Investing in People

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Different funders have different approaches to providing capital, for good reasons. But I think that one of the most important stages of a building an organization and a new solution is the early stage. Social entrepreneurs must be able to find financial support in their budding, developmental stages if they are to accomplish their vision and create growth and stability in their organizations.

Ashoka’s selection criteria is based largely on the social entrepreneur and their life, history and personality. They judge all of their fellow candidates against the same criteria: innovation, creativity, entrepreneurial quality, potential social impact of the idea and their ethical fiber. These criteria focus on both the quality of the person as well as the quality of their idea. The fellow must demonstrate an exceptional history of creativity and innovation as well as leadership qualities and true dedication to their cause. They are expected to plan on spending “the next 10-15 years making a historical development take place.” Demonstrating true ethical fiber is critical because the social entrepreneur who is trying to effect large scale change in the world must be someone who is trusted.

Besides just evaluating the innovator as a person I would also make sure to have criteria that are more related to the idea, the impact and the model. Early stage entrepreneurs do not always have the time or history to prove the sustainability of their ideas but by using some traditional investing techniques the likelihood of their success can be more easily predicted. Commons Capital is an “early stage venture capital fund” focused on helping entrepreneurs launch sustainable companies that will produce financial returns as well as social and environmental impact.

Their strategy is built around proven venture capital techniques as well as analysis of social impact. They seek to support companies with superior management, proper technology and competitive advantage and substantial growth prospects. They focus on early stage companies that deliver market solutions to major social challenges like: healthcare, education, energy and the environment. A unique part of their strategy is that they focus especially on companies owned or managed by women or minorities.

No matter what approach we take when siding with a particular selection criteria we have to remember that ultimately we are investing in people. Whether it is the well-vetted organization tackling malnutrition, the champion social entrepreneur with a new innovative idea or the woman living on $2 a day who gets a microcredit loan, in the end we are always investing in the people who create and benefit from the impact. In the end we should focus on how the money invested will create opportunity and lasting change in the lives of the targeted people in need.

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