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OpenKollab Pooled Fund
 

OpenKollab Pooled Fund

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The description of a model for a pooled fund to seed early stage social entrepreneurs. What makes this fund unique is that we propose to finance systems of projects that are already working together; ...

The description of a model for a pooled fund to seed early stage social entrepreneurs. What makes this fund unique is that we propose to finance systems of projects that are already working together; that constitute a part of a network. This is one risk mitigation strategy

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OpenKollab Pooled Fund OpenKollab Pooled Fund Presentation Transcript

  • A unique strategy for the formation of a pooled fund to finance social ventures in the collaborative infrastructure space
    OpenKollab Pooled Fund
    Suresh Fernando
    Founder
    suresh@radical-inclusion.com
  • Vision and Context
    Historical Inflection Point
    Global challenges (climate change, economic inequity...)
    Failure of existing institutional framework (unfettered capitalism, global institutions...)
    Evolution of collaboration infrastructure (broadband penetration, P2P infrastructure...)
    Something went wrong with the way that traditional organizations were formed.
    We need to think outside the box about what types of organizations to build!
  • The Problem
    Existing capital markets frameworks deploy capital only towards organizations that are purely financially motivated.
  • The Chain of Assumptions
    Can you spot the false assumption?
  • The Solution
    Deploy capital on organizations that are not only financially motivated... They also have a social mission!
  • But, that raises a problem...
    How do investors make money?
  • The Solution... In principle...
    Find projects that are both:
    Financially sustainable
    AND
    Have a social mission
    Find investors that:
    Are seeking investments that have a social focus
    Can tolerate non-market rate returns
    Utilize an investment structure that mitigates risks for investors
  • First... A picture of the current landscape
    -100% rate of return
    Traditional market rate returns
    NOTHING!!
    Charities/ Not For Profits
    For Profit Companies
    NOTHING!!
    NOTHING!!
    Socially Motivated
    Financially Motivated
  • So what is needed is...
    Social Investors looking for Social AND Financial Returns
    -100% rate of return
    Traditional market rate returns
    Charities/ Not For Profits
    For Profit Companies
    Social Ventures
    Deliver Social AND Financial Returns
    Socially Motivated
    Financially Motivated
  • So what do social investors expect?
    Clearly Defined Social Mission: first and foremost, social investors are looking for organizations that are lead by visionary entrepreneurs with a clear vision of how they want to transform the world for the better!
    Measureable Social Mission: It is not enough just to have a vision of how you will change the world. You will also need to be able to clearly articulate the path in a way that is measurable!
    Some Financial Return: We will be looking for investors who will provide loans at better rates than you could get at the bank. They will, however, expect these loans to be repaid!
  • One Specific Contribution – OK Pooled Fund!
    A pool of capital that is managed by a third party – OK Pool Fund Management Team
    Invest in social mission driven organizations that are financially sustainable
    Investors contribute to the pool and own a `pro-rata` share of the pool
    Certain unique characteristics differentiate fund from other pooled funds.
  • Investor 1
    Investor 2
    Investor 3
    OpenKollab Pooled Fund
    Project 1
    Project 2
    Project 3
    Project 4
    Project 5
  • So what makes this fund unique?
    Investment Focus: Collaboration Infrastructure
    Collaboration tools
    Collaboration services
    Projects that are collaborating
    AND
  • So what makes this fund unique
    Project Synergy: we will identify projects that have synergy in the following ways:
    Common missions
    Complementary needs or resources
    Common markets or clients
    Common technology infrastructure
    Common processes
    Mutual Accountability: we will develop mutual accountability mechanisms that parallel the Grameen Peer Lending model.
    Specific Collaboration Processes
  • Pooled Fund Details
    Overall Size: $2 million
    Candidate Investments
    Seed stage social ventures
    Clearly defined social mission
    Can achieve financial sustainability within 12 months
    Two Investment Stages
    Seed Stage: $50 - $100,000
    2nd Stage: $250 - $350,000 depending on satisfaction of milestones
  • Pooled Fund Details
    Investment Structure
    Given the fact that our portfolio companies will not be strictly financially motivated, we do not expect that we will be able to raise funds for equity financing.
    We expect to raise investment capital for the following:
    Debt (below market rate)
    Debt (below market rate) with option to convert to equity
    Debt with royalty payments tied to profitability
  • So why will this workSocial cohesion between projects
    Why does the Grameen Peer Lending Model work
    Social cohesion within the Lending Circle – all part of the same community
    OK Pooled Fund Investment Groups are, by definition, groups of projects that have synergy
    We hope to identify projects that have existing relationships that give have given rise to social cohesion.
  • Execution Strategy
    Identify Investment Candidates: The first step in the process is for us to identify 5 or 6 investable projects.
    Solicit candidate investments – cast net widely
    Develop shortlist of candidates
    Identify initial Funding Group
    Engage in collaborative processes, discussions etc to assess synergy amongst projects
    Modify Funding Group as necessary.
    Collaborate With Funders: Due to the nascent stage of the market as well as the innovative nature of the pooled fund that we are creating, we hope to engage prospective investors in the process as early as possible.