1. PHOTO CREDIT BCBUSINESSONLINE.CA
Prophet
motives
BCBusiness September 2008 49
The headquarters of Small Potatoes Urban Delivery (SPUD), off an alley
near Hastings and Commercial in Vancouver, is a 13,000-square-foot warehouse
that smells faintly of celery and green onions. Milk crates, a compost barrel full of
carrot tops and several newly arrived pallets of natural orange-mango soda crowd
the receiving bay; at first the warehouse looks like the backroom of an organic
grocery store. But instead of a glossy retail floor, the dimly lit interior is a maze
of assembly-line tracks, where employees in jeans and T-shirts fill customer bins
with grocery items – 1,300 in all, including recycled paper towels, frozen organic
burritos,glassbottlesofmilk,free-rangegroundbuffaloandtheeponymoussmall
potatoes (this week, white nuggets from Fraserland Farms). After pickup the bins
will be delivered to customer doorsteps from White Rock to Pemberton via the
company’s trademark purple vans.
by Tyee Bridge photography by Paul Joseph
How two
wealthy American-
born, Vancouver-
based heirs hope
to change the face
of venture capital-
ism by changing
the world
Green giant: David
Van Seters, founder of
SPUD. His web-based
grocer is one star
investment among many
for Vancouver venture
capitalists Renewal
Partners
48 BCBusiness September 2008

2. 50 BCBusiness September 2008 BCBUSINESSONLINE.CA
Thegreyhairsof10yearsofentrepreneurialstressnotwithstanding,SPUD’s
founderDavidVanSetersisfresh-facedandlaid-back.Beforeweenterthepro-
duce cooler, he points toward the ceiling. “We eliminated 60 per cent of the
lights, then we switched out the last 40 per cent to energy-efficient bulbs,” he
says.“We’reverytunedintokeepingenergyusedown.Thisisnotlikeasuper-
market, where you’ve got open freezers just pouring energy out.” Web-based
grocery delivery is a tough haul for an entrepreneur: it’s a high-volume, high-
overhead business with perishable product, fussy technology and low margins.
Van Seters’s appreciation for conservation is typical of so-called “blended val-
ues” or triple bottom line entrepreneurs – who place equal value on people,
planet and profits – but even in that elect company he has more respect for
efficiency than most.
Unlike web-based grocers Webvan, HomeGrocer and Streamline, SPUD
survived the dot-com bust of the late ’90s and has since maintained a 20 per
cent annual growth rate. New warehouses modelled on its Vancouver opera-
tion have sprouted in Calgary and Victoria, as well as in Seattle, Portland, San
FranciscoandLosAngeles.BetweenDecember2007andApril2008,thecom-
panydoubledinsize,thankstorecentexpansionsintothelatterthreeAmerican
cities; over 16,000 customers now order from its selection of natural, mostly
organic groceries, while annual revenues exceed $24 million.
Though well-oiled and impressive, SPUD’s is not the
kind of operation usually associated with paradigm
shifts and global economic transformation.
But for Carol Newell and Joel Solomon of
Renewal, the company is a star case study
in their “portfolio of stories,” proof of a
theory of social change hatched in the
early’90s–andjustpossiblyproofthat
social venture capitalism can save the
global economy from itself.
I
n the mainstream venture capital
world,anentrepreneurfocusedon
anything but fat profits is a leper.
Venture capitalists tend to prowl
forhigh-techbetstheycanflipinthree
tosevenyears,hopefulofathree-to-one
payout for their trouble. They don’t look
kindly on ethics or social mission DNA that
might temper quick growth. “When you’re
in the realm of having to achieve a billion dol-
lars valuation in three to five years, you have to be
absolutely single-minded and sacrifice whatever needs to be
sacrificed to get there,” agrees Solomon, Renewal’s president and CEO. This
has left countless idealistic entrepreneurs such as Van Seters grinding in low
gear, stuck in the friends-family-credit-card round of financing. But in the
social venture capitalism (SVC) model pioneered by Renewal and a handful of
other funds across North America, investors screen for social purpose, taking
their time to turn lepers into wealthy apostles. “We’re a long-term investor
with an eight-to-12-year frame, which gives social mission DNA time to take
root and become profitable,” he says. “Some call it patient capital, but it’s an
investment strategy.”
Since 1993 Solomon has acted as
the public face and central strategist for
Renewal. Bankrolled entirely by Carol
Newell’s inheritance, Renewal’s mandate
is to “fund change,” using business and
philanthropy to promote conservation
and social justice. Renewal houses several
independent entities in three categories:
grant making, collaboration and SVC.
On the grant-making side is the Endswell
Foundation, which since 1991 has funded
a long list of non-profits, including Rivers
Without Borders, Forest Ethics Canada
and the Pivot Legal Society. Collaboration
projects run by Renewal include the Social
Venture Institute (networking retreats for
triple bottom line entrepreneurs such as
David Van Seters) and invitational “Play
BIG”eventsthatteachwealthyprogressives
how to get the greatest social bang for their
philanthropic buck. The investment arm,
meanwhile, comprises Renewal Partners –
a seed- to expansion-stage SVC firm that,
in addition to SPUD, helped kick-start
juice company Happy Planet Foods Inc.,
Salt Spring Island Coffee Co., Horizon
Distributors and socially responsible in-
vestments (SRI) screener Jantzi Research
Inc. It will also soon include Renewal2, a
$30-million to $50-million fund that, for
the first time, brings in outside capital for
early-stage investments.
This is a lot of social leverage for
one foundation. On the SVC side,
Renewal’s partners kept quiet
about their investments for
15 years, waiting to see if
the startups they’d nur-
tured would achieve
profitability. They
have, or many have,
and, now that the
mystery investor has
stepped out of the
shadows, it appears
that the story of
SVC in B.C. – if not
Canada – is largely the
story of Renewal. The
Renewal story, in turn,
is a tale of two heirs: Carol
Newell and Joel Solomon.
N
ewell, 52, is bright-eyed
and high cheekboned, with
a few streaks of grey in her
brown hair. Sans makeup,
she has a healthy, no-additives glow. While
Solomon was the public face of Renewal
for over a decade, Newell spent nearly the
same period living in anonymity on Cortes
Island, keeping quiet about her patronage
and performing occasionally with a local
African drumming troupe. Like Solomon,
BCBusiness July 2008 51
Since 1993
Solomon has acted
as the public face
and central strategist for
Renewal. Bankrolled entirely
by Carol Newell’s inheritance,
Renewal’s mandate is to
“fund change,” using
business and philanthropy
to promote conservation
and social
justice
patient capitalists:
Carol Newell and Joel Solomon
at Hollyhock on Cortes Island.
The educational retreat centre
is funded in part by Renewal’s
Endswell Foundation

3. 52 BCBusiness September 2008 BCBUSINESSONLINE.CA BCBusiness September 2008 53
“C
arol was in a position that was
unique,” says Joel Solomon,
who, like David Van Seters,
has the fizz of a man with a
mission. “She had no heirs and complete
clarity about her mission. We felt obliged
to go into these investment areas where
anyone you talk to would say, ‘I don’t know
if that’s such a good idea. I’ve never seen
that done before.’ ”
Solomon,53,was borninto a Tennessee
family that embodied the SVC notion
of blended values. His father, Joel “Jay”
Solomon, was chairman of Arlen Shopping
Malls – once the largest mall developer in
North America – while his photographer
mother, Rosalind, starred in the first one-
woman photography exhibit at New York’s
Museum of Modern Art. “Business is the
mostpowerfulinfluenceontheplanet,and,
growing up, I was surrounded by it,” says
Solomon. “At the same time, my family
had also been very involved in civil rights
issues and liberal Democrat politics in the
South, so I got exposed early to the notion
of doing the right thing while making a liv-
ing.” Early on he opted for politics over a
financial empire, taking time out from a
political science major at Vassar College to
act as the national youth co-ordinator for
Jimmy Carter’s winning presidential cam-
paign (Solomon Sr. would ultimately end
up in Carter’s cabinet). The peanut gover-
nor’s bid for the Oval Office was the ulti-
matelong-shotascent,anditgaveSolomon
a lasting faith in idealistic underdogs.
A year after the inauguration, doctors
told Solomon that he had inherited poly-
cystic kidney disease, an unpredictable and
deadlygeneticcondition,fromhisfather.“I
was given, in effect, a death sentence of un-
known duration – as, I like to say, everyone
is,”hesayscheerfully.“IwastoldIcoulddie
soon, or I could live a long life, and there
was nothing I could do about it. The beau-
tiful thing was that it was presented to me
in such a way that I had to address it.” At
the time, Solomon was assisting his father
in Washington, D.C.; the diagnosis sent
him on a soul-searching journey to an in-
tentional community on Cortes Island. He
spent six months on Cortes, followed by
three years acting as a caretaker, gardener
andlabassistantforOrcaLab,aremotema-
rineresearchstationonHansonIslandnear
Alert Bay. “I had an epiphany about the ab-
solute importance of living my remaining
life with my values and vision aligned with
my life work,” says Solomon of the experi-
ence.“Itmeantseeingmyselfasanancestor
of future generations, accountable to them
for every action I take today.”
In1984SolomonreturnedtoTennessee
to be with his dying father. The following
Newell grew up in the U.S. in a wealthy business family. Her father was head
oftheNewellCompany,ahousewaresmanufacturerinUpstateNewYorkthat
got its start making curtain rods. He died when she was nine, and her mother
took his seat on the board of directors, shifting from homemaker to business-
woman at age 46, just when the family company was about to go public. By
the time she was 16, Newell had gotten an oblique education in business from
her mother and learned how to track the imposing number of family invest-
ments. “She had this huge ledger; assets above purchase price were in black,
below they were in red. . . . She would invite me to meetings with the portfolio
managers and ask me to help her make decisions.”
At age 21, Newell came into her first inheritance of US$4 million. It made
her head spin – but, thanks to her mother’s training, not out of control. “It
doesn’tseemlikemuchnow,butbackin1977itwasahugeamountofmoney,”
shesays.“ThereIwasinmyearly20s,thinkingofallthepossibilitiesconnected
with that amount of capital.” Travelling in Egypt on a university archaeology
course, she had an epiphany while watching locals grinding grain. “They were
using cattle harnessed to a wheel, and I thought, ‘My God, they’ve been doing
this for thousands of years. That’s sustainable culture. How long can we actu-
ally keep doing what we’re doing back in the States?’ ” Newell’s mother had
takenatraditionalphilanthropyapproachbysupportingthearts,hospitalsand
universities, but in the era of Love Canal and Three Mile Island this sort of
charity no longer seemed radical enough. “They didn’t really have a focus on
creating systemic change in society, and I could see that we were going down a
road that was, well, doomed, with an end point. The disposable society, where
the GDP booms but leaves destruction behind it and doesn’t account for exter-
nalities, that didn’t make sense to me.”
In the late ’80s, shortly after moving to B.C. with her geologist husband,
Newell attended a talk by SRI pioneer Amy Domini, founder of Domini Social
Investments. “That was probably the first ‘aha’ moment,” she says. “I realized
money could be used to leverage us back
intoconnectionandregeneration,andaway
from rampant consumerism.” As she began
altering her portfolio to reflect her ethics,
she had good instincts for profitable SRIs:
she was an early stakeholder in both Whole
Foods Market Inc. and the organic baby
food manufacturer Earth’s Best.
After her mother passed away in 1992,
Newell received two further inheritances
totalling $24 million. At that point, she
decided she had more than enough for
herself and put the first $17 million into
the Endswell Foundation. When the next
trancheof$7millioncameacoupleofyears
later, she earmarked it for an SVC approach
to investment activism. “I was dreaming of
what to do with it, and by the time I met
Joel knew I wanted to invest it in social-
change entrepreneurs,” says Newell. “I
realized he was a terrific person to handle
what I hoped to do with Renewal Partners.
I hate paperwork and I didn’t want to do
the deals – but I wanted to combine busi-
ness efficiency and the pragmatic idealism
of philanthropy. So he tackled it, invest-
ing $7 million in companies that would be
part of the solution, rather than part of the
problem.”
SMALL STEPS:
SPUD products travel about
800 kilometres to reach
their warehouse, versus
2,400 kilometres for the
average grocery store

4. BCBUSINESSONLINE.CA BCBusiness September 2008 55
regional strategy would leverage some fairly large ecological and social gains
in B.C., from the Great Bear Rainforest to Vancouver’s Downtown Eastside.
Leveraging a profit, however, was a different game. “That was the Renewal
Partners experiment: to go into these areas that are under-represented in con-
ventionalcapitalmarkets–naturalfoods,greenconsumerproducts,newmedia
–andshowtheycanbeprofitable,”saysSolomon.“Asitturnsout,exceptwhen
compared to the most aggressive funds, the returns are pretty similar to what
you get if you’re making the big bets, the quick hits, and supporting a lot more
thattumble.”Withoverahundredfor-profitSVCdealssignedtodate,Solomon
has averaged a minimum of two times return over the life of each $50,000-plus
Renewalinvestment,withsomecompanies–HorizonDistributorsandSeventh
Generation, to name two – bringing 15 to 20 times returns. “In all of this, what
we wanted was that portfolio of stories to prove it could be done. And because
weneverpushedforexits,welearnedthatcompanieshavetheirownlifecycles,
andyougetthemanyway:theentrepreneurgetswornoutorwasgreatatstartup
but not so good long-term. Exits tend to come.”
E
ntrepreneurs changing the world sounds a bit Pollyanna until you see
it working on the ground. In SPUD’s case – setting aside the boost to
organicmethodsandthethousandsofcartripssavedbypurpledelivery
vans – they act as the anti-Wal-Mart by making local farmers and sup-
pliers a priority. Most SPUD products travel an average of 800 kilometres to
reachtheirwarehouse,versus2,400kilometresfortheaveragegrocerystore.A
securedistribution chainencourages new local farms and suppliers,and telling
these stories – every SPUD product links to a supplier story – in turn increases
demand for local goods, creating a positive feedback loop. By spurring local
agriculture and supplier chains, every new SPUD warehouse from Calgary to
Los Angeles acts as a sort of virtual carbon sink, soaking up more and more
regional fuel emissions each year.
After driving us to lunch in his pastel-green Smart car, David Van Seters
tells the SPUD and Renewal Partners story over a Cobb salad. In 1994 Van
Seters was working as a consultant for
KPMG International, making a business
case for high social and ecological stan-
dards to senior corporate officers and
government officials. While completing a
study on sustainable food systems for the
University of California at Davis, the idea
ofhomeorganicfooddeliverygrabbedhim
asabusinessmodelthatwouldmergeethics
and profit. “Home delivery saves resources
and energy, and makes a more direct con-
nection between farmers and consumers,”
he says, gesturing with his fork. “I was keen
to set up a company like that. And because
I had charted the company as a social mis-
sionbusiness,Iwantedtofindinvestorsand
lenders who shared that mission.”
Van Seters put $150,000 of his own
money into SPUD; the trouble was finding
another investor who believed in his vision
as much as he did. This was 1998, before
the dot-bomb crash, so optimism about
web-based businesses such as SPUD may
have wooed some conventional investors
on board. But Van Seters was as wary of
traditional banks and venture capitalists as
theywereofhim.“Iwasworriedtheywould
askmetowaterdownthecompanyvaluesin
order to generate a bigger profit, and all of
a sudden we’re selling Coca-Cola.” Friends
pointed him toward Renewal Partners, and
year, he joined the Threshold Foundation, a San Francisco-based network of
wealthyheirsandphilanthropistsinterestedinfundingsocialchange.Solomon
began to see other possibilities for capital besides big-box stores and parking
lots. “I went to Threshold because I needed a social network of people who
were attempting to do things differently. All the non-profit
groups and change-the-world folks I came in contact
with had terrible business skills,” he says. “It struck
me that business and philanthropy needed to
come together, that my best role was to take the
legacy I’d been born into and apply it to a set
of values.” He was at the founding meeting
of the Social Venture Network, a support
group for triple bottom line entrepre-
neurs initiated by Threshold, and through
the network he met Ben Cohen of Ben &
Jerry’sHomemadeHoldingsInc.andAnita
Roddick of the Body Shop International
PLC. When his father passed away in 1986,
Solomon inherited $3 million and, inspired
by those entrepreneurs, his experiments with
social venture capitalism began – investing in a
chain of eclectic coffee houses and restaurants in
Nashville’s decayed urban core, as well as a develop-
ment company focused on infill neighbourhoods. “We
tried to start businesses with focused missions, to differentiate
them from the pack and create ripples of good.”
Solomon served as president of the Threshold Foundation from 1988 to
1990,andinhislastyearhereceivedanapplicationformembershipfromCarol
Newell. He jumped at the chance to return to B.C. and flew to Vancouver to
interview Newell in the Gastown offices of her Sage Foundation, an early so-
cial-change organization. There was quick alchemy. “Carol joined Threshold
and loved it. Over the next two years, we
talked about B.C. and our mutual interests
here. At this point, I had business, imple-
mentation and strategy skills. Carol had vi-
sion and resources and a direction that she
wanted to go.” That direction was
putting Newell’s $24 million to
work leveraging the econ-
omy – primarily in B.C.
but also further afield
– toward conserva-
tion and social justice,
using the Endswell
Foundation to fund
non-profits, and
Renewal Partners to
capitalize social pur-
pose businesses. It was
a chance for Solomon
to get his hands dirty on
amuchbiggerscale,andhe
couldn’t resist. After he and
Newell sketched out a 50-year
plan and a 500-year “imagination”
of the social impact they hoped (in some
small part) to have, Solomon began seek-
ing SVC deals for Renewal Partners in late
1992. He tapped into his network of social
mission entrepreneurs in B.C. and across
North America, sniffing out noteworthy
startups. Through Endswell, Renewal’s
“That was
the Renewal
Partners experiment:
to go into these areas
that are under-represented
in conventional capital
markets – natural foods,
green consumer products,
new media – and show
they can be profitable”
– Joel Solomon
“That was
the Renewal
Partners experiment:
to go into these areas
that are under-represented
in conventional capital
markets – natural foods,
green consumer products,
new media – and show
they can be profitable”
– Joel Solomon

5. 56 BCBusiness September 2008 BCBUSINESSONLINE.CA BCBusiness September 2008 57
The launch of the Renewal2 fund this
December will help SVC continue to break
out of the philanthropic eggshell and into
the world of outside money and limited
partners. The rest of the social venture
community is watching with interest.
For years, says Tasch, Renewal
Partners has been looked on
by international colleagues
in the SVC and SRI worlds,
not only as an influen-
tial pioneer, but with
some amazement. “I
can’t think of another
group that I know that
is doing this work with
the vision and proactive
intensity that they are.
Renewal has moved more
creatively and with more
mission focus into a kind of
community-first, bioregion-
firstinvestmentmethodologythan
pretty much any other fund I’ve ever
seen,” says Tasch. “Joel tends to downplay
the money they make, but they’re getting
returns on top of supporting these trans-
formative companies. Basically, the whole
social investment world wishes it could do
what they’re doing. It just doesn’t know
how to do it.”
Solomon says he hopes to build a group of 20 to 50 limited partners with
Renewal2–“ifwegetto$50million,yahoo;ifwehit$30million,that’splentyto
keepusbusy”–andprojectsathreetimesreturnonthenewfund.Theprospect
ofRenewal2breakingSVC outoftheboutiqueworldofindividualphilanthropy
is welcome news to colleagues such as Tasch. “In a perfect
world, social investing would lead to large numbers of
small investors investing in large numbers of small,
local-first businesses,” says Tasch. “What we’re
all doing is creating a new financial market,
one based on a new understanding of the
concept of prudence. Investors in the 21st
century will consider the health of bio-
regionsandcommunitiestobeintegralto
fiscal prudence, not something to attend
to after you’ve created wealth.”
This past November, Solomon re-
ceived a no-complications kidney trans-
plant from his friend Shivon Robinsong,
one of the founders of Hollyhock on
Cortes Island. It’s the sort of ending Newell
and Solomon, true to their organization’s
name, are plotting for the planet: after decades
of an uncertain and gloomy prognosis, lasting re-
newal. “We’re now in a very dynamic, macro-forces
moment in history, and Renewal is just one variant of what
is a natural response of humans in stressful times – to seek and tinker with
possible solutions,” says Solomon. “We’ve been part of a movement to bring
money and social purpose back together, and social ventures are a super-
exciting cauldron of the new economy. It’s less evolved, and that makes it
interesting. I’m convinced there will be billions of dollars in this in not too
many years.” n
after some mutual background sniffing they struck a deal. Solomon initially
invested$45,500andprovideda$50,000loan;insubsequentfinancingrounds,
SPUD would receive a total of about half a million dollars.
Money was only part of the Renewal Partners offer. Solomon quickly be-
came a SPUD vizier, connecting Van Seters with dozens of social entrepre-
neurs, consultants and investors. “Over the past 10 years, Joel has sent me
literally thousands of emails with suggestions and referrals, which has been
absolutely fabulous,” says Van Seters. “A typical VC might ask for a seat on the
boardandgetinvolvedinmanagementdecisions butwouldnotgetinvolvedat
nearly the level that Renewal Partners did. Most VCs view money as their pri-
mary offering, but Renewal offers partnership. One thing I can say for certain
is that I wouldn’t have made it, I wouldn’t be in business today, without them.
Fortunately, the value of SPUD shares has risen dramatically, so we’re finally in
a position to reward them for all the good work they’ve done.”
These days Renewal Partners does about 15 deals a year, roughly two-
thirds of which Solomon spots through his social venture networks; of the
hundred or so unsolicited pitches he receives each year from entrepreneurs,
maybe five make the final cut. Renewal has kept a regional focus in its attempt
to preserve B.C. habitat and hold the province up as a model economy. But it
makes a point of reaching out beyond B.C. to put down wider roots. “About
two-thirds of our deals have been local, one-third have been continental,”
explains Solomon. “It’s a globalized world and we need intellectual resources,
social networks and allies from other regions. In our new fund, we’ll probably
aim for about 50-50.”
SVC funds such as Renewal make up a hair-thin sliver of the roughly $3.5
trillion in North American SRI funds. Woody Tasch, chairman of Investors’
Circle – an SVC network of about 200 angels, professional VCs and founda-
tions such as Renewal Partners – says that 99 per cent of those SRI trillions are
in screened portfolios and public companies. “The SVC side is small and rel-
egated to angel investors and a small number of relatively small – and I say that
advisedlybecausewe’retalkingbillionshere–ofsocialpurposeventurefunds.”
Experts such as Tasch are reluctant to put a
figure on the SVC field because the dollars
are usually pooled in exclusive investment
funds, available only to foundations and
high-net-worth individuals – hard to find,
harder to track. “The sector is still in its
infancy,” says Solomon. “If you’re talking
big clean-tech funding, we’re in the hun-
dreds of billions, but my definition would
be ‘investment defined by authentic triple
bottom line goals in undercapitalized sec-
tors.’ And my guesstimate for that is we’re
still in the sub-$1-billion level.”
This may be small potatoes, but the
number of SVC potato farmers is grow-
ing sharply, and their roots are spreading
into the mainstream. Columbia Business
School’s RISE (Research Initiative on Social
Entrepreneurship) project lists over 60
funds that now invest in triple bottom line
start-ups; larger SRI funds such as Calvert
Group Ltd. now direct a small percentage
of their money towards social mission en-
trepreneurs. Of the half-dozen SVC funds
whosenamestendtocomeupwhendiscuss-
ingRenewalPartners–UnderdogVentures
inVermont;theRudolfSteinerFoundation
Inc., TBL Capital, Investors’ Circle and
Good Capital, all from San Francisco; and
Investeco Capital Corp. in Toronto – three
have launched in the past five years.
Renewal
Partners does
about 15 deals a year,
roughly two-thirds of which
Solomon spots through his
social venture networks; of
the hundred or so unsolicited
pitches he receives each
year from entrepreneurs,
maybe five make the
final cut