Top Trend in Impact Investing 2012: #7: #socent vs. #impinv

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This is the fourth in a series of ten posts on what we predict will be the top trends in impact investing in 2012.  Previous posts:

#10: The U.S. Heats Up

#9: Gaps close in seed investing in India

#8: Mobile goes mainstream

#7: #socent vs. #impinv

 

In the 1999 classic film Office Space, two consultants in a corporate workplace ask one of the employees: “So…what is it you say you…do here?”  When I explain the impact investing sector to people unfamiliar, the response is often similar.  “Social enterprise”: using entrepreneurial/earned-revenue strategies to create social change–has been around since the 1980s, popularized by Bill Drayton and the Ashoka Fellowship.  More recently, “impact investing”–describing an investment strategy that seeks social/environmental returns beyond just financial–was coined in 2007 at a Bellagio summit convened by the Rockefeller Foundation as a more mainstream corollary to “social enterprise,” and has been popularized by Antony Bugg-Levine, Amit Bouri, and the Global Impact Investing Network (GIIN).

Other prominent terms include  “impact entrepreneur,” which Agora Partnerships in Nicaragua uses to describe the entrepreneurs who are “impact investments,” “Blended value,” which Jed Emerson pioneered and is common in multiple circles, “social capital markets,” popularized by the SoCap crew, “patient capital,” promoted by Acumen Fund, “base-of-the-pyramid,” coined by CK Prahalad, “social business,” promoted by Muhammad Yunus, and “double-triple bottom line.”  Whew!  What is it…we say…we do here?

Let’s turn to the Twittersphere.  By far the most-used hashtags are #socent and #impinv, with about a 50-50 split in usage.  Most people in the sector tweet with both (us included).  What do we predict?  In 2012, we predict one of the two terms in “impact investing” and “social entrepreneurship,” which, right now, describe the same thing, will become much more popularized as the sector tries to go mainstream.  (And we don’t know which one.)

In going mainstream, “social enterprise” lacks credibility among mainstream businesses, with some assuming a less-than-solid business model because of the “social good” and others (particularly in more conservative parts of the U.S.) worrying about “socialism.”  “Impact investing” may be more understandable in the mainstream, but it stresses the capital rather than the entrepreneurs who are generating change.

Why does this matter? By far the most valuable additions to the sectors are “social entrepreneurs who don’t know they are social entrepreneurs,” such as Sautil, a health care company in Brazil we recruited to our Village Capital program that provides basic health information to low-income Brazilians, and was founded by talented entrepreneurs who had never heard of any “impact investing” sector.  And figuring out better ways to explain what we do to people who have never heard of any of the above-mentioned buzzwords is the best way to continue to build great businesses that have a positive impact on the world.

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