 So I've spent almost the last two decades working on what some would call the dark side as a technology venture capital investor Why was I drawn to the dark side? Because I love working with entrepreneurs and supporting them along their journeys as they work to to create Their visions and turn them into reality I've been fortunate to have had front-row seats to the amazing innovative power of entrepreneurs to transform industries and transform lives I Joined the venture capital industry back in 1997 just as the internet was getting started and one of the first companies that we invested in was at a company called unwired Planet Unwired Planet was the first company to put an internet browser on a mobile phone And they drove a wave of innovation around access to data from mobile devices That changed the lives of billions of people around the world and has created an important platform for creating social impact today I Was first exposed to the idea of combining this investment approach with philanthropic goals in 2009 when I transfer when I traveled to Zambia with an organization called spark ventures Spark was taking an investment approach to philanthropy identifying entrepreneurial NGOs in the developing world that were serving children and Investing in businesses that could drive financial sustainability for those partners So this idea of harnessing the power of business and entrepreneurship to create social impact was a really really powerful idea And I was hooked So I got involved in starting an early-stage impact fund called impact engine Which identifies promising entrepreneurs that are launching for-profit businesses Where there's positive social or environmental impact baked into their product so that impact grows hand-in-hand with revenues One of those promising entrepreneurs is Brian Hill When I was growing up my father taught in Folsom prison in California and I remember at night he would actually read he'd bring home the essays of a maintenance he'd read them to us almost like bedtime stories and Feeling of the hopes and dreams It was it was disheartening to recognize that many of these that so few of the people had actually the opportunity to even get into the Classroom and many of those dreams will never be realized because they didn't have the resources to make that a reality Post-release at that age though I had no idea of the magnitude of the problem 12 million American cycle through our jails each year And we spent a 74 billion dollars in car trading that population now. What do we get as a return on that investment? Sadly, we see about 50% return a short time after being released a rate we call recidivism But what is driving such abysmal returns? How how are we spending the time of this literally captive audience right now? We're showing daytime television Jerry Springer the price is right This is not a formula for success, especially when we know it works It's been unequivocally proven that education and vocation when provided to the MA population Decreases recidivism by about 43% even when you're controlling for things like background and motivation and yet with and yet It's politically challenging and it's operationally very difficult to get people into the classroom And this is where a double comes in at a double or jail education solutions We bring tablet technology and secure wireless networks into jails and prisons across the country that enable them to access Everything from literacy all the way to college degrees treatment programming substance abuse parenting courses Not only can they begin making progress while they're incarcerated, but they can continue that progress post-release now It hasn't been easy to bring technology like this into a very secure environment But we've seen a lot of growth already and by the end of the year we hope to be here in about five jails here in California So there are a lot of challenges facing entrepreneurs But one of the first challenges that they face is raising the funding so that they can take their idea and Turn it into a product that they can take out to market and start to test Now most entrepreneurs raise their first money from friends and family But impact entrepreneurs who often come from the populations and communities that they're trying to serve Generally don't have that rich uncle or connections to the entrepreneur in the tech space that just cashed out and is investing in the next generation of startups This is where philanthropy can play an important role as risk capital So you can imagine my dad as a as a teacher and a father of six not exactly the rich uncle You're looking for so we had to find and adopt our friends and family and that came through philanthropy Phil drop of capital is critical at the early stages of an impact company And it's more than just the capital itself the money itself when you look at sort of bottom of the pyramid or challenge Population businesses. There is fundamentally a high level of risk and a much more capital-intensive Expenditure on getting prototypes out there testing it in the market because of location or the challenge of the barriers of entry that Take place in those markets. It's because of this it creates a lot more risk and that risk scares way investors And it's a little too early to bring in that capital And so philanthropic dollars if you look at the narratives of the successful social enterprises here in it here at Socap you'll see that narratives almost always begin with that philanthropic capital We were fortunate enough to have the MacArthur Foundation the Chicago Community Trust come in and give us equity-free financing grant money in the early stages as well as win money through some awards the loudest to go in prototype Table technology behind wires behind the wires we call it and you can imagine again How challenging that is to bring these secure the secure technology into a very tight correctional facility now In this early stage When you look at that philanthropic capital, I mentioned it's more than just the money Yes, it allowed us to prototype and iterate but it also allowed us to do was send a strong signal that that a foundation an organization Organization that vets companies just like ours and organizations just like ours Recognize that we were driving impact not only that but they also helped us anchor our focus in the mission that we were trying to drive So an impact engine we're looking for action-oriented entrepreneurs that have collected some of the early proof points around the product Both the financial value as well as the impact And so the fact that MacArthur Foundation and the Chicago Community Trust had backed Brian as an entrepreneur Was an important signal to us that he was on to something really important. They're the experts in what driver's Cidivism we're not so it had a really important signaling effect for us Now our goals with adobe were to help the company get to that next level of proof point around the business Establish the product market fit Secure some of those early customers put together a revenue model that worked and could scale And this is where impact motivated financial investors can make a big difference It wasn't until we really actually raised the money Through impact engine and we went out to raise our first round of capital that we recognized the importance of having a business model That was credible and scalable if we're gonna make an impact in this space that you have to have those components We had raised money from the philanthropic end of things But there were very few financial requirements or business rigor that went behind that it was really just driving it to social outcomes That business rigor came through impact engine that came through So again that realization came as we went out to raise money now The the rigor that as we as we look at that that we wanted to make sure that we did have that We still have that balance because you almost want this this sort of tension that exists this healthy tension that exists between profitability and outcome and so we specifically went out and raised PRI investment program related investment from Philanthropic dollars as well This is where philanthropy can even play in that in the growth stage and take and be a part of that upside as well And so we looked at the balance We want to make sure that when we send out in investor updates that we have investors and stakeholders that aren't aren't just looking at the Financial outcomes, but are also looking at our impact metrics as well So Commingling impact-focused philanthropic dollars with investment dollars is really really valuable as a company is proving out its business model Improving out its impact, but when a company gets to the growth stage, that's where the paths can diverge So some companies will have demonstrated their appeal to financial investors and they can raise funding from more traditional sources These companies might be the next Tesla or the next Etsy Other companies will be operating a break-even, but not necessarily driving the kind of of Profits or growth that financial investors get excited about and this is where philanthropy can play a role as growth Capital helping those companies grow their business and grow their impact As we look at our company we see definitely venture funding is has been a strong option for us because we have a scalable model That will reach a large percentage of the population But as we as as we look at again the different models of the different companies that come out of this We really have to recognize that a big wave of social entrepreneurship and impact companies are coming that are looking towards Exit and liquidity that's a conversation that starts from the early days of your with your conversations with investors All the way to as you start looking towards those actual opportunities and this is a challenge Liquidity is important for two reasons one. We want to be able to free up these entrepreneurs to go Fight the next battle is to go start the next thing There's a there are a lot of problems that we need to solve and we need sharp entrepreneurs to go and help continue to Solve those problems. The second thing is we need liquidity for impact capital that needs to also be recycled and the best part about recycled impact capital is that comes with many lessons learned and so Having that creating those liquidity events for those exits or something that we need to not just be thinking about and talking about We actually need to be taking action on two ways that two suggestions as we look towards exits Might be and where philanthropic capital can really come into play is something where when you see a sustainable model But not necessarily one that requires venture growth doing something like a nonprofit buyout Actually buying out the company converting it to a nonprofit and allowing that sustainable revenue to continue in the nonprofit Setting so you're not as focused on profit but can just focus on the mission in the outcome Another option as we look at sort of venture stage companies might be an impact public offering pooling together philanthropic capital so that we actually have an Liquidity event that could make many people and syndicates can play into Looking at these different options as we have a look at the ways in which philanthropic capital could step into the market You have number one. You have your early seed stage Early seed stage capital that is critical and that is a must we're filmed philanthropy must play the second is in the growth stage Using public program related investment PRI dollars is a great way to take on the upside and the third area Which we need to not only be thinking about but addressing is how do we create liquidity? How can philanthropy play to create liquidity and think about not only the two recommendations I made but other options because if we're going to have scale and we want to continue to maintain the impact in the Space and create liquidity events that drive mission just as strongly as they drive Revenue and profitability that we're going to need to have philanthropy coming to the space again Investors have an important role to play as well both as risk capital But also setting high expectations for the performance of the business from a financial perspective And also helping entrepreneurs reach those milestones that show that they have a business model that works that can scale and setting the stage for growth if You look at modern history. It's really entrepreneurs that have driven innovation and driven value creation from Carnegie to Gates to Zuckerberg There's a new generation of entrepreneurs That's building social and environmental impact into their businesses from day one a lot of them are at this conference A lot of them are sitting here in this room, so I'll leave you with a question What are you going to do to help these entrepreneurs turns their vision into reality? Thank you