VentureBeat talking about Social Capital - the word is getting out

Chris Morrison in VentrureBeat just published a post asking "Will Social Capital be the next big industry to emerge?"

I believe that the answer is Yes, but there is a need to clarify how we can go about it:

Going back to Blended Capital as discussed in the post, there is one big issue that has not been resolved yet is what is it exactly? While everybody understand at a high level the concept, or what some other people call double or triple bottom line, it is very hard from the investor prospective to figure out what you can expect from it. You know you will get less return, but how much and how do you figure out good deals and bad deals? There is an issue of estimation and measurement of success that still needs to be resolved.

One way to deal with this is what we are doing with Entrepreneur Commons (www.entrepreneurcommons.org), using debt instead of equity. Because equity creates tension between the investor and the entrepreneur, for example by forcing the issue of exit: the investor needs his money back at some point, but who do you sell too, and should you really? (the Ben& Jerry things)
With debt, everything becomes a lot easier: you know exactly when you will get your money back and how much you will get, and you can benchmark this against the market to decide whether you are comfortable with a given rate for a given "mission".

In addition to clarifying the issue, debt is a good thing because we have historical data on what can be done. Microfinance is for a big part about helping entrepreneurs in developing countries. This is debt to finance small businesses.
And "Social Capital" in the US can be done the same way, with the difference that you need more than a few dollars to help an entrepreneur here. And the good news here is that you do not need huge amounts of money in the US either: according to Inc Magazine, and looking at their Top 5000 fastest growing companies, the average capital to get started for companies in the list is $25K, and if you look at their top 500 it is $75K.
The default rates from Grammen Bank (microfinance) are 1 to 5%, so very manageable, and there is no reason why we could not do as good in developped countries.

So there is an opportunity to make a big impact, and I am convinced that Social Capital is the next big thing because we have no other choice if we want to world to become a better place...

Originally posted as a comment by mdangear on VentureBeat using Disqus.

Entrepreneur Commons Emergency Fund

From the Entrepreneur Commons website:

While Entrepreneur Commons has been focusing on early stage investment, special situations call for special action and we are considering raising an emergency fund for Entrepreneurs with existing businesses and existing customers who are now being left without credit options because of the current financial crisis.

In order to confirm the size of the need and opportunity for funding, we are asking entrepreneurs and investors to fill out the following survey:

If you are an entrepreneur - click here

If you are an investor - click here

If you are in France, a similar survey has been launched to see what could be done specifically for entrepreneurs there:
http://www.les-entrepreneurs-pour-la-relance.org/

Let's get some action going!

Entrepreneur Commons presentation at Socap08

Socap2008

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Entrepreneur Commons presentation at Socap2008


SlideShare Link

HP CMO says it all: Brands need to utilize their own "networks"

A great short video on how Brands should realize they now have a direct access to their customers and their ecosystem, and they should listen and engage.
Check it out...

Time for companies large and small to think about their Social Network Support system. And a good opportunity for me to plug in my friends at eCairn - www.ecairn.com :-)

Interesting article on the future of VCs

From Cyril Demaria:
For the first time since 1978, there was no venture capital-backed IPO in the US during a quarter, making the second quarter of 2008 the worst on the EVCA records. This was attributed to the consequences of the liquidity crisis - but is this so? In October 2006, Steve Dow already launched a first statement which rippled through the venture capital sphere, by declaring that the venture capital model was 'broken'. Too much money chasing too few deals, not enough exits, no real perspectives of substantial profits on the short term: the diagnosis was severe, especially from this seasoned partner at Sevin Rosen. This was in fact the mark of a much needed revolution in the venture capital world [click here to read more].

Building Blocks for a New Kind of Venture Capital

The Entrepreneur Commons mentioned on Igniter.com in a post discussing the components that would make up core building blocks for a new kind of venture capital:

The key in this lies in the interdependence between the micro-funds and the commons. The commons nutures and convenes community. Funds add some fuel and spark by investing and catlyzing conversations. The ventures serve themselves through supporting each other and participating in the commons.
I’m continuing to refine this as I move toward a working example and will continue to think out loud as I go. And if you haven’t checked it out - take a look at the Entrepreneur Commons being led by Marc Dangeard. He’s farther along and is tackling similar issues as he goes. The similarities and even more so, the differences, are interesting and good fodder for conversation.IGNITER, Oct 2008

Check out the whole article.

Entrepreneur Commons in Les Echos

Les Echos (French equivalent of Financial Times) just published an article on Entrepreneur Commons. You can read it here (in French)

Reframeit!

Just downloaded the Firefox extension from Reframeit.
This is a great tool that allows you to comment on any page on the web, and see comments by others. It should make the experience of reading the news (for example, it apply to any content really) way more interesting.
I like that you can create group that are public or private to share your comments with people who care about one issue or another.
Another great step forward for us users...

Take away from Socap2008

I was at Socap2008 today, and the one thing I will remember from the sessions I attended is this recommendation to people who want to change the world to "follow the money":
great entrepreneurs like Bill Gates or Warren Buffett are doing philanthropy because they recognize that there are things to do beyond building great companies that make a lot of money. And when they decide to address an issue, it becomes an important issue for the rest of the world.
This is excellent news...

The one flag I have on this is that this process feels like it may be fishing in the dark: if you take a flashlight and point towards the water, you will attract a lot of fish. But if your goal is to remove all fish from the pond it may not be the best way. What happens to things that are not important to the rich guys?

It is great that people at the top of the pyramid are helping people at the bottom, there should be one more things they do when they get into it: instead of (or in addition to) focusing on "mission driven" efforts and on addressing specific issues, they should also consider investing in platforms (people, basic infrastructure) that will allow people who need help to help themselves.

For example: funding non-profit (that I see as beta test programs to establish blueprints), then help them evolve from cost centers to zero-cost or profitable centers by either becoming for-profits (as happened with micro-finance, MFI being turned into profitable businesses) or becoming programs that are licensed to the government because they are fixing social issues better than how the government was doing before (as Tom Siebel is doing with the Meth Project).

I believe that this is what Muhammad Yunus recommends when it talks about creating hybrid structures. And this is where philanthro-capital really will meet social capital.

And since this is my blog: if you are Bill Gates and you are reading this, this is why you should consider invest in the Entrepreneur Commons :-)

The Entrepreneur Commons on Change.org

From Nathaniel Whittemore on Change.org:

What if peer-to-peer loans weren’t just a tool of international development? What if, even more, they were about more than individuals? What if peer-to-peer loans could be leveraged to create communities of support and opportunity around innovative enterprises?
Marc Dangeard is building Entrepreneur Commons to do just that.

Read more...

Financial Markets and Social Capital

At a time when Financial Markets worldwide are going crazy, you get depressed if you look at your portfolio: the capital you had accumulated in there is vaporising.
What you have left, and I love the words, is your social capital, the one that describes "trust and giving between family, friends and communities". Hopefully you have accumulated some of that if you want to be able to go through the bad times without too much hardship.
This social capital is one that grows when you give, rather than when you take, and it does not decrease when you use it right: a really wonderful thing.
What is interesting is that the same words also describes "a business serving a community purpose", and I see a lesson here that this is what we should focus on if we want to avoid going over and over again through these bubbles and busts.
The answer has been here always, in the definition of the concept itself, but we forgot to pay attention: Social Capital is where we need to look for an answer to get us out of this cycle of crisis. The success of microfinance has shown us that it is working for poverty in developing countries, it will help resolve our other issues in other places...

93% of americans want companies to have a presence on Social Media Sites

From ReadWriteWeb:

According to the 2008 Cone Business in Social Media Study, 93% of Americans believe that a company should have a presence on social media sites and 85 percent believe that these companies should use these services to interact with consumers. Cone, a Boston-based consulting firm, also found that men are far more likely to interact with a company through social media than women are. 56% of consumers believe that a company is providing them with a better service by interacting with them on social media sites.

Thank you Dominique for pointing this one out...

Very good article on why social investment is slow to take off

From Kevin Jones and the Stanford Social Innovation Review, read this.
The article is a very good explanation of why we need efforts like the Entrepreneur Commons...