SOCAP – The Impact Investing Mosh Pit

I was musing on the upcoming SOCAP conference last night, a gathering of Impact Investing’s glitterati and an event I have often referred to as “impact’s finest mosh pit” when it struck me that I should post my thoughts before I attend this year rather than after. This would give me the opportunity to go public with my predictions, and eat crow next weekend as I review just how wrong I was. As Oliver Wendell Holmes (the second-rate poet, not the Supreme Court Justice) once wrote, “Choose your words carefully, for someday you may be forced to eat them.”

Mosh PitAnyway, as I was contemplating what to say, I got an email from my good friend and deep impact thinking/doer Ross Baird… with the same idea: setting the stage for this year’s SOCAP. As usual, he is a step ahead of me. At least I don’t mind following a guy like that. Turns out that he was chatting with Lewis Hower about the State of Impact, a conversation I’d had with Lewis earlier this week. Apparently, we all feel as if impact is at some sort of inflection point and that a moment of stock-taking is appropriate.  As I read his blog post, I realized that it was pretty much what I was going to say… with one important exception. So I figured I’d just introduce you to ross via his blog and website. And if you don’t feel like linking through to Village Capital’s site, here are the high points:

  1. Talk isn’t cheap: it is incredibly expensive. The Impact Investing landscape is stuffed with people who are all willing to be thought-leaders. Precious few are willing to be action-leaders. This is an unfair characterization in many ways, and I am frequently humbled by the pioneering work and investing being done in the discipline. But, broadly, there is a lot more talk than there is action.
  2. Marginal impact is better than doing nothing. I’ve referenced Voltaire’s dictum that “perfect is the enemy of good” more times than I care to remember. I’ve seen well-intentioned investors paralyzed by the fear of not investing for impact perfectly. I am NOT a proponent of lowering standards in order to catalyze capital. We do recognize, however, that we are in thesis validation mode… and in order to validate a thesis, one must first gather the data. This means acting.
  3. Identify a problem and work to solve it. The hardest part of impact investing is that one woman’s problem is another woman’s pragmatic reality. Different people resonate with different opportunities. Impact investing is thus a reflection of the “hyper-customization” that the financial services industry doesn’t like… not because it isn’t the right approach, but rather because it doesn’t optimize for profitability. This places the onus on the investor to clearly articulate the problem they want to solve, and to then harness the resources – advisors, funds, direct deals, philanthropic engagement, etc. – to pursue it.

Where I disagree with Ross is in his characterization of impact investing as an asset class. I’ll take that up with him, as I have done with many others over the years when I see him next week in SF. Watch for a small mushroom cloud rising over Fort Mason as we debate the matter.