Data darlings and activist athletes inspired me – but did SOCAP 2019 miss key voices?

SOCAP first-timer Candice Hampson, investment director at the UK's Big Society Capital, reports back on her return from one of the biggest impact investing events of the year: inspired by the American willingness to fund data, the power of influencers and some bold commitments to fund diversity – but wondering where the entrepreneurs and end users are.

What a whirlwind SOCAP 2019 was. I was initially nervous about attending an event of over 3,000 people where I didn’t know a single person. But I had forgotten how friendly Americans are: on every table and in every talk my neighbours struck up conversations.

The chance encounters were one of the best things about SOCAP. Almost everyone I met was super interesting, and at least somewhat relevant to what we at Big Society Capital are working on.

It’s difficult to capture the feeling of the place in writing, but here are my top four takeaways.

1. Data is making a real difference – and we’re STILL way behind the US

Good data is critical to gain a deeper, more nuanced understanding of problems; engage people; influence policy change; and prove and improve impact. And we need to invest in getting good data: putting bad data out there will undermine your efforts.

We know all of this. But our sector continues to underfund data. The Americans are so far ahead of the UK in this regard, with a real respect for and willingness to fund data. My two favourite talks from the whole conference are great examples of this.

The first was from Evan Marwell, CEO and founder of EducationSuperHighway (ESH), a non-profit with a mission to upgrade the internet access in every public school classroom in America. Having completed its mission, ESH will shut down in August 2020. Who actually ever does that?! Brilliant.

Evan estimated that EducationSuperHighway spent a third of its budget on data

And it all came about because of the data. By surveying 800,000 schools, ESH found that almost 63% of schools in the US needed an upgrade. This data helped convey the scale of the problem to the White House, prompting the launch of ConnectED in 2013, a programme that aimed to get 99% of students access to stable broadband. ESH used a team of 10 people over eight months spending $1m to collect hard data on how the $2.4bn ConnectED money was being spent. It turned out wealthy schools were getting 10x better speeds than poor schools a few blocks away, while paying a tenth of the cost. Making the data public helped get state governors on board and drove broadband costs for schools down 90%. Evan estimated that ESH spent a third of its budget on data.

The second example is Kiva, a donations crowdfunding platform that provides microfinance loans, mostly to women, in emerging markets. CEO Neville Crawley recently realised the company was providing lots of loans but not actually increasing financial inclusion, because borrowers couldn’t use their loans to build a credit history. Kiva Protocol is now using data from decades of lending to improve, and in some cases create, individual credit scores, to which other lenders – from banks to shopkeepers giving credit – can contribute.

2. The tide of bias and exclusion is turning – somewhat

Some US foundations are making bold commitments to change. Kresge Foundation plans to put 25% of assets with women-and minority-owned funds by 2025 (currently it’s at 14%), primarily to generate better returns. It’s also working on the “pipeline problem” by going into schools in deprived areas and encouraging careers in finance. In the UK, we have many fewer impact fund managers, and thus we have a job to do to encourage more women and minorities to step out of banking or up within existing impact managers, to launch their own funds.

Everyone at SOCAP was talking diversity, in almost every session. A great first step is to ask: how diverse are you? And what are your plans to get more diversity into your teams and decision-making structures? Not only fund managers, but also co-investors, other asset owners and entrepreneurs. As one panellist put it: “Be ok making people uncomfortable! We don’t expect them to change overnight, but ask the question!”

Everyone at SOCAP was talking diversity, in almost every session

Remembering to be inclusive still requires a very conscious effort – even for SOCAP. I went to a session on “Refugee Lens Investing” with no refugees on the panel, nor any entrepreneurs working with refugees. Nothing against OPIC (Overseas Private Investment Corporation) or the IADB (Inter-American Development Bank), but boy was it ever dull to listen to them talk without grounding what they are saying in the real struggle refugees face day to day. In fact, the only actual refugee I could find in that track was the amazing Mursal Hedayat of Chatterbox, which offers tailored language lessons taught by expert refugee coaches.

On a positive note, it was great to see so many women working in finance at the conference. It really felt like a tide has turned – it’s wonderful not to be in the obvious minority any longer.

3. User voice is still too often missing

Incorporating user voice and lived experience is an area where it seems the UK is ahead by a nose. We are getting better at incorporating user voice into both our investment decision-making and programme design, and more funders are starting to expect to see this as a norm rather than the exception.

A leading example is the Fair by Design programme that makes use of a panel of people with lived experience of poverty, who give informed opinions on each potential product or service investment before it goes to the investment committee. It also has a formerly-homeless tech entrepreneur, Mylo Kaye, sitting on the investment committee itself.

The best panels at SOCAP were ones with entrepreneurs on them, and I must say they seemed few and far between. It is a conference for investors, but we have a duty to ensure we don’t become too far removed from how people are experiencing our funding in the real world. Some of the best investments to come out of Big Society Capital have been the ones that start by understanding need and design financing solutions in partnership that best enable others to meet those needs.

4. We can do much more to harness the power of celebrity

With a single tweet, celebrities, athletes and other influencers reach millions of people outside our usual networks, who don’t normally hear our messages. We don’t make enough of that opportunity in the UK – and frankly it should be easier for us to get them on board with our powerful stories.

NFL player Derrick Morgan speaks to teammates in the locker room about where their assets are invested and whether they have ever considered impact investing

NFL player Derrick Morgan of the Tennessee Titans (pictured above) spoke about “being more intentional about being more impactful in [his] community”. His engagement with the sector started after watching the documentary “13th” about the horrors of private prisons in America. He realised it could be people from his community in those prisons, and wanted to help. He then read Real Impact by Morgan Simon, and was compelled to take action. Derrick recently shifted his investment portfolio almost entirely to social impact investing and this year, he launched the KNGDM fund to invest $50m in Opportunity Zones in four cities. Derrick uses his NFL platform and connections for good, speaking to his teammates in the locker room about where their assets are invested and whether they have ever considered impact investing.

Harnessing the influencing power of social capital is one of the biggest opportunities to grow our movement. Don’t just ask celebrities, athletes and other influencers for money – we should be asking them for their voice.

Candice Hampson was speaking at SOCAP 2019 about catalytic capital – read more about her research, “It’s Time to Talk About Scale” here.

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Header photo: Morgan Simon of Candide Group and Derrick Morgan of KNGDM at SOCAP19 (credit: sreel Photography / Courtesy of Social Capital Markets)