MIT Healthcare Financing Lecture

mit_crest_logoIf 2014 had a narrative arc, it would look like a series of sprints – from obtaining visas, starting a new job, moving apartments to being in a new industry – all leaving me just enough room to catch my breath before the next leg begins. Amongst the many life-sprints that have occurred, one particular sprint has been most unexpected and rewarding – both personally and professionally.

It started in Dec, 2013 – when I received an email from a friend whose paths I crossed during my Nairobi days in late 2012. She offered the opportunity for me to become a guest lecturer at MIT Sana’s spring course on Global Health Informatics to Improve the Quality of Care. They were looking for someone to speak about financing in healthcare in rural/resource-limiting settings. Truthfully, it has never crossed my mind that I would be lecturing at MIT especially at this stage of my career/life, but embracing Sheryl Sandberg’s philosophy of “if you’re offered a seat on a rocket ship, don’t ask what seat! Just get on!”, I accepted and found my way to the MIT campus in the beginning of March to deliver my lecture.

The course itself  “focuses on innovations in information systems to accelerate improvements of health outcomes in developing countries. The course will focus not only on technology and mHealth as it applies to global health, but also on broader issues necessary for the successful deployment of information systems such as quality of care, disease burden, and project management. This is the fourth iteration of the course, which is a collaborative offering from Sana, MIT, Partners in Health, Harvard School of Public Health, Harvard Medical School, and a network of international partner academic institutions located around the globe.” – MIT Sana

During my lecture, 400 students were watching from 45 locations around the world. The lecture itself was a very basic introduction to financing as most of the students do not have finance or investing backgrounds. It will also be turned into an official MOOC edX/MITx curriculum in 2015! If you’re interesting in watching my lecture, it is available online.

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Thank you Sarah, for this amazing opportunity.

Responsibilities of an (Impact) Investor

For the past few months, I have been reflecting a lot on my role as an investor. Business plans and proposals come across my desk and as I shift through them, it really struck me on how large a responsibility investors play in accelerating trends, shaping a community or even country’s economy, but yet how little this responsibility is spoken about in the investing circles. We place so much emphasis on finding the right business, the right management team, the right social impact, that sometimes we get lost in our own capacity to recognize what really is innovative and what truly deserves to be funded. So, from my experiences, here’s what I think an investor’s responsibilities are on top of the typical investment work:

1) Investors need to live in the future. 

This is a point I feel very strongly about. If you’re an investor: VC/PE and particularly if you play in the startup and impact investing work, (as Fred Wilson pointed today in his blog post and what Paul Graham said):  you should live in the future and see what is missing. So well said. I’m currently in an environment (yes, I recognize that I am in Africa – so feel free to shower stereotypes), where I know investors who are still using yahoo mail, internet explorer and Windows 2003 (true story!). Not to say that there are anything wrong with the products, but more so – I think it’s so important to be keeping up with the trends in the world, technology being one of them. How can you expect to identify an investment that is ‘ground-breaking’ if you’re not even following the newest trends in your sector? Taking this a step further, if you are following these global trends vs. local trends, it is then our responsibility to seek out entrepreneurs who can close this gap and further elevate the developing world, or the developing world would forever be playing ‘catch up’.

2) Don’t be a sheep. 

This responsibility is particularly important in the impact investing space. Given that we’re playing in a field that is largely uncharted, risk is high and typically, most investors are unable to size up a new market and end up relying on the opinions of other investors. aka. I’ll invest if someone else will too aka. a sheep. Impact investors say that they are risk tolerant, but few translate this tolerance into signing along the dotted line. A very chicken and egg situation. Hence, I have to constantly push myself to understand what is the right balance of being a market leader but also not be a reckless investor. Balance is key.

3) The need to close and disburse faster

There are a lot of delays that occur in [impact] investing. The courting of investors and [social] entrepreneurs, the dance between finding the right termsheet, the issue of making sure that the social impact actually has an impact, and [insert your traditional delays in investing here]. This is the norm. This is my challenge to investors: recognize that the longer the delay, the bigger the strain on the business/organization. From an entrepreneur perspective, you’re constantly watching your ‘runway’ aka. how much money do I have before I run out, and a delayed closing round and disbursement is to the [social] entrepreneur’s disadvantage as well as to their customers. If we’re really standing with the poor, then deals need to close quicker with clear and simple terms, as the longer the delay, the more people are missing out on potentially experiencing the product/service.

This is by no means supposed to be an exhaustive list of responsibilities, but instead ones that I feel are most important given my experience. As investors, we are in a privileged position to start/continue or end trends. I think it’s time that we started thinking a little harder about where our responsibilities lie.

How to Create an Impact Investing Movement

I’ve been stalking the impact investing space closely for the last few years and it seems that across research papers, from the recently released Acumen FundMonitor Group: Case for Philanthropy in Impact Investing (which is a great read!) to goals of foundation tackling impact investing – a systemic issue that resurfaces is the lack of infrastructure to help people identify and function as a part of the impact industry. A recent conversation with a friend on movement creation sparked this idea on figuring out how to build this infrastructure. It also reminded me of a old twitter exchange I had with Steve Wright (Grameen Foundation) and Kevin Jones (SOCAP) on the value of marketing and storytelling in the social context. A snippet of our conversation is below:

I believe that marketing/value-positioning is an undervalued practice in the impact investing space. However, if we’re looking to expand the space beyond those who care about the impact value of capital, we have a to start looking at creating a movement of impact investing – a sustainable and scalable platform. We have to look closely on how we can create pull-factors needed for a successful impact movement. Now, I am not as naive to think that the world of philanthropy and for-profit investing should cease to exist. What I am suggesting is that the movement’s aim is to help the general public and those in the investing world to have a third way to think about capital: a blended value of capital and impact.

So, this is my attempt to build this movement’s basic framework and my vision of what core elements of an impact investing movement would contain and look like.

Defining the Movement’s Core

Education is the key to the movement and a first step is shifting people’s perspective to a third way to think about capital. I would like people to think of their portfolios as follow (Note: the pie charts below are based on a hypothetical way to think about capital – main point is to illustrate the inclusion of impact investments when an individual thinks of capital):


I believe the core of an impact investing movement should be two-fold:

1) The choice between impact and profit should not be a binary one.

2) Close the mental disconnects and isolation between the different components of the Impact chain of capital: (Input –> Output –> Impact)

Distinction of Target Groups 

Just like the ‘real’ investing world, in the impact investing world, there are two distinct investors to target: Institutional and Retail. By the nature of the way that capital flows into the space, influence on the retail end is bottom heavy + personal and on the institutional side, it is top heavy and politically barriered. (Sidenote: A great report to read to understand the institutional-policy relationship in impact investing written by Pacific Community Ventures & Harvard Uni).

Another target group (and this is admittedly the harder group to penetrate than the former) would be both institutional and retail investment advisors. Straight away, the inherent challenge to create this movement is how to create a simultaneous pressure on both ends and in each respective groups.

Five Strategies

In creating this ‘pull’ platform, because capital flows through a system through an impact chain, the platform should become the mechanism by which ‘push’ platforms must engage in. The graphic below illustrates this point using the recently announced Morgan Stanley Investing with Impact platform. The idea is that on Morgan Stanley’s end, they can only get so far by engaging their current clients. However, if they look beyond their Investing with Impact platform, and engage in a middle ‘pull’ platform that educates the masses, their message and reach would more than double.

I believe that a successful impact investing ‘pull’ movement would contain the following practices:

 1) Radically lower knowledge barriers

The landscape of impact investing is slowly coming to light. There is great research and data that heavily supports the sector. However, bite size pieces of information are far and few in between. Investors and advisors need understand: the reason for impact investing, proof of concept, and how it would affect an institution’s or individual’s portfolio. The knowledge barrier should also include a way to disseminate authentic and real stories (see: twitter exchange above) about impact investing and the results of the investment – a form of curated ‘entertainment’.

2) Uncover and disrupt offline analogies

Most form of human interactions surround a pre-existing way of thinking. e.g. before email, people would send letters. In the case of thinking about capital, the tipping points of where someone starts to think about money is in the education system, with a focus on universities and college (typically an individual’s first experience in managing a substantial amount of money).

3) Empower key community leaders

I’m a big fan of Seth Godin’s practice of building tribes. People are more passionate about this issue than you think they are. A great organization that organically (and perhaps unexpectedly) tapped into the power of tribes is Acumen Fund. (Full disclosure: I currently volunteer with them, and this is by no means a representation of their perspective on the matter. Just my own). Acumen Fund currently has 12 volunteer-led chapters around the world that support and spread their cause. These chapters are going into local communities with a depth and reach that Acumen would not have been able to achieve just by themselves.

4) Reduce friction

Thinking about capital – can be an overwhelming experience, especially on the retail side. The movement needs to create a frictionless and simple experience that catalyzes ‘pull’ for transactional activities. A great example of this practice is by LearnVest, a budgeting and advisory platform to help individuals achieve their goals. Simple and clear. I envision a successful impact investing platform to embrace a similar frictionless user experience.

 5) Getting started

No single agenda or strategy is equally relevant to all target groups. I see two main engagement strategies embedded in the movement, which in some cases can be executed separately or combined. One is a online-mass led proposition with multiple knowledge engagement pieces. The other is a high-touch with direct channel distribution. The latter would fit in more with the advisory/’push’ platform engagement target group whereas the former would fit into a engaging retail investors. The high-touch component is definitely more of a challenge as we would be looking at a target group of banks/corporations/venture capitalist that have systems in place in order to achieve execute their business model.

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There are multiple ways to continue to build out this framework. The points above are merely a starting point in the basic wireframe of this impact investing movement. All ideas are welcome, and if you want to have a brainstorm session about this – hit me up!

Thanks to Erika, Jo-Ann, Steve and Kevin for inspiring this post.

Identifying the Next Steps for Impact Investing

A report by Credit Suisse and the Schwab Foundation for Social Entrepreneurship was released this week on the topic of impact investing at the World Economic Forum’s annual meeting (Davos). A great overview of the current landscape, it is worth a read, particularly Mark Kramer‘s and Sir Richard Branson‘s interviews and comments on the sector.

Investing_for_impact Credit Suisse – Schwab Reporthttp://www.scribd.com/embeds/79696734/content?start_page=1&view_mode=list&access_key=key-yytb73n5b9fkyqr8xyr&secret_password=1rswq7esa28y97c61ndn//

The report lead me down an interesting thought path on the “next steps” of the sector…

Evidence:  The report highlights several successful social enterprise models that are part of Schwab’s network. My personal favourite was Bam Aquino of Hapinoy in the Philippines – investment funds that creates sustainable distribution channels and business development strategies to empower formerly isolated and informal sectors of the Filipino economy. The report above, complements the Data Driven JP Morgan-GIIN report, that drills drown into the numbers and breakdown of social enterprise in different sectors.

As a next step, I would love to see a report that focusses more on the accessibility and availability of investments in the space – from an investors perspective. Coming from an asset-management background, I have developed a strong belief that understanding the investment is just as important as knowing your investment options. Currently, main-stream investor’s exposure of ‘social’ in investments are SRI offerings – they need to be educated on different entry points and impact investing product offerings ranging from an institutional and private client perspective. A great starting point to this step is Impact Asset’s 50: A listing of Impact Fund Managers.

Failure: With the industry in a growth stage, as great as it is to know the successes and the landscape, it is just as important to know the failures. Where did we go wrong? What worked? How did you manage to pivot? How do you prioritize your mission and your finances? When did you know the time to scale? There is such a stigma with failure in the non-profit/charity world. This stigma should NOT be carried forward into the impact investing/social enterprise sector. Failure is a gift – and the ability to speak freely to learn from them, should be embraced by this sector. A wonderful example of embracing failure is the EWB Canada’s Failure Reports. I would love to see a similar initiative in the impact investing sector. Even internally within organizations – as a start.

Road-Map: There is a wealth of information on impact investing that has been churned up within the last few years or so. The issue is knowing where to look: from funding social enterprises to exiting an investment. A natural next step to this would be for various stakeholders to share their “how-tos” and points of consideration in the impact sector. Some organizations have already begun to pave the way for this, but what we need is for more road-maps to appear so at the very least, when you’re at the starting line – you have a general sense of direction on where to go.

 

Constructing a prezi presentation

Earlier this week, I had the pleasure of presenting the VANCOUVER+acumen/Acumen Fund model to an impact investing meetup in Vancouver. It was also the first time I was on a panel of speakers and it was a really humbling experience to be there with other passionate/knowledgable people working in the Vancouver impact investing space. I would like to share my prezi presentation that I gave that day as well as couple of notes that I have picked up along the way from building my fair share of prezi presentations.

1) Build a picture: Prezi is a fantastic tool when you are trying to present a concept as an overall vision. It adds the dimension of space to the presentation which is a blessing in disguise. I find the best prezi presentation is a picture that you build in an audience’s mind. When the presentation is finished, it really should be a complete single picture with a few takeaways. This is the most important differentiation point on why you should pick prezi over keynote: when you want to construct a visual picture as opposed to a linear flow of ideas.

2) Draw out your presentation: When constructing this presentation, I spent a long time beforehand thinking about what I wanted my final picture to be. I knew the message I wanted to deliver: the acumen story in two parts – the business/investment process and moral leadership. How that information is presented is a different story. I chose a mountain and split my presentation to show the first part and then unveil the lower half of the mountain as the second story.

3) Construct your path: I love the zooming ability of prezi, and when used properly, can really add alot of impact to your presentation. My two favourite ways of using this tool is the ability to give a sense of diving into something, or moving from one concept to another (think – movie reel). I personally haven’t been able to find an effective way of using the tool that rotates words (unless its surrounding a circle) as I find that it disrupts the flow path instead of adding (I’ve had feedback where I was overly excited and use it too much – people actually became dizzy with the zooming in and out).

Hence, this tool really should then be used to unveil layers (think – Inception dream layers) in your presentation – however deep you want to dive. Keep the layers consistent working from big –> small, or in my presentation above, I chose to go small –> big. For my presentation the 3 layers I wanted to create was moving from the core of Acumen – creating a world beyond poverty, to the how of their business model, building on that to their complete picture which includes moral leadership, and finally the overall call to action of getting involved with Vancouver for Acumen.

If you’re interested in getting in touch to learn more about VANCOUVER+acumen/Acumen Fund, please feel free to be in touch!

Note: The pictures in my prezi is an Acumen investment: WaterHealth International. You can read more about them here.

*All pictures and images are the property of VANCOUVER+acumen and Acumen Fund. 

VANCOUVER+acumen Presentation – Making an Impact through Social Finance

For the past year and a half or so, I have been involved with an incredible group, VANCOUVER+acumen. We’re a volunteer chapter supporting Acumen Fund by actively championing Acumen’s innovative model of patient capital to elevate global poverty. We achieve this by engaging in community, ranging from informational workshops, monthly salons and our annual case competition. As one of the founding members, it has been a great privilege to work alongside such passionate individuals in this space and to continue to create a world beyond poverty.

I’m really excited to announce that I will be speaking at the inaugural Canadian Global Impact Investing meetup in Vancouver on behalf of the group – sharing the acumen model (both on a global and chapter level) to the impact investing community in Vancouver. The event will be held on Wednesday, Nov 23rd from 6:30pm – 9pm at SFU Segal Graduate School of Business in downtown Vancouver. You can check out more details about the event here.

Three other organizations will also be presenting at the event: Vancity, Global Catalyst Initiative and Opportunity International Canada. Also, at the event, they will be giving away door prizes ( 2 books I couldn’t recommend highly enough): Impact investing: Transforming How We make Money While Making a Difference – Jed Emerson, Antony Bugg-Levine and Banker to the Poor – Muhammad Yunus.

See you on the 23rd. Looking forward to connecting with other fellow impact investing/social enterprise champions.

Catalyzing Social Capital Markets: 4 key publications

I’m not sure if I suffer(?) a bad case of Confirmation Bias but it seems (and this is a broad generalization of course!) that there has been a rise in news, webinars, events or articles about impact investing and/or social enterprise. I wrote the post below for SocialEarth two days ago and it already needs updating! From the amount of responses and retweets, people really love resource/reading lists! Hence, I will start sharing resources that I come across here instead of blasting out via email to my friends (I’m under a delusion that they love receiving news like this – no one has opted out so far!).

So 2 quick updates. Upcoming (free!) webinars on impact investing.

1) How to Be An Impact Investor hosted by MaRS Centre for Impact Investing

Date: Thurs, Oct 27th 2011

Time: 12pm – 1pm (EST)

Key themes/questions (from event description):

  • How do you convert your motivations for a just and equitable society or a pollution-free environment into an effective investment policy statement that will enable you to make both positive impact and seek the financial return requirements of your organization?
  • What level of due diligence should you conduct to determine whether a venture is a good candidate for such investments?
  • What skills and expertise can you draw on internally or acquire through external advisors or managers to aid in your decision-making process?
  • What opportunities and challenges should you be cognizant of as you seek to re-align your investment portfolio with your mission and values, both organizationally and personally?

2) Impact Investing: Challenges and Prospects hosted by Jed Emerson and Antony Bugg-Levine

Date: Mon, Nov 7th 2011

Time: 12pm -1pm (EST)

Key themes/questions (from event description):

  • Roots of impact investing, examples of its practice today
  • Challenges that need to be addressed: regulations, cultivating transformational leaders, measuring blended value, bringing in philanthropic capital, limits and challenges of impact investing
  • Charting a course for ‘blended value’ investment strategies that make money while improving social and environmental conditions.

 

*The post below was orig­i­nally pub­lished on http://www.socialearth.org on Oct 11, 2011

Capitalism has alot to answer for these days. Members of this group range from ardent Occupy Wall Street protesters to a sense of common vision that seems lacking amongst citizens. Today, we turn to four wonderful publications highlighted at  SOCAP11  that has been creating momentum to redefine capitalism and would be a significant contribution to the public debate.

1) Impact Investing: Transforming How We Make Money While Making A Difference – Jed Emerson, Antony Bugg-Levine

This ground-breaking book should be your first choice to pick up to explore the transformative power of impact investing. The book explores an integrated alternative to traditional philanthropy and investing – highlighting the applications of impact investing as well as its potential. It demonstrates how it is and can be a positive disruptive force. Perhaps the most interesting angle of this book is the usage of time with impact investing, providing a historical and predictive perspective enabling readers to have a solid understanding of what the present holds. The authors ultimately offer a optimistic vision for what we can collectively achieve when our assets work in unison with our values. As a bonus, I can assure you that the authors are as inspiring in person as they are in the book. No jokes.

Further Resources:

 

2) Innovations Journal: SOCAP 11 – Impact Investing Special Edition

I’ve been a big fan of Innovations – quarterly compilations of commentary, research and essays from leading innovators in their field. There was a special edition of Innovations for SOCAP11 containing a myriad of perspectives on building the intersection on money and meaning as part of the solution to global challenges. Below is the complete list of contributors in this special edition.

My pick out of all the essays was one by Robert Katz and Brian Trelstad of Acumen Fund on Mission, Margin and Mandate. The essay firstly unwraps the definition of scale and sustainability and then lays out the three paths to achieve this goal through mission, margin and mandate. I was particularly hooked on the dilemma presented: what should take precedence when building out a social enterprise?

  • “At what point do you evangelize your solution to raise mission-based grant capital or volunteer support to work on that new product?
  • At what point to you buckle down and simply execute on sales and service to grow your margins?
  • When do you approach the government for changes to policy that might help get that mandate to scale?”

Further Resources:

  • You can obtain a free copy of their essay here
  • Bonus offer: Write an Amazon review for the SOCAP11 Impact Investing Special Edition and receive a free subscription to the Innovations Journal.

 

3) Design for the Other 90% – Cynthia Smith, Paul Polok

“It is a discipline that uses the designer’s sensibility and methods to match people’s needs with what is technologically feasible and what a viable business strategy can convert into customer value and market opportunity”. Tim Brown, Change By Design

This book is an extraordinary collection of more than 30 design projects targeted specifically to design low-cost solutions for the world’s population that have little or no access to most products (the other 90%). The stories and brilliant illustrations (partnered with the Smithsonian’s Cooper Hewitt, National Design Museum) takes the reader through unique ways to provide better access to basic needs and how innovations in design are often the most successfull in addressing these issues.

 

Further Resources:

 

4) A New Foundation for Portfolio Management – Portfolio 21, RSF Social Finance

One of the fundamental concepts that permeates portfolio construction and the asset management world is Modern Portfolio Theory (MPT) – how do you maximize portfolio expected return for a given amount of risk by choosing various proportions of assets. This paper is a great starting point in a call to arms to reevaluate MPT in light of the impact of ecological limits and global impact of investments. The premise of the paper focuses on: 1) Integrated Risk; 2) Selective Growth; and 3) Multidimensional Utility Function to provide investors clarity on the long-term implications of managing a portfolio that goes beyond a purely financial purpose.

Further Resources:

  • Portfolios of the Poor: How the poor live on $2 a day  – Daryl Collins, Jonathan Morduch, Stuart Rutherford, Orlanda Ruthven