SOCAP offers important lessons for social entrepreneurs

SAN FRANCISCO — Michael Lwin, managing director of a Myanmar-based social enterprise that creates software for the health and legal sectors, was among the entrepreneurs who traveled from around the world to attend last week’s Social Capital Markets conference, or SOCAP. He was able to catch up with many of the organizations that have gotten him and his co-founder at KoeKoeTech, to where they are today. He mentioned Echoing Green, a global nonprofit that supports social entrepreneurs and held its summit a day before SOCAP; the Global Social Benefit Institute, an accelerator that is part of the Miller Center for Social Entrepreneurship at the University of Santa Clara and had its own booth at the conference; and the U.S. Agency for International Development, which also sent a number of representatives to the annual meeting of investors and entrepreneurs. While he was disappointed but not surprised when Development Innovation Ventures, an initiative of USAID’s Global Development Lab, stopped accepting applications earlier this year, he emphasized the important role of official development assistance, together with investors and accelerators, in helping KoeKoeTech launch its MayMay mobile health app and then expand to other software services. “I do not think we’d survive given the low purchasing power of Myanmar citizens doing a standard investor route even impact investing,” he said. “There are other social enterprises, for-profit tech companies, that tried to take a more traditional route and they don’t exist anymore.” That is what SOCAP is for. The convention brought leaders in official development assistance who are increasingly looking for ways to support social entrepreneurs together with investors who are increasingly looking to emerging markets as places where they can generate social impact and financial returns. Many entrepreneurs skip the sessions, taking meetings with funders and potential investors at picnic tables lined up outside the Fort Mason venue with views of the Golden Gate Bridge. But those who did fill their agenda with sessions as well as one-on-one meetings went home with a few key lessons to help them do their work more effectively. From data for compliance to data for decision-making When Ann Mei Chang, former director of the U.S. Agency for International Development’s Global Development Lab, was at Google, she had data on everything. But when she transitioned to the social sector, she saw an emphasis on data collection about what was being done, but not whether it was working. She met entrepreneurs and donors alike who fell in love with a solution and continued to optimize the solution to the point where they forget the problem they were trying to solve in the first place. “As a result, we’re far less effective in the social sector than we could be,” she said at a SOCAP panel called Flying Blind: No Way to Build a Social Enterprise. Other panelists agreed that funders and social enterprises get overly focused on whether the organization did what it promised it would do, rather than the question of whether it is working. Sasha Dichter, chief innovation officer at Acumen, an early stage patient capital investor in businesses that serve the poor, spoke about Lean Data, a set of tools his organization developed that applies lean experimentation principles to measurement of social performance. This evolved from two simple realizations, he said. First, companies have lots of touchpoints with customers, “so if we use those to talk with them, we can learn things.” Second, that all customers have access to mobile phones “so we should probably use those.” Many forms of impact measurement, such as randomized control trials, are expensive, so cheaper solutions that leverage technology to gather constant feedback makes data collection a more valuable continual effort, rather than a one-off. Maryana Iskander, chief executive officer of the Harambee Youth Employment Accelerator in South Africa, talked about her own approach to gather key insights at low cost. “In our organization, you can’t propose an activity if you can’t propose how to measure it and use the data,” she said of her work to connect employers looking for entry level talent to young skilled workers. Her organization uses SMS surveys and reports on a quarterly basis to everyone about everything, she said. Lindsay Louie, program officer at the William and Flora Hewlett Foundation, talked about Listen for Good, the signature initiative of a coalition of funders who have come together in a national collaborative to improve philanthropy called the Fund for Shared Insight. Increasingly, donors ask grantees what the evidence says about their work, but even with a growing number of data sources, it is easy to overlook feedback from the people these programs aim to serve. She talked about how foundations focus on two legs of the stool — evaluation and monitoring — and ignore the third leg of the stool: how people experience these products and services. One of the more interesting points that came up in the audience Q&A was whether donors should have to fund data collection. “I find myself torn about whether this is a make sure it’s funded question or not,” Dichter said. “People need the resources to do it. But that alone would be insufficient because it reinforces the notion that it’s for the funder.” One of the key differences between the private and public sector, Chang said, is in the private sector the customer is also the funder. “So you care if they’re going to buy your thing,” she said. Meanwhile in the social sector there are two customers, the donor and the customer. And oftentimes organizations do monitoring and evaluation for their donors in order to satisfy grant requirements, meaning it’s data for compliance not data for decision-making. Putting the spotlight on the power of failing at scaling It is rare to hear a one word answer from a panelist, but Ella Gudwin, president of VisionSpring, did not hesitate when she was asked onstage at SOCAP: “What is the biggest reason that we are failing at scaling?” “Readiness,” Gudwin said. She recounted how VisionSpring, which works to provide affordable access to eyewear, ended up having to give money back to USAID. VisionSpring applied for a scaling grant from the Innovation Investment Alliance — a partnership between the Skoll Foundation and USAID’s Global Development Lab with support from Mercy Corps as USAID’s implementing partner — to spread its hub and spoke model of retail stores in Central America. But over time it realized that its core strength was not brick and mortar retail. The organization had been too focused on cost recovery versus its target audience, Gudwin said, so they created a new metric, Philanthropic Investment Per Pair, and told USAID they would need to return the money as they changed course. Alexis Bonnell, head of applied innovation at USAID, explained that because VisionSpring was honest with USAID, the agency was able to move from funder to partner. The agency had a hard time figuring out a way to actually take the money back, she said. But she appreciated this opportunity to solve the issue together. “I can’t tell you how quickly I immediately shut down when I meet people here at SOCAP [who] tell me the amazing thing they're doing, and I ask: Who’s your competition? What’s not going right? And why are you going to fail in three years? I can’t tell you how many people will tell me, ‘We have no competition. We’re not going to fail.’” If an entrepreneur is not realistic about the fact that this is hard work and they will likely fail along the way it becomes a harder bet for USAID to make, Bonnell said, adding that funders want to do more than just write checks, but you have to let them in. Amanda West and Chris Walker, the Mercy Corps staff who facilitate the Innovation Investment Alliance, explained while sitting at the SOCAP picnic tables to get a better sense of what the lessons from this coalition, captured in these Scaling Pathways case studies, have to offer for global development professionals. “We’re all recognizing that social entrepreneurship plays an important role in global development currently and in the future of global development, so anyone who’s not incorporating this approach now should probably be looking at it,” West said. “We tend to think of iteration happening at pilot level, but iteration should happen over and over again as you scale,” Walker said. “And we’re intentional about saying that this is not about scaling the organization, but scaling its impact, which can happen in a lot of different ways.” Sonali Mehta-Rao — co-founder and chief growth officer of Awaaz.de, a group voice SMS messaging platform based in India — joined other social entrepreneurs at SOCAP in the ADAP Deal Room, an event organized by ADAP Capital, which supports early stage entrepreneurs working to address extreme poverty. The event sought to develop authentic connections between investors and entrepreneurs, featuring eight groups, including Awaaz.de. “One trend I see in the sessions that I’m participating in is about bridging gaps, and I think that’s a really important function that this conference and other conferences can play and should play,” Mehta-Rao said, adding that she hopes to see the same from the 2017 Global Entrepreneurship Summit in Hyderabad, India, where several of the entrepreneurs from SOCAP will soon be heading to continue these conversations. Read more international development news online, and subscribe to The Development Newswire to receive the latest from the world’s leading donors and decision-makers — emailed to you free every business day.