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Social good incubator2
The document proposes a Social Good Ecosystem Incubator model to support pre-proof of concept social ventures. It suggests structuring the incubator as an ecosystem where established organizations help offset costs for early-stage ventures. A technology layer across projects would provide visibility and collaboration. A Social Good Ecosystem Pooled Fund would provide cash for projects through structures like bonds that guarantee investor principal while funding the incubator ecosystem. The model aims to proliferate social entrepreneurship by supporting many small ventures rather than just one large venture.
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Social good incubator2
- 1. Social Good Ecosystem Incubator SupportingPre-Proof of Concept Social Ventures by Rethinking the Resource Allocation Paradigm
- 2. What Is TheOpportunity? Develop a prototype for a solution that will solve a systemic problem!... To totally change the game… to make a difference at a global level… Ramp up capacity for the movement for change in our local area
- 3. The Paradigm Shift 1.Systemic View of Resource Allocation… from funding one project at a time to funding one ecosystem at a time! 2. Combining two resource allocation concepts into one Early stage seed funding… cash Incubators… in-kind Different forms of value
- 4. What We WillCover Social Finance concepts and articulation of the systemic problem Present concept for prototype of the Social Good Ecosystem Incubator Present initial sketch of Social Good Ecosystem Pooled Fund Scalability: how we can make the model go viral!
- 5. What is aSocial Venture? There are many definitions. I am offering the following… ‘Projects, the objective of which is to bring about positive social change’ Note that, there is no reference to said projects necessarily having to make money in this definition
- 6. Why this definition? Iwill start with the following assumptions… The world needs fixing We need more social innovators We must provide social innovators maximum flexibility to innovate Hence, we cannot allow the requirement to make money to be a constraint on the development of innovative models.
- 7. First... A roughpicture of the current Funding landscape returns NOTHING!! Charities/ Not For Profits For Profit Companies -100% rate of return Traditional market rate NOTHING!! Socially Motivated Financially Motivated NOTHING!!
- 8. So what isneeded is... Charities/ Not For Profits For Profit Companies -100% rate of return Traditional market rate returns Social Ventures -for profit -not for profit Socially Motivated Financially Motivated Social Investors looking for Social AND Financial Returns Socially and Financially Motivated
- 9. What is theProblem Being Solved? Lack of resources (cash and in-kind) for pre-proof of concept social innovators… which is a systemic problem … why is this a systemic problem?
- 10. The Systemic Problem Seed stage social innovation projects (as defined) carry very high risk and very little financial return potential (by definition) This is to be contrasted with financial innovation which behaves like…
- 11. ‘Financial Driven’ Angel Investments…return distributions Socially motivated investments don’t have this return potential Seed stage Social investments have high risk and moderate return potential All seed stage projects are risky but some that are profit motivated do really well!... This compensates for all those that do poorly…
- 12. Guess where thebottleneck is? Pre Proof of Concept Proof of Concept Mid Stage Late Stage No $ Small $ Volume of Ventures Some $ Huge $!Enterprise Centric Model
- 13. Where is themoney going? High Financial Return/Low Social Return - traditional investments… served by existing capital markets infrastructure High Financial/High Social Return - traditional ‘social ventures’… served by current social financiers… at least to some extent Low Financial Return/Low Social Return - badly designed projects… deserve no external capital Low Financial Return/High Social Return -No financial support from social investors!
- 14. Taking a SystemApproach… from One To MANY!
- 15. Traditional Funding Mindset… scaleone project Scalability: support the one project that has the highest probability of doing extraordinarily well. Problem… Ignores 9/10 projects Reinforces survival of the fittest Underlying Perspective Competition versus cooperation
- 16. Social Change andCultural Change… proliferating social entrepreneurship The Problem with the One Project Scalability model… Is it better to fund 1 * $200,000 into a great project that will scale… or 10 * $20,000 into smaller unproven projects? Not clear from a financial perspective A definite NO from a cultural change perspective
- 17. The Cultural Mix Isit better to have?... Highly Scalable Projects Moderately Scalable Projects From the perspective of the system... The world!... How do we scale the entire system?
- 18. How Can WeSolve the Problem of Lack of Resources? In principle there are three ways 1. Convince social innovators to focus on making money 2. Convince investors to assume reduced financial return 3. Structure transactions to mitigate financial risk 4. Structure the relationship between projects (and the community) to flow non-financial value to the project … think in terms of ecosystems… and provide resources to the entire system
- 19. What is anIncubator? Co-location space Provide support services… • Infrastructure • Advisory Connect projects to mentoring support For profit: equity stake in projects
- 20. What is aSocial Good Incubator? Internal Ecosystem located in a Co- location space Provide in-kind support services… • Infrastructure • Advisory Connect projects to mentoring support Offsets financial cost
- 21. How Can AnIncubator Mitigate Financial Risk? What is the primary financial obligation for projects situated in an incubator?... Lease payments (and other costs of being in incubator) So, the question is…
- 22. How Can YouReduce the Burden of Lease Payments for Seed Projects?
- 23. View the IncubatorAs An Ecosystem! Hmm… what does this mean?
- 24. Distribution of LeasePayments (costs)… sufficient in aggregate Organization Type Lease Payment Capacity For Profit Service Profit Service Providers Strong cash flow… and ability to cover lease payments Established Social Business Service Providers Reasonable cash flow… and ability to cover lease payments Early Stage (post proof of concept) Service providers Some cash flow… can manage reduced lease payments Pre Proof of Concept Service Providers No cash flow… no ability to cover lease payments
- 25. Hypothetical Project Mix SERVICE TYPE ForProfit Social Venture Not-for- Profit Technology Technology infrastructure/web development Strategy Business/strategic planning Media Film, video, content development Crowdfunding Anti Pipeline Activists
- 26. Why would sustainableorganizations ‘cover’ lease payments for early stage projects? Be a good community citizen Provide in-kind support for social enterprises Receive in kind-support from other organizations in ‘ecosystem’ Receive financing from Ecosystem Pooled Fund
- 27. Hypothetical Financial Model REVENUE ForProfit $9,000 Social Venture (cash positive) $1,000 Not-for-Profit $300 COSTS Lease $10,000 Internet $100 Insurance $200
- 28. But Projects NeedMore Than Their Costs Being Reduced… So extend the ecosystem beyond the boundaries of the Social Good Incubator… … and build a Value Exchange mechanism within the ecosystem… a Social Good Currency
- 29. Social Change Ecosystem SOCIALGOOD INCUBATOR Social Change Ecosystem
- 30.
- 31. What is anEcosystem? “An ecosystem is a community of living organisms…” “…ecosystems are defined by the network of interactions among organisms, and between organisms and their environment…” “While the resource inputs are generally controlled by external processes like climate and parent material, the availability of these resources within the ecosystem is controlled by internal factors…”
- 32. Why Ecosystems Now?...The connectivity network 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) We are connected like at no other time in history!
- 33. The Collaborative Context Informationflows 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 Collaboration makes sense!
- 34. Build a TechnologyLayer Across the Ecosystem of Projects Social Change Ecosystem SGEI Why?
- 35. Emergence, Presence, Visibilityand the Fluidity of Early Stage Projects Early stage projects are… Basically concepts… … residing in the head of one or two people … lacking in resources … lacking moral support … they can go in many directions … depending on people… money… opportunity… If only we, as social entrepreneurs, had a sense of the bigger picture (the Ecosystem)… and others that were working on similar things! Build a shared virtual space!
- 36. Systemic Visibility… anexample
- 37. Systemic Visibility… anexample Early stage projects are fluid… what if we could see what others were doing and where they wanted to go?
- 38.
- 39. OK… but howdoes this model scale? What do we mean by scale?... Remember the goal is to proliferate the world with more social entrepreneurs! To Scale we need to… 1. Ramp up the number of federated Social Good Incubators 2. Ramp up Ecosystem Pooled Fund
- 40. What about Governance?... Cooperative Operateas a cooperative Democratically governed One vote per member organization Membership classes can be defined, however if necessary
- 41. A Few Principlesand Processes To Drive Scalability of Model Develop and document Prototype Develop Open Source platform to disseminate prototype Develop Federated Open Collaboration Platform to connaect incubators Develop an emotionally compelling story Utilize video Utilize social media channels
- 42. Federating the SocialGood Incubators with Open Architecture SG Incubator SG Incubator SG Incubator SG Incubator SG Incubator Open Source Best Practice Repository and Communication System (Embrace P2P/Sharing Economy Principles) SG Incubator
- 43. In Principle an‘incubator’ is just an ecosystem with a physical footprint SG Incubator 1 SG ‘Incubator’ Ecovillage 2 Social Housing Complex Ecovillage 1 Open Source Best Practice Repository and Communication System (Embrace P2P/Sharing Economy Principles) SG ‘Incubator’
- 44. The Social Good EcosystemPooled Fund Developing Ecosystem Focused Funding Structures
- 45. But Projects NeedReal Hard Cash As Well!... Introducing the Ecosystem Pooled Fund Capital Distribution Models!
- 46. The Paradigm Shift Constructthe funding structures in a manner that is targeted at the unique features of the SGI Model, in particular… 1. The SGI is based in a physical location 2. The SGI provides capital to high risk projects
- 47. Traditional Pooled Financial CapitalDistribution Models Manager Company Company Company Company Company Financial Capital Pool Investor Investor Investor Investor
- 48. Ecosystem Pooled FundCapital Distribution Models Project Project Project Project Project Social Good Ecosystem Pooled Fund Investor Investor Investor Investor Cooperative Crowdfunded Creative Structures Targeted at Financing Ecosystem Social Good Ecosystem Incubator
- 49. Zero Coupon PrincipleGuaranteed Social Good Bond… an example Raise $1,000,000 via Social Good Bond Invest $930,700 in a 5 year zero coupon bond guaranteeing investors their principle back Invest $69,300 in ….. A project… a pool that can invest in other projects…
- 50.
- 51. Ecosystem Pooled Fund $1,000,000– Principle Guaranteed! Ecosystem of Projects Investor Investor Investor Investor Investor Fund Entire Ecosystem Governed As A Cooperative Targeted at High Net Worth Individuals … that are socially conscious Targets Another Problem: how do we unlock private sector capital?