ADAP was delighted to be an Acceleration Partner for the first-ever SEED Conference on April 19-20 in San Francisco. As I wade through the stack of business cards and try to fulfill promises to my new LinkedIn connections, I want to share some reflections from this conference. From my perspective working in early-stage impact investing for the last decade, four key themes seemed to run throughout the event:
1) New players with new perspectives
My main concern going into the SEED Conference was that it would be the same few characters sharing opinions on a narrow set of best practices with a lineup of the “usual suspects.” While it was great to reconnect with old friends and compare war stories, we also heard from refreshing new voices and saw an increased diversity of participants. While there is still a long way to go, I experienced many fruitful conversations that challenged the status quo and helped to bring new perspectives to this evolving space. Fresh eyes are critically important as impact investing's social norms and best practices are still being established.
2) Things take a LOOOONG time
The need for longevity and patience has been a recurring theme in early-stage impact investing over the last ten years, perhaps best described by the term “patient capital.” Many social enterprises take a long time to scale. Yet a mixture of impatience, misapplication of traditional investment practices, and funder-driven time horizons has led to many false promises and failed expectations. While the broader investing community is embracing the idea that there does not need to be an offset of financial returns for social impact, investing in unproven early-stage businesses is slightly more nuanced. We hope and strongly believe that the goal of having both HIGH impact and strong financial returns will be achieved, but it is not fully proven and will need time and patience (both in the use of patient capital AND a patient philosophy) before this is truly realised. Expectations for returns as well as for how long it will take for sustainable long-term impact need to be realistic and can’t be short-cut.
3) More focused conversations
As SOCAP and other groups go through an evolution with a changing of the guard of the leadership, and with new entrants from mainstream investing being enthusiastically welcomed, there is an opportunity for like-minded people and organizations to focus on specific impact investing sub-sectors. If your theory of change is focused on developing companies with less than $1M in revenue, then being a part of the philosophical conversation on best practices for billion-dollar corporations will add only limited value. We see the sector strategically splintering as we deepen the conversation from “why impact investing is important” to “how to effectively grow the early-stage impact investing business.”
4) Beyond competition
A new wave of following and sharing best practices is upon us. Many uncollaborative early-stage participants were missing from the SEED Conference. Yet more competition among investors in the early-stage sector means that while capital is still scarce, entrepreneurs will increasingly have the opportunity to say “no” to investment offers, as they have more power to decide what is best for their business. With this long-awaited shift in power dynamic, collaboration will become increasingly important between investors and entrepreneurs. With the rise of marginalised voices in society, we see that more manipulative power dynamic behaviours will increasingly be brought to light and other, better options will be presented to both investors and entrepreneurs. I am excited to enter a new era of “coopetition” where perceived competitors will increasingly become collaborators, sharing deals and ideas.
My bottom line: the SEED Conference was a great success and has the potential to be a catalytic part of the wave of new conversations. ADAP is excited to continue to drive conversation and collaboration into action, as we seek to create a more effective early-stage impact ecosystem, where egos are checked at the door and everyone focuses on enabling social enterprises to create massive, sustainable impact.