit to a social enterprise in Guatemala. Additionally, she has worked with a nonprofit in Peru constructing research tools, conducting field research, and analyzing data to make recommendations to the local government.

Laura has also consulted on projects related to: social media, fund diversification, marketing, network analysis, as well as monitoring and evaluation.  Her experience working with international organizations to create sustainable and culturally relevant programs has prepared her to be innovative and flexible with strong problem solving and communication skills. Laura truly believes that development work is most sustainable and valuable to the local community when it is paired with the creation and strengthening of the local community and economy.

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Caryn McKinney

January 30th, 2015 · No Comments · Winter 2015

MTY_W2015 Caryn McKinney

Caryn’s experience in the energy sector has given her a valuable interest and background. She has strong competencies in financial analysis and modeling, supply chain and operations management, which give her an opportunity to make valuable contributions to any company’s financial advisory and energy/operations management efforts.  Her research experience has also given her strong project management, problem-solving, and analytical skills, which enable her to play a vital role in business /strategy.  Her recent education at the Monterey Institute in International Business Administration and International Environmental Policy includes many activities in line with her interests in energy consulting and management. These skills and interests can be valuable to any growing or changing business

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Jeanette Pelizzon 

January 30th, 2015 · No Comments · Winter 2015

MTY_W2015 Jeanette Pelizzon

Jeanette’s experience in a variety of different fields ranging from public relations to development program management has given her a diverse skill set to bring to any organization. She has proven strengths in using social media mediums to achieve marketing and fundraising goals, as well as event planning and team leadership experience. These proficiencies allow her to be an asset to any organization’s communication and outreach efforts. Recent experience working with rural artisans in Rwanda allowed Jeanette to gain valuable strategic planning expertise, as well as giving her the opportunity to build off previous production management competencies in an international environment. Jeanette sees herself excelling in any role that allows her to build upon her existing strengths in communications and management, while gaining new skills in the realm of social enterprise.

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Tiffany Vlaanderen

January 30th, 2015 · No Comments · Winter 2015

MTY_W2015 Tiffany VlandereenTiffany is a Dutch and Indonesian Angeleno who graduated from the University of Southern California. She is a thoughtful problem solver with a diverse skillset to serve strategy or advising roles for a social enterprise.

Her experience in international development spans three continents with a focus on poverty reduction programs, grassroots community engagement and non-profit and for-profit social enterprise management. Recently she worked on business and program strategy development for Kiva Zip Kenya in Nairobi, a Kiva.org platform that links Kenyan small businesses directly to crowd-funded capital via mobile payment platform, M-Pesa and the Internet. Her ability to synthesize complex issues, have foresight and communicate solutions enabled her to develop partnerships with individuals and organizations that serve Kenyan entrepreneurs in various high-impact sectors.

Most recently she worked as the Growth Manager for the Silk Road Bazaar, a fair trade wholesale representative of marginalized artist groups located in Kyrgyzstan. She has an interest in the intersection of creativity and creating economic opportunities for underserved communities, more specifically in understanding how to link small-scale artisans to capital and markets for their products.

She is eager to grow a career in strategy and advising for impact investing and social enterprise management.

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Zsoka Ardai

January 30th, 2015 · No Comments · Winter 2015

MTY_W2015 Zsoka ArdaiZsoka is a recent graduate with a field of Environmental Engineering and Environmental Studies focusing on Sustainability, Urban Development and Renewables. She has been active in international programs which enabled to sharpen her communication, problem-solving and professional skills. She has experience in Environmental Management at a multi-company, Sales and Business Strategy at a small enterprise and her recent research focuses on Urban Metabolism Mapping. She is dedicated to life-long learning and her professional goal is to achieve balance between humanity and nature in such a way that it will contribute to a paradigm shift. She believes in the power of love, the importance of collaboration and the joy of life.

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Thomas M. Bunn

January 30th, 2015 · No Comments · Winter 2015

MTY_W2015 Thomas BunnTom has had experience in investment banking in Colorado and Boston and, recently, in teaching History on a remote island in The Bahamas. In trying to combine the business-oriented side of banking with the community-oriented side of teaching in a developing country, Tom was drawn to Frontier Market Scouts. As a clear communicator with a track record in business development and financial analysis, Tom is pursuing a career in impact investing with a focus on Latin America and/or the alternative energy sector.

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Deborah C. Lindsay

January 29th, 2015 · No Comments · Winter 2015

MTY_W2015 Deborah LindsayDeborah’s had a wide range of professional opportunities; from the co-founder of a successful non-profit to an HR manager for a Silicon Valley start-up. Currently, she works with an independent school as their Director of Operations and Enrollment and on the side, has her own consulting business that mentors small businesses through the “Crowdfunding” process. The thread that has run through all the work she’s done has been local economic reinvigoration, community building and environmental and social justice. Deborah has very strong strategic planning, business development and personnel skills. She is a progressive leader with a quick bottom-line mind that enables her to see the big picture clearly and she excels in  finding ways to move entrenched problems forward.  Her highest level of impact is identifying and catalyzing stakeholders, systems thinking and tapping into potential resources.

 

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Helen Elizabeth Ashdown

January 29th, 2015 · No Comments · Winter 2015

MTY_W2015 Helen AshdownHelen has developed a unique blend of highly valuable and transferable skills through both her professional career as a transfer pricing manager for Deloitte Tax LLP and her work with her own sustainable non profit organization in Ecuador. She has strong competencies in financial modeling; intangible property valuation and impact measurement that would be valuable in helping an organization better value, understand and manage their social impacts and financial performance. Her experience living and working with rural communities in Ecuador and her recent consulting experience developing a business plan for an El Salvadorian social enterprise has also given her profound intercultural communication skills, a strong proficiency in the Spanish language and a passion for development in Latin America. This along with her project management skills and her impact investing experience will allow her to play a vital role in business impact measurement and evaluation strategy.

 

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Maria Jimenez

January 29th, 2015 · No Comments · Winter 2015

MTY_W2015 Maria Jimenez

Maria’s experiences in both banking and finance management have given her a valuable background and skillset to bring to an impact investment organization. She has strong competencies in financial modeling, analyzing financial statements and financial ratios, which allow her to make valuable contributions to the due-diligence activities of the organization. She is a native Spanish speaker having lived, studied and worked in Peru, Mexico, Ecuador, Nicaragua and Honduras. Her professional experiences have given her strong management, problem-solving, coaching and communication skills; these enable her to play a vital role in working in a multicultural, multi-country and fast-paced environment.

She also brings a successful social enterprise experience from having worked as a volunteer coach with a Peruvian entrepreneur on the final development of his business plan. His business plan won a National Award in Peru and a Global award in Holland in 2010.

Her most recent professional experience in an international non-profit organization includes many activities in line with social investment organization operations.

All of this gives her industry knowledge in impact investing and social enterprise relevant to an impact investment organization’s core business.

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Lindsey Krummell

January 29th, 2015 · No Comments · Winter 2015

MTY_W2015 Lindsey Krummel

Lindsey’s interest in social entrepreneurship and business development stems from her experience founding a social enterprise in Thailand focusing on economic diversification. She also has a strong background in international development policy after working with the United Nations to craft national policies in preparation for post-2015 development agenda negotiations. She has further experience in public relations, marketing, and public health. Lindsey has worked on three continents and speaks two languages.

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Leslie Graham

January 29th, 2015 · No Comments · Winter 2015

MTY_W2015 Leslie Graham

Leslie Graham is an experienced consultant and fundraiser, based in Los Angeles.  Since earning her MBA, she has consulted with numerous community-based organizations, social service agencies and local governments on capacity building issues.  She currently works as the Director of Development at CalArts, where she links the institute’s financial goals to funding opportunities, both private and public. Having extensive experience as a management consultant for small nonprofit organizations, Leslie particularly enjoys working in the field to establish relationships based on shared interests and mutual goals.

With her planned transition into the social enterprise field, she would like to work with a growing organization that would benefit from her diverse skills – project management, business planning, and strategy – and involve her in the decision-making process.

 

With FMS, Leslie is looking for an assignment focused on social enterprise development (regionally or locally) or with an environment-focused funder. She speaks French and is eager to improve her Spanish.

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Alex Kopelyan

January 29th, 2015 · No Comments · Winter 2015

MTY_W2015 Alex Kopelyan

Alex is a 2014 University of Iowa pharmacy school graduate with a passion for preventive medicine through lifestyle improvement and patient education. He currently works with Self Spark, a lifehacking startup that focuses on creating positive lifestyle behavior change through behavioral science and technology. He has a broad range of healthcare internship experience, from macro level projects (at US-FDA, GlaxoSmithKline, Management Sciences for Health, and PATH) to one on one work with patients in clinical settings. He hopes to work with a healthcare focused fund to learn how they evaluate and support individual enterprises, as well as analyze and project market trends.

 

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Maura Dilley

January 29th, 2015 · No Comments · Winter 2015

MTY_W2015 Maura Dilley

Maura has unique experience in management consulting and field development for social enterprise. Her strengths are in strategy and design for systemic change, community engagement and education. She is a creative individual driven to share stories of social and environmental triumph through unique program design, speaking, writing. As a consultant, she has developed strong project management, problem-solving and facilitation skills. As a co-owner of a small business (an independent cinema and café) she is versed in the ground-level practicalities of small business administration as well as design research for new services and community engagement. Maura cares deeply for ocean health and is working to end plastic pollution through materials and systems innovation and to help people economically dependent on environmental degradation achieve alternative livelihoods.

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