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Working with investors to develop proactive talent strategies

Posted By Rebecca Harrison, African Management Initiative, Thursday, March 21, 2019

Working with investors to develop proactive talent strategies 

Human capital is a key challenge for many SGBs. Getting and keeping the right team in place is critical to propel ventures to scale – yet founding teams often struggle to find the right fit. Many investors in African companies have tolAMI they want to focus more post-investment support on developing talent within their investee companies. But they often aren’t sure how to develop a talent strategy that cuts across their investment portfolio.

AMI hosted a roundtable discussion in Nairobi last month for around 30 early and growth stage investors into East Africa interested in adopting more proactive talent strategies for their portfolio companies. We shared 3 models we’ve seen used to provide post-investment human capital support, and hosted a candid discussion around what is and isn’t working.

AMI identified the following three broad buckets for ways to engage around talent at a portfolio company level. We heard from various investors, who shared how they are using different approaches to help their investee companies build out the teams they need to scale.

Three models:

Facilitative model   This could also be described as the ‘matchmaking’ model. The facilitative model is used when investors help companies understand their talent needs, identify and introduce them to quality providers, and then show them how to engage. The investor’s role here is primarily diagnostic and facilitative, and aims to support needs that are specific to each founding teams/organisation. Some investors are using TA funds to finance these interventions.

Examples: For AHL Ventures, talent is one of the main post-investment challenges that companies across their portfolio face. They often work with their companies on creating a talent plan or helping them directly acquire talent. They also refer investee companies to talent providers, where appropriate, using experience on what has worked with other portfolio companies to inform recommendations. For example, AMI has worked with AHL to train employees in several of their investee companies, including MKOPAPowerGenEthioChicken and Equity for Tanzania.

A different approach within the facilitative model was shared by CDC Groupwhich is developing an online directory for investee companies providing information on different human capital services available, including services specific to talent development – training, recruiting etc. CDC aims to make this directory available more broadly with the goal of also building the broader ecosystem (see supply-side model below).

Direct model The direct model differs from the facilitative model, as it works to identify a very clear need across the investor’s portfolio, instead of working on a case-by-case basis. This model is focused on solving a specific challenge, for example developing middle managers, hiring CFOs or working on enterprise sales. The goal is to offer a structured programme or intervention that cuts across the entire portfolio. This approach is becoming increasingly popular as investors deepen their understanding around critical talent challenges, and is often funded by a blend of investor/TA subsidy and direct payment by the company.

Examples: Acumen identified a need across its portfolio to strengthen middle management skills and build leadership bench strength below the executive team. They first partnered with AMI 3 years ago to develop cross-portfolio programmes for both middle and senior managers and now run at least one programme annually. Interestingly, Acumen started by subsidising the programmes significantly, but has gradually phased this out. Companies now pay directly, and many have worked this into their annual planning and budgeting processes.

Shell Foundation took a similarly direct approach, offering AMI management programmes to companies across its portfolio on a cost share basis, after identifying management skills as a cross-cutting need. In this case, Shell Foundation allowed companies to engage AMI on their own terms, but provided the cost-share to make this possible. More than 100 have continued to work with AMI on a fully commercial basis, demonstrating that investors can often play a catalytic role in demonstrating the value of human capital services to companies.

Finally, Investisseurs & Partenaires (I&P) hosts a pan-African entrepreneurship club for its portfolio companies, where portfolio companies are invited to exchange ideas and debate on various issues including recruitment and retention. I&P also hosts seminars on specific topics of interest to entrepreneurs.

Supply-side support A small and growing group of investors are working to strengthen the ecosystem of human capital providers itself, either through grants and investments into supply-side players, or through experimentation with innovative sector-building models.

Examples: Shell Foundation is working with Argidius Foundation and Bluehaven to develop a Talent Facility to encourage and enable early-stage enterprises to invest in talent even when cash is constrained. Bluehaven, AHL and I&P have all invested directly into human capital providers such as AMI and Shortlist. And both Bluehaven and Argidius Foundation have provided grants to build the talent ecosystem more broadly.

Top learnings from investors:

Each of the 30 investors in attendance have several years of experience working in the impact investment sector in East Africa and globally, and shared openly about what they’ve learned around human capital. Here are a few high-level learnings

    • Investors can and should influence, and even incentivise, founding teams to focus on talent. Investors noted that founders themselves needed to be bought into human capital as a strategic priority. Investors can make their expectations clear in this regard, both before investment during diue diligence and after investment, at a board level.
    • Human capital is a core strategic priority not a ‘nice to have’ – is it on the agenda at board meetings? Many companies and investors agree that talent is important, but then spend their board meetings talking about fund-raising and sales targets. Investors who sit on boards can push talent issues up the agenda by asking the right questions around talent strategy.
    • Proactive talent strategy is more effective than reactive crisis management: Investors have seen talent challenges emerge when companies grow very quickly. Investors can encourage companies to get the right human capital systems and structures in place ahead of (or at least at the beginning) of a period of aggressive growth, and can share lessons learned from other portfolio companies.
    • Investors have seen key needs cut across portfolio companies. Some key themes emerged from the discussion – for the example the need to develop middle management, the shortage of strong CFO candidates and challenges with enterprise sales. However investors working at different stages of the investment cycle noted that different approaches are required for early-stage businesses versus more mature companies. Investors can benefit from sharing notes with others investing at a similar stage.
    • Due diligence should include a structured focus on management capacity & learning mindset. Many investors are being more intentional and structured about probing the management capacity of founding teams and their broader leadership. Some noted the importance of ensuring that entrepreneurs themselves have a learning mindset, and so are likely to build a learning culture across the organisation.
    • Start with simple interventions that work – A quick and easy way to start leveraging your experience as an investor to drive talent development is to introduce functional heads from within your own portfolio to each other. For example, introducing the head of marketing from two of your investee companies to each other is extremely beneficial for growth, learning and innovation.

We’d love to hear from any investors who have tried approaches not listed here. What’s worked for you? What are you still trying to figure out? Can we help?

AMI delivers a practical and scalable approach to workplace learning using a blended methodology that combines online courses with in-person workshops and practical hands-on application. AMI has rolled out 70 programmes across 13 African countries and directly trained over 26,000 people, including hundreds working at investor-backed growth companies. In 2019, AMI was named one of the Companies to Inspire Africa by the London Stock Exchange Group.

Tags:  Africa  capacity development  east africa  emerging markets  Human Capital  impact investing  impact investment  investors  smes  social enterprise  social impact  talent  Training & Events 

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Legal Workshop for social enterprises

Posted By Flavie Fuentes, Thomson Reuters Foundation, Monday, March 18, 2019
Updated: Monday, March 18, 2019

Are you a social enterprise with legal questions or concerns? If you are already a member of TrustLaw, the Thomson Reuters Foundation's global pro bono program, please join us on April 3, 2019 in NYC for lunch  for our Legal Health Check Workshop where you will be matched with expert lawyers from JP Morgan and Simpson Thacher who will be able to identify your legal needs through our TrustLaw Legal Health Check, and draft priority requests that determine the legal assistance needed. 

If you are not a TrustLaw member yet, please contact us at emily.donohoe@thomsonreuters.com to check your eligibility. 

Tags:  legal  Pro Bono  social enterprise  TrustLaw 

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TrustLaw's Impact Webinar

Posted By Flavie Fuentes, Thomson Reuters Foundation, Wednesday, March 6, 2019

 

 

We know how easy it can be to get caught up in the numbers, so we’re inviting you to something a little different. Join TrustLaw Director Nicholas Glicher in conversation with two of our most active and impact-driven members as they discuss how pro bono legal support is helping them achieve their missions.

 

RSVP here: http://www.trust.org/trustlaw/training-and-events/i/?sfid=a113z00000M2DCRAA3 


 

 

Tags:  impact  legal  pro bono  TrustLaw 

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Creating a Supportive Ecosystem for Entrepreneurs in Emerging Markets

Posted By Amanda Epting, Massachusetts Institute of Technology (MIT), Tuesday, February 19, 2019

MIT D-Lab is excited to share an upcoming panel as part of the 2019 Harvard Social Enterprise Conference Sunday, March 3. If you're in the Boston area please consider joining us there.

Creating a Supportive Ecosystem for Entrepreneurs in Emerging Markets

How can different types of stakeholders forge partnerships and actively create entrepreneurial, innovative ecosystems in developing economies for sustainable positive societal impact. The panel will foster conversations on how partnerships and productive ecosystems can be created, even in the most difficult environments. Panelists will discuss the individual, market-level and systemic impacts of creating more inclusive, productive 'entrepreneurial ecosystems' based on their experiences.

Tags:  ANDE Members  entrepreneurship ecosystems  innovation  Social entrepreneurship 

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Designing Agricultural Research that Leads to Commercialization

Posted By Mark Sevier, Feed the Future Partnering for Innovation, Tuesday, February 19, 2019

Join Feed the Future Partnering for Innovation on Tuesday, March 12, 2019 for a webinar on designing agricultural research-related interventions with commercialization as the intended scaling pathway. Click here for more information and to register:

https://zoom.us/webinar/register/WN_B9Lu4BeXRdaMcLBLPxtHZQ

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2018 was another whirlwind year for us at the Branson Centre

Posted By Gizelle Riley, Branson Centre Of Entrepreneurship - Caribbean, Friday, February 1, 2019

We made great memories, forged strong partnerships, and solidified our position as the region's leading accelerator for scaling businesses. We've wrapped all of our big stories, accomplishments and milestones achieved last year in our Annual Report

Click HERE to download. 

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Join the BiD Network Impact Investment Trip Rwanda & Uganda

Posted By Gert van Veldhuisen, BiD Network, Tuesday, January 22, 2019

Are you interested in investing in increasingly attractive destinations for foreign investments? For the fourth time, BiD Network organises an Impact Investment Trip to Rwanda & Uganda. From 10 - 16 March, BiD Network offers potential angel investors the opportunity to visit a number of well-prepared businesses from their portfolio.

The trip offers angel investors:

  • Unique opportunity to personally meet Rwandan & Ugandan entrepreneurs
  • Get insights in impact investing in Rwanda & Uganda
  • Potentially co-invest with a group of like-minded investors
  • Opportunity to create a positive impact together with financial return

Interested in joining this year’s trip? The cost of the trip is 2,500 EUR, including accommodation, flight Kigali - Entebbe, all other logistics and all meals, but excluding VAT and intercontinental flights. Space is limited, so secure your spot now by contacting BiD Network’s CEO Gert van Veldhuisen (gert.vanveldhuisen@bidnetwork.org). More information: https://www.bidnetwork.org/impact-investment-trip-rwanda-uganda/

Tags:  East Africa  event  impact investment  investors 

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Codifying "What Works" in Social Venture Business Planning

Posted By Jim Koch, Miller Center for Social Entrepreneurship at Santa Clara University, Sunday, January 13, 2019
Updated: Sunday, January 13, 2019
Revolution is not a single event.  
Revolution is finding True North and walking toward it. 
Knowing that you will be walking for a very long while, 
Or always . . .   ”
— From Revolution the Day After, by Carrie Newcomer

On November 2 I was invited to give the opening keynote for the 15th Annual Social Entrepreneurship Conference hosted by USC’s Marshall School of Business.  My remarks described the evolution of Santa Clara University’s efforts to advance the potential for solving the urgent unmet needs of humanity through innovation at the crossroads of technology and business model innovation.  Because this was primarily an academic research conference, I focused on the evolution of Miller Center’s business planning paradigm and its emergence as a practice-based theory for building successful social ventures.  I began my talk by specifying that the business planning process must empower social venture start-up teams:

    1. To raise money
    2. To maximize the social impact of the enterprise
    3. To operate the enterprise with a surplus (positive cash flow)
    4. To grow (scale) the social impact (and income) of the enterprise at a rate faster than the growth of expenses
    5. And, to ensure their enterprise provides a needed solution to a real problem in an effective and efficient manner

The first four of these criteria speak to the ability to achieve both social benefit and financial viability.  The fifth factor speaks to the importance of organizational learning and entrepreneurial adaptation.

In addition to specifying these criteria I cited compelling evidence of Miller Center’s efficacy in supporting the scaling up of social ventures and advancing the social entrepreneurship movement:

    • $940 million dollars has been raised by ventures accelerated through Miller Center’s Global Social Benefit Institute (GSBI®)
    • Since their graduation, 320 million lives have been positively impacted by GSBI alumni
    • From 7 ventures served in its 2003 pilot, by 2018 the GSBI has grown to serve more than 900 ventures across 60+ countries

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Most importantly, from its pilot in 2003 to today, Miller Center for Social Entrepreneurship has been a learning organization.  To scale its delivery capacity, it has segmented its market and developed alternative delivery modalities—including a mentor-supported distance learning process and other adapted forms for serving the needs of ventures in a wide range of geographies, with varying local resources, and at the different stages of development and investment readiness illustrated below:

STAGES OF DEVELOPMENT AND INVESTMENT READINESS FACTORS

    • Early Stage
    • - Viable product or service

    • - Potential market quantified

    • - Evidence of market acceptance                                       

    • Early growth
    • - Successful market trial

    • - Product or service can be replicated                                                       

    • Rapid growth
    • - Ventures processes can be scaled to volume

    • - Evidence of significant market

    • - Product or service can be delivered with positive cash flow

From the beginning of our work, Eric Carlson and I realized we had more to learn from social ventures embedded in diverse cultures with severe resource constraints than we had to teach.  To illustrate the importance of humility and learning, I asked an award-winning documentary producer and colleague, Mike Whalen, to capture the experience of social entrepreneurs and their mentors in the 2006 GSBI cohort. His short video, A Pedagogy of Accompaniment vividly illustrates how the lives of both social entrepreneurs and their mentors are transformed by the experience of collaborating to create a better world through the development of sustainable and scalable solutions for serving urgent unmet human needs.  I shared this video with my academic colleagues at the USC conference and have been amazed by the many comments I’ve received from them about how this historic video evoked imagination about the “possibilities” for systems change and the potential for value-added scholarly work across the diverse cultures and many countries represented by conference attendees.

For a look back in time here’s a link to A Pedagogy of Accompaniment:

MENTORS AS THE SECRET SAUCE OF MILLER CENTER'S GLOBAL SOCIAL BENEFIT INSTITUTE

In writing Building a Successful Social Venture—A Social Entrepreneur’s Guide, Eric and I sought to capture the informal knowledge of the more than 200 mentors who have worked with social entrepreneurs at Miller Center, with a particular focus on the roughly first 50+ individuals we vetted during the first decade of the GSBI program.  These individuals were selected based on a variety of factors with a particular emphasis on C-level or senior management experience in Silicon Valley start-ups, general management or P and L experience, and/or acumen in marketing, finance, or operations and supply chain management. An additional “intangible” factor proved to be critical to the success or failure of GSBI mentorsthe ability to listen with humility in order to understand how their knowledge could be bridged to efforts to serve unmet needs at the base of the economic pyramid.

Mentor 2.png

There is an important distinction between explicit (formal) knowledge—the kind possessed by scholars attending the 15th Annual Social Entrepreneurship Conference—and the implicit (informal) knowledge of successful entrepreneurs.  Mentors in the GSBI rely primarily on implicit knowledge.  The learning organization emphasis in Miller Center required that this knowledge—honed in the munificent environment of Silicon Valley—be adapted to the specific characteristics of markets in poor communities, including local culture and environmental constraints.  Similarly, it required mentors to bridge technology knowledge rooted in the Silicon Valley to the available appropriate technologies and management capabilities within cultural parameters. In Building a Successful Social Venture (BSSV) we codify the accumulated implicit knowledge of GSBI mentors over more than a decade in the form of explicit or basic knowledge needed to complete each element in the 9-factor social venture business planning process summarized in the figure below.

Building a Successful Social Venture
A Social Entrepreneur's Guide

Eric Carlson
James Koch

Berrett-Koehler Publishers
September 2018 

 

For each of the elements, BSSV also taps the collective intelligence of mentors in the form of a “Minimum Critical Specifications Checklist” for what needs to be included in that element of the business plan.  In systems thinking, a minimum critical specification is a condition that is critical to the overall viability of system design.  For social ventures this translates to the ability to achieve both social impact and financial goals. For example, in element 1—Mission, Opportunity, and Strategy—the collective intelligence of Silicon Valley mentors from their work with hundreds of ventures posits that a focused (10-word) mission statement with a specific outcome measure will increase capital efficiency and the likelihood of venture success. 

This and similar takeaway examples from BSSV are summarized below:

The “minimum critical specifications” concept was originally articulated by Albert Cherns in 1976 as a pivotal construct in socio-technical systems design thinking.  It has since been used by numerous scholars and practitioners, including this author, in the design of high performing work systems.  According to Cherns, the principle of minimum critical specifications has two aspects—one negative and one positive: 

    1. The negative aspect states that no more should be specified (in structure, formal systems, and bureaucratic rules) than is absolutely necessary.
    2. The positive aspect states that we need to identify what is essential.

In writing Building a Successful Social Venture—A Guide for Social Entrepreneurs, Eric Carlson and I have sought to do just this—to clarify what is essential¸ while respecting and continuing to learn from the work of social entrepreneurs  who seek to rewire our systems, our practices, and our mindsets.  Our framework intends to contribute to the gradual elaboration of a new model of socio-economic development—one that is better fit for two thirds of humankind at the base of the pyramid than current approaches to economic development. We hope that Building a Successful Social Venture, based on Miller Center’s framework, will help thousands of social entrepreneurs.

Here’s to a future filled with hope!

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ABOUT THE AUTHOR

James Koch.jpg

James Koch is Professor of Organizational Analysis and Management Emeritus and former dean of the Leavey School of Business at Santa Clara University, where he also served as acting dean of the School of Engineering. He is the founder of Miller Center for Social Entrepreneurship (previously the Center for Science, Technology, and Society), co-founder of the Tech AwardsTechnology Benefiting Humanity, and of the Global Social Benefit Incubator. In addition to entrepreneurship and social innovation, his research and consulting focus on organizational change and the design of high-performance work systems. Prior to coming to Santa Clara University, he was director of Organization Planning and Development at PG&E, a recipient of the American Society for Training and Development Award for Excellence in the Organization Development Professional Practice Area. He began his academic career at the University of Oregon where he was associate dean of the MBA and PhD programs before leaving to join PG&E. Jim has served on a number of for-profit and nonprofit boards, including Commonwealth Club of Silicon Valley and the Board of Trustees of Bay Area Council Economic Institute. He received his MBA and PhD in Industrial Relations from UCLA.

 

Tags:  Miller Center for Social Entrepreneurship  Social entrepreneurship  Social Entreprenuership 

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Pact Ventures Launches Revamped Impact Investment Group

Posted By Katie Hallaran, Pact, Monday, December 10, 2018

Pact is excited to announce the launch of its revamped social investment team – Pact Ventures. Pact Ventures believes that markets and private capital can be incentivized to accelerate Pact’s development programs. We structure innovative financing and market-based mechanisms to magnify Pact’s social impact.

Through technical experience in investment banking, private equity, strategy, and social entrepreneurship, we’re integrating private sector perspectives to create tri-sector solutions for complex development challenges by leveraging public, private, and social capital.

Leading with a clean sheet approach, Pact Ventures accesses a wide spectrum of innovative financial and investment vehicles to finance our projects, deliberately matching outcomes risk with financial return. We leverage our impact investments to shift our relationship from donor-beneficiary to provider-customer. In so doing, we tap into economic forces to create market mechanisms that listen and adapt to the voices of our beneficiaries (now customers) in new, empowering ways through:

Outcomes-based and shared value partnerships:

  • Market-based incentives for responsible and traceable sourcing of minerals and gems
  • Access to bottom of the pyramid (BoP) financial products for community-based savings and loans groups

Direct investments in promising social enterprises:

  • Investment in solar home system manufacturer targeting BoP consumers
  • Joint venture with alternative BoP credit scoring and digital distribution services

Innovative business and delivery models for impact:

  • Distribution of solar home system partners to bring renewable energy to Pact’s beneficiaries
  • Workforce development platform for skills-based training and job placement 

We’d love to explore opportunities to collaborate and invite anyone interested in learning more to reach out to Brian Vo at bvo@pactworld.org.

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Tags:  Access to Finance  energy  health  impact investing  innovative finance  social enterprise  social impact 

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Entrepreneurs Call for Urgent Need to Rethink Asia's Agribusiness

Posted By Administration, Wednesday, November 28, 2018

BANGKOK, November 22, 2018 – What is the business case – the ideal eco-system – for sustainable agriculture and forestry?  Is certification worth the cost? How to feed a growing world as youths leave farming? From Thai social enterprises working with organic rice farmers to one of the world’s largest coffee producers, speakers at Aspen Network of Development Entrepreneurs’ (ANDE) inaugural lab on sustainable agriculture, held in Bangkok on November 22, brainstormed a new agricultural eco-system to feed a growing world with shrinking natural resources.

“There’s no getting around it: we need more active participants in this evolving ecosystem,” said Angela Hogg, the Environment Office Director of the U.S. Agency for International Development (USAID) office in Asia. “Asia’s food security and environmental protection goals cannot be met without more smallholder producers and businesses adopting more sustainable practices.”

The UN Food and Agriculture Organization estimates smallholder producers supply some 80 percent of the world’s food.

The challenge to transform agriculture is ambitious and the time short, added Hogg, referring to a recent UN report that called for “unprecedented” action to cut carbon emissions.

USAID Green Invest Asia, a facility brokering private sector investments in Asia’s mid-sized sustainable businesses launched by the U.S. Agency for International Development, led the event.  “Current investment is insufficient based on Asia’s projected food needs, alone,” said Christy Owen, the facility’s director. “We need to find a new way to do agribusiness. Urgently.”

DBS, a financial services firm, and the UN Environment Programme have estimated an additional $400 billion is needed between now and 2030 to adequately protect the people, environment and economies of ASEAN countries from the worst effects of climate change and land degradation.

Citibank Foundation, UN Capital Development Fund, the online lending platform Kiva and Asia Development Bank were among the more than 40 attendees.  Kiva’s largest lending sector is agriculture, said Mark McDonagh, its investment manager in the Asia-Pacific region.

While most of Kiva’s loans are micro-loans of $5,000 or less, there is a growing number of larger loans going to social enterprises, mostly in the field of agriculture, said McDonagh. “A flexible agriculture loan isn’t rocket science. The issue is whether an investor has the risk appetite.”

Barriers

Relatively few businesses participate in the sustainable marketplace, with most actors coming from multinational corporations.  In breakout sessions to suggest ways to build a new agricultural economy, access to flexible agriculture loans and breaking into the global green marketplace surfaced as common themes.

The U.S. Government identified this gap when founding the USAID Green Invest Asia facility, which helps sustainable businesses become investment ready and links them to investors interested in the triple bottom line, an accounting framework with three parts: social, environmental and financial.

McDonagh, who helps direct lenders to investments that match their interests, said lenders have always valued innovation in choosing projects to fund.

Solutions

“Farmers are, by nature, hackers,” said Bryan Hugill, co-owner of the Thailand-based social enterprise, Raitong Organics. His 11-year-old farm has 43 ongoing innovation experiments, some in coordination with research labs worldwide, including: biodynamic rice farming where chemical fertilizers are replaced with natural bacteria; microbial fuel cells, or the use of bacteria to drive electric currents; deep-litter pig farming; stingless beekeeping, and cataloguing effective microorganisms.

Additional labs on innovation in agriculture to be organized by ANDE include: lessons learned in agricultural technology with USAID Feed the Future Asia; the role of women as sustainable consumers and investors with ANDE, and agricultural service delivery to smallholder farmers with Syngenta Foundation for Sustainable Agriculture.

Read the original press release here. 

Tags:  Agribusiness  Agriculture  Asia  Learning Lab  USAID 

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