Invest in the System
In figuring out a criteria for impact investing in Social Entrepreneurs, I looked at the Skoll foundation and Ashoka. As much as I am a fan of Ashoka, Skoll’s approach to investing in Social Entrepreneurs mitigates risk better by focusing more on organizations (and proven organizations) than on the person involved.
To be sure, Ashoka’s focus on investing in people works incredibly well and has its competitive advantage, but I think it falls in line with the idea of creating systemic change to invest in a proven system ready to expand.
Skoll uses a “4-1” evaluation approach, illustrated below:
The Skoll foundation looks to make sure that an organization addresses one of the most pressing issues of our time, that the approach innovatively disrupts the status quo, that it has already proven an ability to make an impact and shows potential for much more, and that the organization is at an “inflection point, ready to move up to a larger scale.
Beyond this 4-1 framework, Skoll does look at the Entrepreneur for a few things. The Skoll foundation ensures that the person can benefit from Skoll through more than just funding, that the person is extremely visionary, and that the person has a good plan for long-term financial and operational sustainability. The Skoll Foundation doesn’t appear to look as rigorously at the entrepreneur as Ashoka (though the Skoll Foundation certainly vets the candidate very closely and seriously,) but I believe a part of sustainability is getting beyond the leader and making sure the plan will continue even if the leader leaves.
That I think, is the biggest advantage to the Skoll approach. It is structured in a way that I foresee a greater chance in the benefiting organization ultimately succeeding even if the leader leaves or suffers some sort of catastrophe.