Inevitably, Money creates power and with power comes great responsibility. Impact investors have the power to enable social enterprises to create change while developing solutions for underserved markets. Reflected in their mission statements, they also have the responsibility to work closely with social entrepreneurs to make this happen.  The following articles from this week review the different responsibilities investors and entrepreneurs have and ways they fulfill them.

Namibia’s  Deputy Minister of Trade and Industry, Tjekero Tweya explains how the private sector, with the support of the government, can, “bring about material change to the living conditions of all Namibians.” Entrepreneurs with a commitment to innovation and investors who take responsibility for their entrepreneurs working in emerging markets will find that they’re actually enabling the development of the market. Tweya stated: “The successful economies of the world have not been created by fate, they have been created by deliberate efforts of perfecting the art of innovation.” By working closely together, entrepreneurs and investors seeking to create social impact in countries like Namibia can leverage resources and networks to foster innovation.

Ebrahimi, founder of ReadyForZero , writes about what really matters for startups. Stating that many startups get caught measuring success by their ability to fundraise, Ebrahimi iterates that the real measure of success for a startup is people (customers). This caveat especially applies to social entrepreneurs who create businesses to spread impact to as many people as possible. It doesn’t matter how much funding social entrepreneurs receive, but rather the scale of the impact and the number of people positively affected. Ebrahimi writes that entrepreneurs often fall into the trap of focusing on raising venture capital rather than on their vision.. Investors, especially impact investors, have a responsibility to their entrepreneurs to focus their energies on creating startups that matter: “make something people want (and need).”

In the wake of SOCAP, the impact investing industry has been reflecting on the different ways that people are powering capital to drive impact investments. Ross Baird, executive director of Village Capital, developed a new way of connecting social capital markets. Inspired by microfinance, Village Capital accelerates the impact investing space by connecting entrepreneurs and investors through peer support organizations. At SOCAP, Baird moderated the “People Powered Capital” panel, during which entrepreneurs shared stories about their experiences working with Village Capital. A key takeaway from the talk was the collaborative nature that social entrepreneurs and impact investors experience while working in the peer-powered networks.  Within the social capital markets, entrepreneurs and investors are responsible for working together to scale up and sustain the social enterprises that create the impact. Peer-powered networks like Village Capital make this possible.

Paul Hudnut recaps his SOCAP experience as a panelist, where he offered an entrepreneur’s perspective on raising capital for social ventures in the developing world. At ID, we especially like Hudnut’s first lesson learned, which he shared on the panel. Hudnut advises entrepreneurs to think of raising capital as “hiring investors.” Investors, especially impact investors, must offer a good organizational fit, live up to their role and make a sufficient time commitment through both the good times and the tough times. The relationship between an entrepreneur and his investor must be strong and in sync.  They have a responsibility to keep each other “in the loop.”  


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