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Interview with Tim Freundlich, President of ImpactAssets and Impact Investment Innovator

Listen to the Interview with Tim Freundlich

 

 

Meet Tim

On Innov8social we get a number of questions about the intersection of Tim Freundlichinvestment and impact. And on this episode of The Innov8social Podcast we offer a front row perspective from the impact investment sector. Tim Freundlich is the President of ImpactAssets and a longtime professional and innovator in the impact investment space. With the tagline “Invest with meaning” ImpactAssets is a nonprofit financial services firm that increases the flow of capital into investments that deliver financial, social and environmental returns.

Tim is well-versed in the space of building financial instruments and pathways for impact in investing.  He has served in a number of capacities at Calvert Foundation,where he launched the Giving Fund – an impact investment-based donor advised fund. He was also instrumental in building the $225 million Calvert Community Investment Note with more than $750 million invested into 300-plus nonprofits and for profits globally.

Tim also co-founded and serves as Managing Partner for Good Capital which funds one of the premier global conferences for social enterprise, Social Capital Markets (SOCAP) annually in San Francisco.

 

Find Out More

 

More About Tim Freundlich

More ImpactAssets

  • Website: impactassets.org
  • Value proposition: “To catalyze the impact investing ecosystem by providing products and thought leadership that enable philanthropists, other asset owners and their wealth advisors to make investments with positive social, environmental and financial returns.
  • Forbes interview, “ImpactAssets Advocates For More Investment In Social Good”

More About Impact Investing Products by ImpactAssets

  • Giving Fund, donor advised fund that leverages the power of impact investing to put more money to work for social and environmental benefit. Tax-deductible contributions start at $5,000
  • Investment Notes, debt securities that will enable individual investors to invest in high-impact organizations around the world. (Sustainable Agriculture Note and Microfinance Plus Note)

More About Impact Investing Field Building by ImpactAssets

  • ImpactAssets 50, annually updated list of impact investment firms that represent the breadth of active impact fund managers
  • Investor & Financial Advisor Education, orginal and curated resources to support the growth of impact investing, for those new and experienced practitioners.

 

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5 Things Every Founder Should Know About Social Entrepreneurship

As a new mentor at the Sustainability Innovation Lab at GSVlabs,I recently had the opportunity to speak there on a topic I am often asked about, namely—what are the essential things that founders should know about social entrepreneurship.

From the engaging follow-up questions and spirited conversation during the presentation, I thought it might be useful to share the slides and key learnings here too.

 

5 Things Every Founder Should Know About Social Entrepreneurship, GSVLabs, July 2015

1. There are legal structures for social entrepreneurship.

This topic was one of the inspirations of founding Innov8social—i.e. to follow the progress and explore the potential of various legal structures including benefit corporations, social purpose corporations, limited low-profit liability companies (L3C’s), and various combinations thereof. These legal structures are intended to form companies founded on principles of creating impact as well as generating profit. These new structures serve to expand the ‘bottom line’ focus of a company to a double or triple bottom line (i.e. people, planet, profits)  and in doing so, expand the stakeholders to which a company owes a legal duty from shareholders to stakeholders such as the environment and community as well.

2. There are business models for social entrepreneurship.

We often say that a legal structure is a “glove” meant to fit the business goals and model of a venture. With that in mind, founders should know that business models are emerging to serve social impact ventures. Models such as buy one give one, or 1%-1%-1%, or dedicating a percentage of revenue to non-profit/policy entities, or pay-what-you-can models are gaining ground as ways to easily explain and account for impact and profit.

3. There are  funding options for social entrepreneurship.

Traditional funding options such as loans, grants, and venture capital can be applicable to social enterprises; however, sometimes the dual goals of impact and profit can make these hard sells for social ventures. There is also a growing body of funding options that can serve social entrepreneurs well—these include impact investors (who actively seek a return on impact and profit on their investments), Program-Related Investments (“PRI’s”) powered by foundations, and the use of crowdfunding (both donation-based and investment-based) to validate and fund social impact companies.

4. Social entrepreneurship isn’t just a way of doing business — it is also a mindset.

Since countries such as the US do not legally define social enterprise per se, that term along with social entrepreneurship and social innovation are often used to describe various legal structures and business models (for-profit and nonprofit). With this broad application, social entrepreneurship signifies a mindset as much as a specific type of venture. In fact, social entrepreneurs are often described as those seeking business-minded solutions to the world’s most pressing problems. They employ methodologies of entrepreneurship and ‘lean’ approach to startups in building revenue models and impact potential. This mindset is a way to problem-solve and calls on the problem-solver to consider and account for multiple end goals, and to do so with accountability and transparency.

5. You are NOT alone! There are resources, tools, and communities to help you reach your profit and impact goals.

If there is one thing to emphasize, it is that social entrepreneurs (and those aspiring to be) are NOT alone! Being an entrepreneur is challenging, add the additional goal of creating impact— and the path to success can feel distant and even lonely. However, there is an ever-strengthening ecosystem of support emerging and evolving to better meet the needs and challenges of social entrepreneurs.

A few leading resources for social innovation and social entrepreneurship:

Resources we have compiled and are building:

 

Here are Prezi slides from the talk



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Interview with Nicholas Fusso, Program Director of D-Prize [AUDIO]

Earlier this year Innov8Social interviewed Nicholas Fusso, Program Director of D-Prize. D-Prize is an innovative competition dedicated to scaling distribution (i.e. the “D” in D Prize) of solutions to global poverty.Now that multiple cohorts have passed through the social innovation competition, Nicholas back in an audio interview to overview past winners, the types of social entrepreneurs that have been selected as D-Prize recipients, and what is ahead for the program.The call for Fall applications concluded at the end of November. Applicants from that round who advance past the first round will have until the end of December to submit their social venture plan, and if they are selected to advance, will be required to complete additional items by January 24, 2014. Winners can receive up to $20,000 to implement their proposed solution.

There will be another call for applications in Spring 2014. You can find out information about past winners and competition details at www.D-prize.com. Good luck to all of the D-Prize participants!

 

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Interview with Attorney Jenny Kassan, CEO of Cutting Edge Capital [Audio]

Jenny Kassan is a pioneering attorney in the social enterprise space. I first met her two years ago when she delivered an insightful presentation at the San Jose Green Business Academy. There, she detailed ways that social entrepreneurs can raise capital.When we met last, she recapped her involvement with the federal crowdfunding legislation (part of the JOBS Act), which at the time was still making its way through Congress. (See her Huffington Post article here). Since then, the bill has passed and is awaiting official rule details from the Securities and Exchange Commission (SEC).

Meet Jenny Kassan, a pioneering social enterprise attorney

Jenny is incredibly personable, experienced, and passionate about connecting law, sustainability, and small businesses to create Jenny Kassansocially responsible ventures. She is the CEO of Cutting Edge Capital (check out their great blog), and a Partner at Katovich & Kassan Law Group.

It was a sincere pleasure interviewing Jenny for Innov8Social. It was an opportunity to hear more about her path to social enterprise law,  her interest in pushing for equity crowdfunding for non-accredited investors, her current work with creating new financial tools, and advice she has for individuals entering the social enterprise law and policy space.

Listen to the interview

A few interesting takeaways:

  • After law school, Jenny became interested in community development
  • Saw that law alone didn’t necessarily help individuals in disadvantaged communities—legal remedies do not always address the root of issues
  • Completed a Masters in City Planning after law school
  • Worked at community development nonprofit, Unity Council for 11 years, in the commercial district in Oakland
  • Loves working with small business owners
  • Joined John Katovich’s firm and worked to find new ways for small businesses to pursue financing
  • Launched Cutting Edge Capital in 2011, focused on creative financing tools for social enterprises—with focus on raising funds from their communities
  • Direct Public Offering (or investment crowdfunding) is a financial tool small businesses can use to raise funds: is legal, but must comply with strict legal compliance guidelines, open to accredited (wealthy) and non-wealthy investors
  • Suggests law students interested in social enterprise law take classes and electives in corporate law subjects

 

Big news for Cutting Edge Capital!

*Note: Since our interview, Cutting Edge Capital successfully raised $150K in a Direct Public Offering of their own. Congratulations! You can contribute until July 1, 2013. More information here.

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D-Prize: A Focus on Distribution of Social Innovation Solutions

Visit D-Prize.org and your bound to do a double take when posed with the question:

“If you were awarded $20,000, how would you fight poverty?”

I had a chance to learn about this innovative program that identifies and funds promising social ventures that are still at an idea phase through a conversation with Nicholas Fusso. Nicholas serves as Program Director of D-Prize.

Q & A with Nicholas Fusso, Program Director of D-Prize

Nicholas FussoWhat is D-Prize?

[Nicholas Fusso] D-prize is a competition program to identify top social entrepreneurs focused on innovative initiatives for distribution.

It was launched by Andrew Youn, of One Acre Fund. Andrew has been working with African farmers to help them become more sustainable. Since One Acre fund started in 2006 it has expanded in scope and scale, now serving over a 100K families.

Through his work at One Acre Fund, Andrew became increasingly frustrated because he saw easy solutions to major problems but they were not being scaled & distributed effectively. He and a few co-founders launched D-Prize to focus on the distribution end of the social enterprise equation. The “D” in D-Prize stands for “distribution equals development”.

How does D-Prize work? Is it an accelerator program?

[Nicholas] D-prize is not necessarily an accelerator program. It is a mechanism to fund ventures that are at the idea stage.  Entrants are considered based on: (1) distribution-focused venture; 2) that can radically scale up (i.e. create massive amounts of impact). Ideal candidate will read the description and come up with concept that meets (1) and (2) and then can apply for D-Prize.

D-prize applications are generally accepted on a rolling basis. Our first round of applications was due April 30, 2013, and we received over 300 applications.  The next deadline for applications for the Fall 2013 cohort will be November 30, 2013.

What are the requirements for candidates? U.S.-based? Proven Model?

[Nicholas] There is no geographic requirement, however, solutions have to be launched in developing areas. The organizations that D-Prize looks to fund are generally highly proven, and just need innovative methods of scaling and distributing solutions. The other skill we look for is the ability of the founders to listen and find out what people need in the area.

How is D-Prize funded?

[Nicholas] By the co-founders & colleagues.

How is D-Prize structured?

[Nicholas] It has applied for non-profit status.

Tell us a little about yourself

[Nicholas] I have been in the role of Program Director since February 2013. When I started, D-Prize had already  published and launched the first competition program, and interested applicants had about 5 weeks to submit an idea. We had an aggressive schedule but were able to identify entrepreneurs in that space.

A little about me…I studied political economics in college and had a lot of friends with idealistic goals pursue nonprofit and ngo-work. I was one of the few to go into business. My first social enterprise was right out of college, called “Sustainable of Sexy.” The mission was to educate people of coffee-drinking habits, especially sustainability of coffee-related goods, such as coffee cups. We took the problem on from a business perspective, trying to show how reusable coffee cups could be better for business all-around. We had a blog, and received some great press coverage. The whole experience really excited me about entrepreneurship. D-Prize was a great fit and has been an exciting experience.

What do you see as the connection between enterprise and impact?

[Nicholas] I see entrepreneurship as the surest path to sustainable development.

How is funding disbursed?

[Nicholas] People submit a 1st round application, then if its a good fit will invite them to a final round. Selected finalists will receive $10-20K funding. Payment method will be Lump sum or in parts, based on what makes more sense for the concept and work. It’s important to determine what type of venture to figure out how to fund. (i.e. build website, market, etc.). D-Prize does not necessarily take an equity stake. The amount of funding is partially based on the budget that applicants must include as part of the final application.

What are you looking for in D-Prize candidates?

[Nicholas] Measurable impact, and lots of it. Whether applicants are non-profit or for-profit, we look at whether they are committed to creating responsible change—that it part of their core business, and not just a consideration. Finally, we are look for ideas that are transformational in their approach to meeting the distribution challenge.

How does a team apply?

Visit the D-Prize competition page for deadlines, etc. and download the application packet.

[Note: This post has been updated to reflect that D-Prize may not necessarily take equity stake in startups.]
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Photo Essay: MIT-Stanford VLAB Event on Virtual Currencies

On June 18th, MIT-Stanford Venture Lab (VLAB) hosted its monthly event on virtual currencies, titled “Virtual Currencies: Gold Rush or Fools’ Gold. The Rise of Bitcoin in a Digital Economy” at the Stanford Law School campus, Munger Conference Center of Paul Brest Hall.For social entrepreneurs, virtual currencies represent new potential for the democratization and distribution of funds to further local and international work. As startups such as Coinbase, Ripple, and dozens of others, are building payment rails & making math-based currencies more accessible and usable for a broader base of users—there is a real opportunity for social enterprise to take notice and action as early adopters. This can be through accepting funding via bitcoin or other math-based currency, transacting via virtual currency, building crowdfunding sites that allow portions of raises to be made in bitcoin, and/or at the least become knowledgable about the topic and exploring its potential.To crowd of standing room only, the panel explored the topic of virtual currencies through various vantage points, with a focus on actionable discovery for entrepreneurs, technologists, and investors. The panel, pictured below, from the left included: Chris Larsen (CEO and Co-Founder, OpenCoin, the company developing the Ripple protocol), Fred Ehrsam (Co-Founder of Coinbase, a digital Bitcoin wallet), Wendy Cheung (Director of Compliance and BSA Officer, Silicon Valley Bank), Cameron Winklevoss (Principal Investor at Winklevoss Capital) and Tyler Winklevoss (Principal Investor at Winklevoss Capital)

VLAB Virtual Currencies #VLABvcurrency

VLAB Virtual Currencies #VLABvcurrencies

 

 




Event brochure

Virtual currencies (aka math-based or digital currencies or cryptocurrencies) are emerging forms and units of digital transaction, outside the realm of government regulation (so far, anyway). They usually can be transacted with virtual anonymity, and be transacted globally fairly quickly.

VLAB Virtual Currencies #VLABvcurrency

Infographic, adapted from Visual Capitalist, on Bitcoin

Bitcoin is the first such digital currency to gain traction. Created by a developer or group of developers named Satoshi Nakamoto (pseudonym) in 2009, today there are 11M bitcoins in circulation and the current market for Bitcoin already tops $1.5B. The currency itself is quite unique. Bitcoin are created (or “mined”) by computers completing complicated algorithms. The first to solve the algorithm and achieve the closest answer effectively claims an allocation of bitcoin. This goes on until the outer limit of 21M bitcoin are mined.

VLAB Virtual Currencies #VLABvcurrencies

VLAB Executive Chair, Ron Chavez, welcomes the audience 

VLAB is a 501(c)(3) nonprofit comprised of volunteers who pitch topic ideas that span innovation and disruptive technology and work in small teams to understand the space, identify controversies, and form an engaging panel.
VLAB Virtual Currencies #VLABvcurrency

Featured speaker, economist, and Stanford Business School professor Susan Athey introduces virtual currencies as an economic concept.

Professor Athey focused on four unique uses of virtual currencies as: a way to store value (especially in light of inflationary currencies); as a ledger; as a method of making anonymous transactions, and possibly as a basis for government monetary policy.

VLAB Virtual Currencies #VLABvcurrency

Moderator & Forbes Online Sr. Editor Kashmir Hill introduces her unique experience with Bitcoin, sushi, and cupcakes

Hill, whose work has lately focused on digital privacy took on a unique challenge in early May. She lived only on bitcoin for one week. She recapped challenges such as finding retail food locations beyond Cups and Cakes Bakery and Sake Zone sushi in SF. She recalled how things got interesting when her landlord didn’t accept rent in Bitcoin, causing Hill to have to find BTC-friendly housing for a few days.

 







Founder/CEO Chris Larsen (OpenCoin, Ripple) explains  math-based currencies and their potential to disrupt payment processing, exchange, and currencies

 

VLAB Virtual Currencies #VLABvcurrency

Panel discusses various topics related to virtual currencies, with questions posed by Moderator Kashmir Hill

VC’s Tyler and Cameron Winklevoss commented on the scope they see for math-based currencies as a disruptor to industries such as remittance. They own approximately 1% of bitcoin in circulation, and most recently funded a Bitcoin startup called BitInstant.

Wendy Cheung of Silicon Valley Bank spoke about state and federal compliance concerns relevant to bitcoin and math-based currency startups. SV Bank currently works with a number of startup companies in this space.

Fred Ehrsam (second from left) touched on unique challenges as a startup in the space. He co-founded Coinbase after noting efficiencies of current systems  as a foreign exchange trader on Wall Street. Coinbase  has had to navigate through the compliance and regulatory requirements and is poised to become the leading bitcoin wallet on the market.

Audience members could text in questions that were fed to the moderator’s iPad. Kashmir selected a few to ask to the panel and noted common questions. Of these a few popular questions were—directed to the Winklevoss investors—whether their firm would ever fund a startup using Bitcoin. Other questions asked about how mining for bitcoin actually works, and yet others touched on inherent limitations of a finite curency (i.e. There will be a total of 21M bitcoin available to be mined).

VLAB Virtual Currencies #VLABvcurrencies

You can view the video of the virtual currencies event when it is posted here

Events in the past year have included: the Founders’ Series, Collaborative Consumption, The Future of Diagnostics

, Commercial Drones

, Young Entrepreneurs

, Synthetic Biology

, Grid Energy Storage

, Software-Designed Networks

, and Gamification

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VLAB Virtual Currencies #VLABvcurrency
[photo credit J. Fuqua]
A few of VLAB event team members with moderator Kashmir Hill

It was a wonderful experience co-chairing the event team for the virtual currencies panel with Frank Martinez (far right). A huge thank you and recognition to event team members including Edward, Jerry, Richard, Jenny, Tony, Lisha, Chethana, Prashant, Geeta, Luca, Jeanne, Michelle, and marketing team Siejen, Chitrak, Tom, Jae and the broader VLAB community.