Social Venture Investment Bank
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Social Venture Investment Bank






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    Social Venture Investment Bank Social Venture Investment Bank Presentation Transcript

    • Open Infrastructure Model To Support Early Stage Social Ventures
      Social Venture Investment Bank
    • Objectives
      Provide vision and model for a social venture investment bank to support early stage social ventures
      Incorporate current context
      Open infrastructures
      Information technology landscape
      Introduce notion of ecosystems and describe how ecosystems can form the basis for understanding the investment landscape
      Provide suggestions on how to rollout the model
      Advance specific proposal for consideration for funding
    • Vision
      Openness: utilize open models whenever possible
      Collaborative: develop collaborative models whenever possible
      Focus on ‘emerging’ spaces; I will focus on spaces that are evolving around open architectures
    • Function, Context and Timing
      Infrastructure and Investment Banking
    • What is an investment bank?
      Add value in the capital allocation process
      Develop industry segments by judiciously deploying capital in a risk adjusted way
      Provide intermediary services between capital providers and those that require capital
      Provide advisory services
    • Investment Banks: some history
      JP Morgan: financed the railroads based on a vision for an integrated Railroad Structure
      Goldman Sachs: pioneered IPO market
      Barclay’s: involved in precious metals trading in the 1600’s
      Drexel Burnham: pioneered high yield debt market
      Investment Banks satisfied a particular need for capital by creating innovative financial structures
    • Why Does The Investment Banking Model Work?
      Market Intelligence!
      Traditional investment banks have very strong research processes and therefore understand the industry context better than most of the companies in the space.
      Market Intelligence is based on a top-down view of the space
    • Why Does The Investment Banking Model Work?
      Industry Relationships!
      Traditional investment banks invest a lot of time and energy as a part of their research process to get to know the companies in a particular industry segment
      There is no shortcut to relationship development...
    • Developing Infrastructure in the SV Space: function and context
      What is the function of SV finance infrastructure? To support the evolution and development of the SV space.
      Therefore: IF we have an evolved SV space, we need many things that would parallel the traditional SV space:
      However, We DO NOT have an evolved SV Space
    • What is the single biggest reason that we don’t have an evolved SV landscape?
      We do not have a sufficient infrastructure to support new entrants into the space!
      No seed funding for pre-proof of concept social ventures
      No support infrastructure for pre-proof of concept social ventures
      Developing Infrastructure in the SV Space: the current problem
      Creating infrastructure to support new entrants into the space should be the single biggest priority from an SV infrastructure standpoint
    • Why is there a lack of infrastructure to support early stage social ventures?
      Projects are high risk and, in many cases, do not carry sufficiently visible financial return (in contrast to traditional early stage markets)
    • The Solution...Mitigate Risk!
      This can be accomplished by:
      Developing information and increasing understanding of space
      Developing relationships to drive transactions; acquisitions, partnerships etc.
      Driving collaboration between projects and funding the collaboratively (see Ecosystem Pooled Fund)
      Driving collaboration amongst SV ecosystem to share risk on deals, better enhance due diligence methods etc.
      One Final Thought...
    • The Creation of Primary Markets Infrastructure
      Should Precede the Creation of Secondary Markets Infrastructure
    • Project Mapping and Relationship Development
      Developing Early Stage Ecosystems
    • What is an ecosystem?
      A natural set of relationships between a group of projects that makes it possible that they collaborate!
      Share common goals: ‘Solve climate change problem!’
      Are a part of a value chain: supplier manufacturer, distributor
      Share common team members
      Share common customers or markets
    • Why Ecosystems? The Evolution in the Communications Infrastructure
      Internet connectivity penetration rates are increasing
      Bandwith limitations are being reduced
      The cost of communication is dropping (thank you Skype!)
      Interoperability protocols, applications etc. are evolving
      Social networking platforms (Facebook...) are changing the culture of communication
      Processing power is being pushed to the edge of the network (Smartphones etc.)
      The real time infrastructure is evolving (Twitter)
    • Why Ecosystems? Changing Patterns of Interaction
      Information flows freely across organizational boundaries
      Geographic constraints are less meaningful
      Structural limitations on information management don’t constrain participation (thousands of people can work on projects!)
      Meetings can be run virtually
      Projects can be managed asynchronously
      Projects can be scaled to involve many people with minimal incremental cost
      Your communications infrastructure can be scaled to include many people with minimal incremental cost
      Real Time Connectivity Across Boundaries Makes a Systems View Natural
    • Sectors/Verticals/Ecosystems...
      All of the above are ‘ecosystems’. Open ecosystems are a new phenomenon
    • The TimingIs Right for A Systems Approach To Understanding the Investment Landscape
    • A Specific Example
      The Open Manufacturing Ecosystem
    • Developing an Ecosystem InvolvesBoth Developing Information on the Projects in the Ecosystem and Making it Visible to all Stakeholders in the Ecosystem, for example...
    • From Visibility Into the Ecosystem, opportunities will emerge
    • Rollout Strategy: the phases
    • Potential Business Models
      Support Associated Fund: management fees
      Align with Funders (Buy side): provide deal flow and to manage investments in the ecosystem
      Sell Side Funding Mandates
    • Project Proposal
    • Develop Single Ecosystem: any ecosystem of your choice
      Develop Ecosystem Map
      Develop Ecosystem Information Model
      Identify collaborative funding candidates (see Ecosystem Pooled Fund)
      Identify individual funding candidates
      Identify ecosystem partner from within ecosystem
      Draft ecosystem Summary Report
      Timeline: 6 months
      Budget: $25,000
      Build foundation to prove model in one ecosystem