Philanthropists are “essential” in the social impact investing marketplace, says award-winning social impact and angel investor, Suzanne Biegel. From chocolate to disruptive to adaptive innovative social impact investing solutions to human-centred designed innovation there is a plethora of innovative opportunities for philanthropists to invest in direct positive impact. City Philanthropy caught up with Suzanne in advance of this week’s Beacon Award Fellowship event to ask a few questions on all things social impact investing and philanthropy.
CP: How would you define social impact investing and do you think definitions even matter?
SB: I would define it as investing to have an intentional positive social or environmental impact and a commitment to try to measure and track that impact. The intentionality is key. There are so many definitions — values based investing, impact investing, social responsible investing — at a certain level I don’t think it matters. What matters is your intent as an investor and your commitment to moving capital to businesses, social enterprises, charities that have a measurable positive social impact. In fact, sometimes it limits us to “label.” All investment has impact. You can choose to aim to have direct positive impact.
CP: What impact do you think social impact investing is having?
SB: For investors, I think the impact is to reconnect people to the meaning of money. And to give people the opportunity, the permission, to make choices which balance financial, social, and environmental returns. For entrepreneurs, the impact is to have access to capital from values aligned investors; investors who care about and want to see problems being solved through business or business like approaches. For the issues we’re addressing impact is about health, education, financial inclusion, access to resources for marginalised populations, sustainable agriculture, poverty alleviation - where shall we start? We could talk about lives saved, lives improved, carbon mitigated, joy created, wellbeing enhanced, financial inclusion for the unbanked. We could talk about children in school because mothers have access to sustainable employment and better livelihoods… it could be about local to global, rural to urban, about babies or about older people; it depends where you want to focus the question. I also think that it is engaging next generation philanthropists and a way to engage across multiple generations in the family wealth and how to deploy it.
CP: How far away are we from an impact investing market, given all the hype around it? And, is it working for society?
SB: I think that a functioning marketplace has significant capital flows, symmetric information for buyers and sellers, high integrity research and ratings, active and significant investors, high functioning intermediaries, data and results tracking, diverse product that meets the needs of different types of investors and those seeking capital. You could say that in some ways we don’t have a mainstream functioning marketplace… but in my opinion we still don’t have enough investors participating, we have road blocks and obstacles in the form of those who are advising on moving capital or moving discretionary capital (significantly, wealth managers and bankers,) and we still don’t have enough product for different appetite around risk, liquidity, and return profiles. We also have a lack of awareness and education of the investors and those who influence them. On the other hand, we have more than enough of all of those things to be active in the market and building the market. I think we are creating the market right now and those of us that are active in it are leading the way. You can invest now across every asset class and there is no excuse not to be aligning your investment assets with your principles and values.
CP: What is your understanding of the term ‘innovative’?
SB: For me, 'innovative' can be product or service, business model, or value chain. It can even be a financing structure. Of course I want to see competitive advantage and unique value propositions. I want to see innovation in the context of really solving problems or seizing market opportunities, and innovative in terms of re-valuing undervalued resources - whether that is re-valuing a role in a business, revaluing women and fair pay, revaluing people with different abilities. Innovative in tech can be very different from innovative in reconnecting broken supply or value chains. I look for evidence of human-centred design, I look for entrepreneurs who are solving real problems or creating really delightful products or services for their customers. For me, solutions can be disruptive or they can be adaptive and depending on what you’re aiming for and your theory of change, either can work. Innovative can also be in a mind-set.
CP: Where is there real innovation? Is it just social value?
SB: I think that providing financial inclusion, efficiently, transparently, for people who have been at the mercy of money lenders or loan sharks is innovative. I think that using games and apps to support people with speech and communications difficulties, who have been massively underserved by old solutions, is innovative. I think that providing access to cognitive behavioural therapy online, 24/7, any place, for people who have limited access to such services and solutions, is massively innovative. I think that finding creative, brilliant products made from ancient fruits, and revaluing women smallholder farmers and creating sustainable livelihoods for them is hugely innovative. Using tech to drive energy efficiency; using recycled materials to create new products; harnessing the power of the sun and the wind and the sea to provide energy access — all these things are innovative. I’m probably less excited about giving me another way to donate or another way to shop. I also think that better understanding and addressing behaviour change is the next frontier and we are so primitive in that. I also think we are now JUST starting to understand how to tackle behaviour change and that is the key to unlocking the uptake of so many innovations that WE ALREADY HAVE.
CP: In which direction is innovation heading?
SB: I think human-centred design is a massively underutilised discipline. We spend so much time, money, and effort making products and services that people don’t want or don’t really solve problems. I’m learning a lot from a project I’m working on with a group called fuseproject – they are experts in human-centred design from both a product/service perspective AND a whole business perspective. I think that we have only just begun to tap into environmentally regenerative solutions. I’m really interested in and we MUST be interested in sustainable aquaculture, water efficiency and water solutions. We need to create access to water and sanitation for the billions of people who still don’t have access. There needs to be a serious uptake of solutions like the agro-ecological methodology of the System of Rice Intensification (SRI) for increasing the productivity of irrigated rice by changing the management of plants, soil, water and nutrients in sustainable agriculture as well as solutions for the ageing market. A tech generation is starting to age, their parents are ageing, and solutions to make life better as we age are just in their infancy. I don’t mean delaying death. I mean making life better while we’re living.
CP: Where do you see philanthropists helping the social investment market?
SB: Philanthropists are one of the most important categories of individuals and institutions in this entire sphere of impact investing. Philanthropists care about solving real social problems, they can be strategic, they can be patient, they can bring their content expertise, their analytical expertise, their capital to work in myriad ways. They can philanthropically fund infrastructure and support for the field; they can fund first loss tranches of investments; they can take tiered positions in investments to unlock private capital. They can lead by seed funding or overhead funding new funds, new fund managers, new intermediaries and research. They can be first into a venture with a grant to get past proof of concept, or they can provide scale-up capital for solutions that work or are closer to being proven. They can hold the line from a governance standpoint on social outcomes not just financial, and they can fund those who need to be able to test and try and fail so that we can learn. Philanthropists are often the ones who can decide to take a lower return to achieve a higher social outcome or more scaled social outcome, or they can push for something really commercial. Philanthropy and philanthropists are ESSENTIAL in this marketplace. There is so much opportunity to play a vital role. I also want to reiterate that for families looking to engage with next generation family members - this is one of the hottest topics and a huge opportunity for family engagement.
CP: Why did you set up Clearly Social Angels?
SB: To find other values-aligned individuals, early stage fund managers, philanthropists, families who could actively and intentionally deploy capital to the best and brightest entrepreneurs and fund managers making social and environmental impact. Can I say also - to hold a beacon for others to come and join us. To show entrepreneurs that there ARE values-aligned, active, experienced investors who can bring their financial, social, and intellectual capital and experience to help them. And to demonstrate that there is a market for this. Also, it’s just really fun. I love our angels. I’m so appreciative that Rod Schwartz (founder of ClearlySo) wanted to do this with me. And for the amazing team that has now come in to grow and run this. Of course I also want to demonstrate that we can do well and do good - make money and make impact. I feel like more people need to see it in action; it’s more rewarding to do this in a group, and it’s more efficient than doing deals by yourself. To have a team like ClearlySo behind it, scanning for the best entrepreneurs, getting them investment-ready, helping people see how to get an investment done, making sure everyone feels like its fair and above board and clean, that also makes a huge difference in driving more capital. Also, there’s chocolate! With options like Specters Chocolate Bonds, which ClearlySo have invested in, have plenty lots of ethical and high quality chocolate around. After all, chocolate makes people happy!
CP: What impact do you see them having?
SB: Well, we (our angels) have invested in about 30 companies directly, we have helped those entrepreneurs prove their business models, pivot their approaches, we have played governance roles as board members, we have advised and been shoulders to lean on; and are holding entrepreneurs accountable. We have opened doors for new clients, new employees and new approaches. In terms of outcomes I look at the jobs created, the number of unbanked people being banked, the smallholder farmers having sustainable livelihoods, the patients who have access to mental health services, the differently-abled people who have access to brilliant tech solutions to enhance their lives. I wish I had a summary scorecard I could give you to show what our businesses are delivering. Even for the entrepreneurs that we haven’t invested in, I think we’ve often had an impact by giving people real, honest and smart feedback. We have also unlocked a lot more capital than our own, by committing our capital. I think we have a reputation for moving money and that’s important. Entrepreneurs need investors who will show up for them, not mess them around. I think we have been an amazing support network for each other, as angels, helping each other to learn and also to develop their impact investing muscles.
Suzanne will be sharing more about her experience of innovative philanthropy through impact investing at the Beacon Award Fellowship event on Wednesday this week at Senator House.