Nathaniel did pretty well in 2010. His number five trend, “Online Action Moves Away From Just Donations,” took hold as VilCap enterprise Feelgoodz partnered with Groupon to get out of a jam and online investment platforms such as Mission Markets and ProFounder started to launch. In coworking and startup incubation, 2010 saw the growth and restructuring of Hubs worldwide; the creation of local and regional place-based incubators such as Bull City Forward in Durham, NC, and Villgro in India; and the inspiring first year of the Unreasonable Institute–2011 will tell us if the initial enthusiasm can be sustained. Most explosive was the creativity around seed-stage funding with the creation of the impact-oriented angel network TONIIC and an impressive reboot of Investors’ Circle.
But 2010 was also full of surprises. Social impact assessment dominated conversations at this year’s conferences, with the development of industry standards, rating mechanisms, and industry associations such as IRIS, GIIN, and GIIRS, but investors and entrepreneurs still have no clear answers. Microfinance went through the wringer as it transitions–painfully and publicly–from a part of international aid to a part of international finance. Close on its heels is impact investing, with JP Morgan and the Rockefeller Foundation announcing the sector’s path toward becoming an asset class in its own right and a number of funds (including new funds such as Impact Investment Partners and Ennovent and new investment vehicles such as Calvert’s Special Equities fund and Acumen Capital Markets) taking hold in 2010.
What’s in store for 2011? Though some of our forecasting will be admittedly more prescriptive than predictive, over the next two weeks we’ll lay out the ten trends that will make headlines in social entrepreneurship and impact investing this year, adding to the list below as we do.
Top Trends in 2011 (note: we will be filling these in daily as we count down):
10. Smart phones get cheap. As the price of smart phones drop precipitously over the next twelve months, watch for big leaps forward in mobile money, health, and education.
9. Local investors step up to the plate. Most of the industry’s growth to date has been driven by investors in the US and Europe: this year, we expect an explosion of indigenous funds.
8. Pathological Collaboration. As impact investing develops funds, governments, nonprofits, and universities will increasingly team up to tackle big ideas.
7. Microfinance re-groups. After a series of successes and challenges in 2010, the microfinance industry is going through some healthy adjustment and MFIs will re-focus on serving their core customers.
6. Social Metrics–Fish or Cut Bait? Social impact assessment was a Big Deal in 2009 and 2010. Will anything come of it?
5. Seed Financing Grows Up. As the industry matures, new players bring new priorities.
4. Kenya! A flurry of developments in 2010 will lead Kenya to be a premier avenue for impact investing in 2011.
3. Rising commodity prices squeeze the poor. As commodity prices rise, the poor–and the businesses and investors that seek to serve them–will have to be proactive in order to succeed.
2. Governments look to do more with less. As governments in the West cut back, new opportunities will open up for social entrepreneurs and their funders.
1. Patient Capital at a Crossroads. Even as funds are building profitable companies, exit and liquidity opportunities are not coming to investors. The sector will navigate this through layered capital, raising of new funds, and development of innovative finance mechanisms.