Q. What do young social innovators do for fun?

A. Hang out at StartingBloc’s fall seminar, of course.

 

About two months ago, while I was waiting for a phenomenally delayed plane at the Dulles Airport, I picked up a copy of the summer edition of Fast Company. Beyond the excellent article about the “Rise of the Aerotropolis”, a short description of StartingBloc caught my eye. It was a fellowship for college students and young professionals who were interested in the intersection of the private sector, sustainability and social change. My first thought was “Wow, this is fantastic, where do I sign up?”

In my relentless search to find reasons to move to the fair city of Cape Town (as if biodiversity-friendly winelands, Lion's Head & the 12 Apostles, and the World Cup semi-finals in 2010 weren't enough), I regularly read South Africa's Mail & Guardian.   I am rarely disappointed and today's article on specialized "retail development bonds" that provide a mechanism to support small business growth is no exception.  The piece entitled, "A Friendlier Bang for Your Buck", discusses the finance gap that we have talked so much about on NextBillion (Shell Interview, Al Hammond on Mesofinance).  The M & G notes that while SRIs remain strong, there is a need to develop funding for projects under $3 million.  To this end, a law professor at American University is developing a government bond, which, "provides a semi-annual return equal to the government’s retail bond, the underlying funds being used to develop small and micro- enterprise business and low-income housing in South Africa."  While the product is not available yet, its potential to attract money from a range of investors, including corporations and the South African diaspora makes it an intriguing investment mechanism aimed at developing local entrepreneurial talent and drawing funding to low-income communities, while providing near commercial returns.

The second part of NextBillion’s interview with Kiva focuses two issues that drive the organization’s success: Kiva’s value proposition within the greater microfinance community and strong partnerships that connect Kiva to its entrepreneurs. As many of you have read, microfinance has a fair number of critics, like NextBillion’s Rob Katz who recently wrote, “Realists know the truth – it (microfinance) suffers from high interest, misrepresentation of repayment rates, poor risk management, and insufficient scale.” Yet, one can not ignore the potentially transformative role small business can play in developing countries. The beauty of Kiva is its ability to address some of the most damaging charges leveled against microfinance by allowing MFI’s to lower interest rates and offer additional services to its entrepreneurs, all while remaining self sustainable. How? The key is excellent partners and the lower cost of capital Kiva provides them (2% vs. 12% industry average).

With my head spinning from the loftiness of an IDB infused week, I happily returned to reality in a conversation with Kiva, which--as many of you know--is leveraging micro-finance institutions (MFIs) to create virtual connections between investors and micro-entrepreneurs. This doesn't sound remarkable until you learn that this investor could be you, your Uncle Benny from Ohio, or anyone else, who with, as CNN Money so aptly wrote, "...$25, a PC and a PayPal account...now [has] the wherewithal to be an international financier." A sort of investment experience for the proletariat, Kiva has turned the traditional microfinance lending model on its head.

Just a quick note for those of you who are interested in venture capital / private equity in emerging economies: IFC and EMPEA hosted the 8th Annual Global Private Equity Conference in Washington, DC last week. Three power points are available on EMPEA's website that have some great quantitative info on sector trends. Take a close look at David Rubenstein's presentation (Carlyle Group) on countries to watch (Argentina & Nigeria, anyone?). In addition, Rubenstein calls for an updated vernacular. I would be interested to know if you agree.

Also, the opinion polls that were highlighted by Michael Klein (IFC) present a window into public opinion of the role of the private sector in development. Complementing this, Sarah Alexander (EMPEA) notes the opinions of investors regarding the success (or failure) of their previous investments in emerging economies that clearly outlines the risk perception (and therefore the challenge) for new investments in emerging economies.

Just a short posting for those of you interested on what is being done to scale up biodiversity friendly businesses.  This was sent me to me by Mareike Hussels my colleague at WRI's New Ventures program, a business accellerator for sustainable business.  She attended an event in Brazil on biodiversity and enterprise creation and was particularly impressed by the caliber of the participants at the event.  Mareike thought that the meeting could represent the start of a renewed interest in SMEs that offer biodiversity-related services.  Check it out to see if you agree.

Three members of the New Ventures team (Virginia Barreiro, Mareike Hussels, and Rodrigo Villar) attended the recent Latin American Venture Capital Association (LAVCA) meeting in Belo Horizonte, Brazil. The conference featured more than 20 speakers from venture capital firms and development banks (incl. Stratus, Actis, MIF, & Aureos) who highlighted new trends in the investment environment in Latin America and how policy can support its growth.

David Thomas, Chairman of LAVCA and Managing Director of Intel Capital Latin America opened the conference, followed by the keynote speaker Ricardo Malavazi, Director of Petros, the pension fund of Brazil’s national oil company Petrobras and the second largest pension fund in Brazil. In order to diversify their portfolio, Petros has very recently entered the Private Equity market with 5-10% of their investment. It will be interesting to see if other pension funds follow suit and insert new capital into the private equity market. Other panelists spoke to the importance of raising the Brazil’s profile as an investment destination. Álvaro Gonçalves, President of the Brazilian Association for Venture Capital and Private Equity stressed the importance of national and regional associations working together to promote Brazil’s many success stories abroad.

In the last couple of weeks a number of issues near and dear to my heart
have gone mainstream...or at least they are getting a little more of the
limelight, which is fine by me. But, how did this happen? And what
does it have to do with emerging market investments in sustainable enterprise?

HBO recently debuted a movie in Washington DC called "Too Hot Not To Handle" that featured scientists talking about climate change. It was
well attended and featured speakers Senators McCain and Lieberman. Wait, what!?

Something seems out of place. HBO, the home of "The Sopranos" produced this film? Well, yes, and not only because of Laurie David, but also because climate change has become an issue that interests even an audience who spends their sunday night's watching the mafia murder someone.

Today the South African Mail & Guardian featured an article on the launch of Soweto TV, a community television station that is designed to train and empower locals to produce news that reflects their reality. Much like, TV Rocinha that was featured at WRI's Base of the Economic Pyramid Conference in Brazil, Soweto TV reaches a largely low income market; while Soweto includes over 40% of the population in Greater Johannesburg, it accounts for only 4% of the city's GDP, source: Johannesburg's Official Website.

Driven by community derived content, special programming will focus on community health issues in the township, particularly HIV / AIDS, as a build up to World AIDS Day on December 1.

This year’s Net Impact Conference, held at Stanford’s Graduate School of Business was by all accounts a huge success. Here are some quick stats:
• Over 1,400 participants from schools across the U.S. and internationally
• Over 200 speakers on approximately 75 panels
• 6 keynotes including: Al Gore, Generation Asset Management; Gary Hirshberg, Stonyfield Farm; VJ Joshi, HP; Judy Vredenburgh, Big Brothers Big Sisters; Greg Steltenpohl, Adina World Beat Beverages / Interra Project; and Kellie McElhaney, UC Berkeley – Haas.

Day One: The event kicked off with a strong keynote from Al Gore, who discussed the importance of integrating sustainability into business practice. Drawing from his experience with Generation Asset Management, he likened current risk management to the visible spectrum; noting that while we continue to assume that the narrow band of financial information used to value companies is sufficient, we can no longer afford to ignore the broader spectrum of global trends.