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Presentation for Pepperdine Law School Sept. 21, 2007 Revolution in Social Enterprise Conference

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    1. 1. Revolution through social enterprise Investing in Social Entrepreneurship Pepperdine University School of Law 09-21-07 Deb Parsons Vice President
    2. 2. There is a gap in the capital market The Social Enterprise Expansion Fund fills this gap <ul><li>Despite the promise of social enterprises, many lack access to expansion capital </li></ul><ul><ul><li>Grant funding not a good fit for expansion </li></ul></ul><ul><ul><li>Traditional capital markets stay away from hybrid models </li></ul></ul><ul><ul><li>No institutional capital providers focused on this space </li></ul></ul>
    3. 3. The power of social enterprise <ul><li>Social enterprises combine the best of the business and philanthropic worlds </li></ul><ul><li>Social enterprises are leveraging the power of business to create sustainable solutions to some of society’s most challenging problems </li></ul><ul><ul><li>The Grameen Bank is alleviating poverty in the developing world through microfinance </li></ul></ul><ul><ul><li>TransFair USA is building demand for fair trade coffee by standards that let consumers know coffee growers really got a fair wage </li></ul></ul><ul><ul><li>Women’s Bean Project strives to break the cycle of chronic unemployment and poverty by helping women discover their talents and develop skills by offering job readiness training </li></ul></ul>
    4. 4. It is capturing increasing mindshare Attention Curve © Graphic conceptualizations © Mark Beam, Collective Intelligence 2007
    5. 5. The ecosystem Commercial Debt Grants Infrastructure Capital Social Angels Social VC “ PRI” Debt Public Market SRI Landscape Definition Evaluation/ Certification Transactional (e.g. Funds) Exchange Platform <ul><ul><ul><ul><li>Calvert </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Philanthropic </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Assets/DAF </li></ul></ul></ul></ul>AA1000 GRI RSF Social Finance Local Exchange NFF Capital Partners Investors’ Circle Aspen Institute Domini Social Investments PCV Chicago Climate Exchange B Lab SouthShore Bank Calvert Special Equities - CF CI Notes - Calvert Mutual Funds New Schools BOVESPA Social Stock Exchange UK Social Stock Exchange Fourth Sector Network NFF Lending Acumen Fund Generation Investments Generation Foundation Ashoka © Jay Coen Gilbert, Don Shaffer and John Katovich Skoll Good Capital
    6. 6. Thank you Deb Parsons [email_address] 415-285-5601 Thank you
    7. 7. The Social Enterprise Expansion Fund <ul><li>High net worth individuals, families and institutions seeking to align investing with their values; $250,000 minimum </li></ul><ul><li>A blend of later-stage private equity and high-yield debt </li></ul>Investor profile Return profile <ul><li>Lead, co-investor, and coordinator of other capital </li></ul><ul><li>Ongoing engagement as board member/observer </li></ul><ul><li>Facilitate balance between growth objectives and mission </li></ul>Role of fund <ul><li>Mission-aligned M&A, management buyouts, IPOs </li></ul><ul><li>Foundation buyouts of investments in non-profits </li></ul>Exit strategies <ul><li>Later-stage expansion capital for enterprises with real revenue recognition and established management teams </li></ul>Stage of investment <ul><li>Equity and structured venture debt </li></ul>Investment type <ul><li>Diversified: Fair Trade, poverty alleviation, healthcare services, workforce development, education, technology </li></ul>Sector focus <ul><li>>80% of companies located in the United States, with social impact both domestically and globally </li></ul>Geographical focus <ul><li>$30 million fund with 10-12 portfolio companies; average investment size of $1 million - $3 million </li></ul>Target fund size
    8. 8. Why we will succeed <ul><li>We are the first institutional capital provider and market leader in the social enterprise space </li></ul><ul><li>Our position provides us with the ability to identify and fund the best deals </li></ul><ul><li>We are backed by a strong management team with relevant experience in the following: </li></ul><ul><ul><li>Developing innovative social investment products </li></ul></ul><ul><ul><li>Starting, growing, and selling businesses </li></ul></ul><ul><ul><li>Investing in and exiting numerous venture investments </li></ul></ul><ul><ul><li>Launching various social enterprises </li></ul></ul>
    9. 9. Our team <ul><li>Joy Anderson, Founding Principal </li></ul><ul><li>Founder and President of Criterion Ventures: successfully partnering with social ventures to overcome challenges since 2001 </li></ul><ul><li>Counseled $14 billion Methodist pension fund in reforming nation-wide healthcare system. </li></ul><ul><li>Network builder of thought leaders, philanthropists, investors, and non-profit executives </li></ul><ul><li>Expert in multi-stakeholder initiatives with faith-based institutions, philanthropy and government </li></ul><ul><li>Tim Freundlich, Founding Principal </li></ul><ul><li>Over 10 years experience in the social capital markets at Calvert Social Investment Foundation </li></ul><ul><li>Helped build Calvert’s $120M Community Investment Note, $50M Community Investment Partners and $20M Calvert Giving Fund </li></ul><ul><li>Oversaw $250 million in social purpose debt in 225 investments globally with a 0.2% default rate and average gross yield of 4.25% over 10 years </li></ul><ul><li>Founding Partner, Social Venture Partners </li></ul><ul><li>Marie Trexler, Chief Investment Officer </li></ul><ul><li>Accomplished strategic venture investor with more than twelve years of experience </li></ul><ul><li>60+ venture investments at Intel Capital with 15 realized positive exits </li></ul><ul><li>Emerging markets at the IFC and others </li></ul><ul><li>Board of Advisors for NESsT, an organization supporting venture philanthropy and social enterprise </li></ul><ul><li>Kevin Jones, Founding Principal </li></ul><ul><li>Accomplished entrepreneur who has started and sold several market dominant media and technology businesses for an average of 10x return </li></ul><ul><li>Former columnist for Forbes and Business 2.0 </li></ul><ul><li>Angel investor in a range of technology businesses and social enterprises </li></ul><ul><li>Founding Partner, Social Venture Partners; former Board Member of Social Enterprise Alliance </li></ul><ul><li>Founder of, an online social capital markets community </li></ul>
    10. 10. Case Study: Pura Vida and Fair Trade Business: for-profit wholesaler of Fair Trade certified, organic coffee to college campuses, businesses, and non-profits Social mission: to disrupt the cycle of poverty in coffee-growing communities while raising awareness of Fair Trade in the US Impact today: $250,000 in incremental income to farmers and over 50,000 nutritious meals served to children Impact tomorrow: $$ millions of incremental income to poor farmers Financial results: $5M revenue growing 20%+ per year Capital need: $3 million in equity Exit strategies: Mission-aligned M&A or management buyout
    11. 11. Case Study: Kiva and microfinance Business: popular web-based platform that enables peer-to-peer lending to poor entrepreneurs in the developing world Social mission: to help the world's working poor make great strides towards economic independence Impact today: Kiva funds about $1.5 million in loans each month from 110,000+ lenders in increments as small as $25 Impact tomorrow: ability to scale and place rapidly growing loan volume Financial results: $700k in revenue; additional revenue streams fueling growth Capital need: $1 million in structured debt Exit strategies: revenue royalty financing, foundation purchase of investment