Melissa CheongJournal #1
Enterprise Solutions to Poverty works to accelerate the creation and adoption of inclusive business models by identifying and mobilizing corporate leaders already engaged in or committed to inclusive businesses. Currently, ESP is seeking to help drive further development of the social enterprise venture capital fund universe. In addition to advising emerging fund managers about their operational strategies, ESP has been a critical part of these social venture fund’s formation and development. This summer, my position with ESP will be supervised by Nancy Barry, the founder and President of NBA, Enterprise Solutions to Poverty. My work with ESP will be focusing specifically on advancing sand promoting social venture capital affiliates. This is currently a high priority for ESP and one organization in particular, Innosight Ventures, has approached Nancy and is seeking advisory services regarding their entry into the social venture marketplace. They have demonstrated the potential to drive business-driven solutions to poverty through their innovative business ventures and social agenda. I am both excited and thrilled to be working with them over the next few months, as I am sure that this will be a great experience.
In addition to providing the organization general research support in an effort to help them better understand the social venture marketplace, I will be working to assist them in identifying relevant potential investors. With access to ESP resources and relationships, I will be responsible for delivering a well-thought out list of industry contacts that have a high probability of evolving into valuable strategic or financial relationships for Innosight as they continue to make investments in the social venture space. They have requested that ESP assist in shaping their overall social strategy and support them in better defining what their mission should be and how this mission should be presented to the market. Additionally, I will be working to help them improve their marketing materials so that they can better present their investing strategy and prior history of investments. I will also be responsible for helping them to develop the performance evaluation metrics and standards that will be required of their social investor base.
Journal #2
One month into my project with ESP and Innosight Ventures and I am pleased that we have made a substantial amount of progress. Recently, I had the opportunity to travel to Baltimore in order to meet with the rest of the team and participate in some collaborative brainstorming. It was a great opportunity to get to know my fellow project teammates. As the current fundraising market continues to look grim, we are under pressure to develop an alternative solution to meet the firm’s fundraising needs. More specifically, there are two new ventures that they are seeking financing for – Guaranteach and Razor Rave.
Guaranteach is a US-based venture that provides children’s educational tutoring services at a lower price point that is accessible for low-income families who would otherwise not be able to afford such a service. Razor Rave is an India-based venture that provides grooming and hygiene services for low-income consumers at the base of the pyramid.
Our team has developed a model that could describe as a combination of a pledge-fund and a membership-based network of investors. The idea is that we would create a network of social investors who are interested in gaining access to our pipeline of investment ideas and proprietary deal flow, stemming from the network’s relationship with Innosight Ventures. We are struggling to determine exactly who best meets our investor profile – Angel investors or institutional investors. Both have their advantages and disadvantages and we are trying to make sure that our structure is flexible enough to accommodate them both in certain ways. We are also struggling with how we think that, we, the network managers should be compensated. We have interviewed a range of individuals from the Angel world and foundations in order to assess what we think that investors will be willing to pay in exchange for the investment opportunity that we are offering. Hopefully, we will have a better sense of what is reasonable in the next few weeks.
Journal #3
My work with ESP and Innosight Ventures is starting to wrap up and I am amazed at how much our project focus has changed over the past two months. ESP has continued to work with Innosight in assisting them in the development of the most efficient and appropriate fund structure for this innovative social venture firm. Whereas we had originally thought that targeting individual social angel investors was going to prove to be most successful strategy, it has become apparent that the organization has more to gain from targeting organizations and institutional investors. Not only does this change in strategy open doors to deeper pockets, approaching and continuing to maintain a dialogue with strategic actors in the social venture space allows Innosight to build its brand and improve its relationships with other organizations. It has quickly become apparent that there is much to be gained by building strategic partnerships and establishing relationships with others in the field. This process has also been extremely valuable to ESP, as we continue to build knowledge about the emerging social venture investing field. We continue to learn more about innovative business models and different approaches undertaken by different organizations globally.
As we have shifted away from individual angel investors, towards more traditional institutional investors, we have also started to question our proposed semi-pledge fund model. We are currently discussing whether or not it might make more sense to adopt a more traditional venture capital model. Currently, it is believed that this would make more sense if we were to secure a large capital commitment from a potential investor. A management fee-based structure would enable us to most effectively fund our operating structure and execute our investment strategy. Although it is somewhat frustrating that a great deal of the work that I completed earlier this summer may be thrown out the window, I can say with confidence that I learned a lot from my experience working at ESP. Furthermore, I loved gaining exposure to Innosight Ventures, its talented professionals and groundbreaking social ventures. We were able to secure financing for Village Laundry Services and made a great deal of progress in advancing the fundraising process for both Razor Rave and Guaranteach. Overall, this was an invaluable professional experience for me.
