Current Skoll Scholar and Oxford MBA student Jose Miguel Alfarogives his perspective on the Skoll World Forum seminar session ‘Bringing in Big Money: Innovative Financing Meets Inclusive Business’.
Bringing in Big Money: Innovative Financing Meets Inclusive Business, L-R: Robert Annibale, Elizabeth Littlefield, Cahrlotte Oades and Peter Tufano.
How is it possible to bring in big money to the impact investing sector? Robert Annibale did an incredible job moderating the deluxe panel of experts that were OPIC’s Elizabeth Littlefield, Coca-Cola’s Charlotte Oades and Dean Peter Tufano to analyse the articulation of different players in the very promising landscape of finance for social innovation. Government, corporate philanthropy, international aid, multilateral organisations, NGOs and social enterprises come together in a field that becomes more complex and integrated everyday. Unprecedented levels of complexity demand a clearer understanding of each player’s role. Experts differ on how much social innovation can be reached through business models with impact and how much should be financed through traditional aid schemes. However, what seems to be a consensus is that each player mentioned above has a role in the new dynamics. After having heard the figures that Dean Tufano presented on the amounts of capital ready to be deployed in the sector and the amazing programmes that Coca Cola are promoting including a by-all-means sustainable supply chain, it is clear that the true challenge is bringing the right intermediation: providing the skills and resources needed on a project-base seeking the best fit between capital deployed and investment conditions. As Elizabeth pointed out, “We all see the need of the plumbing and architecture”.
The audience actively engaged in a conversation with the experts. Investors present in the room enlisted five different challenges for further articulation in the sector: (i) transaction costs must be lowered; (ii) in spite of considerable number of financial instruments created in the market, few have track record of proven success; (iii) volatility in the market causes instability of aid; (iv) there is a clear disjoint between incentives of managers and long term goals and (v) entrepreneurs and investors don’t speak the same language in terms of needs and expectations.
Let’s forget the labels and divisions. By the end of the session, experts agreed that relevant players must orchestrate and articulate a mature and stable growth of the impact investing field by (i) creating sector funds that would increase the capital available and (ii) standardising financial instruments, players’ roles and corporate practices with track record of proven success which, as Elizabeth highlighted “doesn’t always guarantee success but it is a precondition”.