 that you want to take a look at that's in that middle space that's hard for people to understand when you're talking about investing not just in companies, but in sector. Can you explain that idea? I think that's challenging for some people. Yeah. Maybe we're dealing with stuff too frequently, but it seems early this year for me and Sunset. So there's one core concept that is going to be consistent throughout this year which is to think about sectors, you know, how do we advance the entire sector as we talked about yesterday, the extent to which the entire sector, or really how do we get it scaled? And if all the firms are great, if we're willing to scale, you'd be in multiple firms competing in a larger part of the place. So if I go to the sector, just so we can make sure we know what's going on. I think this pre-sector is something like, like the finance or what we're talking about, what we're talking about here about mobile money. There is an industry segment that are comprised of firms and infrastructure that supports those firms and the policy environment that also supports those firms. So getting back to your two-year original question, we've always thought about moving entire sectors. How we evolve is initially we said, okay, in order to move sector by bank capital, as you mentioned, and we'll invest in firms that we think can generate risk-adjusting returns. Market rate returns. And we were nervous about going less of market rate returns because we thought maybe we'd have to store markets and we'll get some slot investors. But what we realized is there was a lot of early-stage firms that were not only assuming regular business rates, but were also assuming risks to the sector, right? They were out there, they were cutting edge, they were de-risking an idea or a new model. And that even if they failed, they were still delivering enormous value in terms of driving that sector. There was evolution of that sector of education and more medical technology or something. Correct. So we were hopeful that they could succeed. Everybody wants these firms to succeed. But even if they don't, we're having to shoot you a public good for the sector. So then we said, hey, on one hand we're pushing the risk-adjusting returns. But if we push the risk-adjusting returns in all circumstances, we're not recognizing the value that some of these firms can deliver to the sector, even if they don't generate those adjusted returns. So that's how we started to begin to think about maybe investing in firms that may not generate those adjusted returns. Right. So the firms didn't go to market rate. And the investment investor, when you're talking about investing in a sector, that's the job of a foundation. That's the job of a government. That's the public good. Investors are not about, you know, you want the impact and you want the return, but you're saying, how do I think of myself as an investor if I'm not capturing the value at the end of the day? If it's a public good, you're not capturing the value. You're delivering the value to everybody else. How do I think differently about myself as an investor if I actually look at the investment? I guess it's related to now how you define investment. If you're purely a financial investor, then you're absolutely right. If you're just looking here for returns or all those things you can invest in and you generate nice returns. We call ourselves a video network, a film-project investment network. So we consider ourselves investors. Absolutely. No more investors in sector development or investors in positive social change. And my sense is that people are looking to move beyond for this narrow sense of what an investor is and think about what broadly might bring out social change. So in that sense, if you're an investor in social change, you don't always need to capture all of the financial value that's being created in the system. So if I deliver this public good along with my investment, which is what Zocac has found, how do I look at that public good? Do I have the really granular about measuring all the impact and consultants alone to find all of that? But how do I know the good of that? It's hard. A lot of these things are extremely difficult but incredibly important to do. I think there is an element of measurement. I think we're seeing real progress when I mentioned the problem. And I think there is an element of, you know, when we see it, when we talk about a bridge, we talk about remedying what they did. One of the ways you can measure success is, okay, I invested in the organization that's developed a model but it's now being replicated by others. So did it start with a single firm? I invested in that initially. I think that's that early-stage firm. And are we now seeing other copycats or others who are trying to hang on that property? So once your innovation has been offensively, you want to see copycats. You want to see other people doing that. That's a sign of success. I think that's absolutely one of the signs of success. So it's completely different from traditional technology investment where you want to say, what's my very interest? I want to see what's my way of having multiple children and how they can do the same things. And there's an interesting point in here. There's the old adage of what gets measured gets managed. It's interesting that there is an emergence of measurement systems in an impact perspective with GERS and IRIS, not as fast. But it seems to me that it would be good if there was an emergence of some mechanisms to measure sector reforms and sector development. And people would begin to think about more strongly. This is a new way of thinking. I mean, a meteor has the ability to have what you call a flexible castle. So you can invest in something, you can donate sometimes. And you have the resources to do that. A fund that sets up in the space has internal data return, limited partners. How can a fund or a traditional investor or an impact investor look at doing this kind of thing and telling it's story? Well, you're right. We are incredibly fortunate to have a very generous family that understands and is committed to pushing us into the workforce of the sector. I think it is really important to have different types of capital. The entity and the capital that you did were talking last night about thinking about the problem first and then figuring out how to address that problem, the problem first capital type. Now, we're fortunate to have a flexible capital as you wrote. I think the point isn't that everybody should have a flexible capital. The point is that there are multiple, large pools of capital out there. Each of those pools of capital is seeking different results and collectively we think that we can move sectors. Now, the gap we see, there's not capital out there, the gap we see is in early stage investing. I'm going to talk about why that is. And early stage investment infrastructure and policy. So, those are the biggest gaps we've seen. I think if we can direct a little more capital that way, we can compete much more. Let's take those one at a time. There is not enough risk at our early stage. Why not? And what needs to happen when you make that happen? I think you hit on the primary reason, why not? The difficulty of getting risk adjusted returns. Yes. You're dealing, if you go very early stage, you're dealing highly in separate terms. It's a very difficult environment. And also one thing that's not talked about a lot is transaction costs. I mean, for many folks doing a $250,000 deal, in terms of getting that done, it's possibly going to be a $2 million deal or a $20 million deal. The same amount of cost that you deal with. The same amount of cost. And if you're doing that $200,000 deal, you also got a lot of human capital costs. Typically, you're dealing with a very early stage entrepreneur and you want to be spending a lot of time without human money. That's probably the fundamental reason. It's expensive, it's difficult, and it's complicated. But again, it's incredibly important. But does that mean the mid-air is going to do more $250,000 deals and you're going to put the things out in these sectors to say, I'm going to, you know, people have been through the accelerator programs, I got a $100,000 deal, it's $250,000 to a million dollar gap that doesn't go to my deals. Well, the mid-air is going to be the kind of stuff. People do things to support that kind of stuff. But we also realize that we have a cost structure that doesn't make us terribly able to deal with the $250,000 deals. But we are looking at supporting organizations that can. A whole organization that we're really excited about that we have a support for sometimes. In Denver, I probably know of in Denver. And they are not focused on, this is the average population on the old people's side, they're focused on building kind of bigger entrepreneurial ecosystems. And they're absolutely supporting my impact on Kenors who are just starting out and showing some real traction. And again, there's other players that Abish Khan and India are building at this stage. And so we want to do the things that foster those kinds of things. What is needed to create more endeavors, Abish Khan or in the U.S., the Village Council or whatever? What would your role be to support those kinds of groups? It depends. It really depends on the market. One of the things we haven't touched upon is, in as much as we talk high level, we've got to move the market sectors. The work of doing that is specific to a country, is specific to a sector, is specific to a point in time. So it's really getting that local launch, building that local launch will be important. We have a significant team in Mumbai. We're building a team in Johannesburg. To get us sort of closer to the investment. Closer to what I'm trying to say. What's really at stake at Washington here at the sector-based approach? What's really different about it? I think, if you look at an individual firm, you may be, if the firm is incredibly successful, you may even impact a couple of minutes. I'll use the example of Remain yesterday. Remains are a million borrowers. Fact. Terrific. But they, there are a few others sparking innovations to sort of search 200 million. So that's what's really at stake here. But I think it's going to take us, I've acted differently, I'll come back to, we've tied the blocks, there's a bunch of them. Because what we're seeing in the sector right now, our sense is that we have an exponential increase in the amount of interest and the money of local companies in fact. The challenge is, everybody seems to want high financial returns and high social impact. That's a bit of a free-run plan. We get a lot of people, some question, what is new, because if you're going to generate financial risk-efficient returns anyway, that money should be as well. But we have a sense that everybody is waiting for those fabulous deals. And nobody's actually doing the hard work up front to make those fabulous deals ultimately possible. And so that's what we're concerned about. How can we get people to go to their state? But I do think there are some earlier state investments that can generate risk-efficient returns. One of the things we focus on, focus on on the New York Network, and one of the reasons we try to develop local knowledge and knowledge in areas like mobile payments, is that will enable us to find these terrific opportunities which can generate risk-efficient returns. Typical commercial capital markets just wouldn't have the knowledge and sector and the geography to believe that they generate risk-efficient returns. We can go in there and be confident we can, and those are kind of the investments we really want. Right. Foundations are mostly granted. PRI's are such exciting sites and mission-related investments. How do you get foundations to take some risk to play this role about investing for a public good in early state risk-efficient investments? Yeah, I think that foundation for one source of capital would be not about others as well. I think their first of all, it's important to recognize the program-related investments where people who don't know about them here enable foundations to invest in property and entities. And there's a lot of talk about program-related investments. But as you know, still 99% of money from foundation goes to grants. Right. And even if the 1% remains, only 5% of that 1% goes to equity investments in early state risk-efficient investments. Now, I think there is a positive element there. It's doing some interesting things but it will take a while before I think conveying a massive impact on that arena. I do think foundations have others where rent capitals, high development effect, rent capitals, one of the scarce forms of capital out there. And foundations also historically have a nice job thinking about systems and thinking about sectors and thinking about policy. And now, notice a lot of those when you I spoke, there's still a lot to do there. I think they also can be quite constructive in the overall world. But you look at what Judith was on this stage yesterday, you look at what Rockefeller has done to impact investments. I could quote infrastructure for impact investing with the gin and girls and other things. So I think foundations can absolutely play a role here. It's just changing, I think what's required is a bit of a change of focus. I think foundations historically see the role of addressing market failures rather than making markets. And so I think that's a bit of a philosophical shift. But again, there are a lot of innovative several innovative foundations out there that can make that shift. So when you say that foundations have been addressing market bill, where the market doesn't go, not creating a market, if you have a foundation not a community or a network that is not a foundation, what would you do to move that foundation? How could you get people to take the sector approach to build a market that then enables the market based solutions that are going to leave a scalable answers? Yeah, I think, well, boy, I think there are several things that one can think about doing. I think on the investments piece, I think it's difficult to do a lot of early stage equity investing in a foundation structure today. I mean, some of my sort of more radical suggestions are maybe foundations need to create a separate or parallel entity that looks at investments because it's a different skill set, it's a different mentality. I do think foundations are dealt with thinking around policy and infrastructure issues. It's a matter of whether they want to change strategies on certain points. Can you talk about supporting the interest group at least building the sector? Can you talk about what you mean by that? It's just, it's the overall environment in which the firms exist, the example I cited last night for some work that Kinsley company did in India. They looked at what it would take to build the infrastructure for medical technology and its rating agencies and skills development and policy. All of those which are elements in the broader system that have created a soil in which these firms can sprout. We talked about mobile payments and the money in GSMA has some terrific work. It's an intellectual capital that contributes to the space. We talked about the policy front. We just announced that CGI are committed to the better of the cash alliance which is focused on mobile getting governments and private sector firms to develop mobile payments. In three countries we've actually signed up principles and are focused on putting a lot of their transactions through mobile money which can effectively bring the many of the business franchise who aren't going to have access to the financial system in that financial system because you'll be sending them to transfer other payments and those are examples of infrastructure and policy that can help the sector. So what is the goal of government? We're talking about the public good of the firm. It's a little capsule of value. You get that money back as an investor. We're talking about the public good of these whole sectors of things like the roads and highways, the phone lines and whatever. What's the role of government now? And what's the role of the government I think government plays an absolutely critical role. Again with Judith and Catherine and Anthony to get on that point actually that was our point of departure and Catherine said that's one of the central things she's learned. The government is important. Sometimes even as we embrace market solutions we forget that the government has a legitimate role to play. One of the things that I've thought about a lot was the crisis number of the dash where you can hear different versions of why things happened but ultimately they stopped allowing you to buy the finance. Yes, ultimately there was obviously the commercialized finance players that the government were not alive and we had a disruption in the market which resulted in 10 million people being disenfranchised from access to financial services so that's a horrible outcome. The state level as they said that this sector sucks here. Yes, but I would get into the politics of the fundamental point is that it was a misalignment of understanding of incentive that led to a massive disruption that just hurt a lot of people and it set the industry back years. And I think when people this is not a well-off enigma they have a no-pocket movement where the government said we shouldn't be paying these microfinance institutions and that led to the collapse of the microfinance industry there as well. And it's not just microfinance I think you need to be sensitive that any time you are serving the poor in a market-based way in a generating return you're going to have people who see themselves as defenders of the interests of the poor want to know what's going on and want to make sure that there are consumer protections in place, etc. And if you don't have a good understanding between government and the business community about what you're collectively doing to accomplish it can lead to these sorts of conflicts that are at heart or might be bad for everybody so I think that's a big lesson learned that I actually have not talked about much. The other thing is the flip side, government can be incredibly constructive in terms of helping the sectors forward. The example I said last time is in Bangladesh where they're predisposited to purchase of home solar systems and in Bangladesh there are 750,000 householdable solar systems. That really was to simply creating a predispositivity and working constructively with a few private sector players to get the market going. Government can play an incredible role. I think the most important thing is establishing a great competitive environment in which firms can compete. Ultimately my personal view is the way you get prices down and the quality up is not through the anti-regulation but ensuring that there's appropriate consumer protections and vigorous competition among many players who are aggressively trying to win over the consumers. That's really important. So what as you look into places what would you want to change about the role of government? Well I think it's a difficult one. Governments Governments are of course comprised of individual, frequently elected officials as well as the agencies of support. I think it's so variable by country even by state. I'm not sure I would say I would change government but I would advise I would advise entrepreneurs and business leaders to more constructively engage with government so that they don't understand what needs to be done to serve the... So there's often a race forward to create a solution that doesn't think about government except as maybe a barrier? Yes, I think that's probably true when we've seen several instances where that has come back to damage an individual firm. I think it's a critical issue in the U.S. I think government plays even a more significant role in many developing world companies to do more than that. So you did this six part blog series and I confess I read all of them last week and I did a little of them all this week. What was your goal in doing this blog series? Why the blog series? And whose opinion do you want to change? Who do you want to input? We really want to share the ideas and the learnings. We've been at this now for years because we invest across the returns continual from grants to investments where we expect to adjust to the returns of everything we're actually, I think well positioned to see the tension or some of the tensions that are trying to do that. And we just felt it was about time to kind of put our thoughts out there and share what we've learned, spark a discussion. A lot of the issues of the Burge are very nuanced. A whole issue of public goods of the market innovator generating public goods in the development sector or the related issue of firm subsidy. Too often we get into this subsidy's goods up in the back or to say these are very nuanced, very challenging, very, very important issues. So we thought we just put out the idea as a lesson to learn there. Hopefully spark discussion or debate, hopefully a little insight. When we were talking about this we said look, this is not the recipe for impact investing but we're hopeful that there are a few interesting ingredients here that people can take away in advance of the money. Who would you see using ideas in one or two or three easiest ideas that you can kind of use? I'm hopeful that even as we say or as we say we just shift the curve and go our loose stage foundations have a role to play in that and are looking at this stage so I'm hopeful that foundations and foundation professionals and leaders will take a look and engage in the conversation. One of the pools of capital that we've talked about last time is ultra-high net worth individuals. I mean we got to put those numbers together I thought it was as stunned as I think as some of the people in the audience were in terms of four to four hundred controlling 1.7 trillion dollars. There, a lot of people are, a lot of those folks are committed to philanthropy and there's a lot of capital available there. You look at the Gates giving pledge members and a lot of those folks are also making money in commerce and through innovation. So that's another set of individuals that we hope we can begin this discussion. So the individual platform has decided on what to give a lot of money to good. How do you get them to think about I should invest in early stage high-risk sector forward and then think about a market-based approach? How would you? The second one is easier because I think you have a lot of people who are looking for market-based approach. The first one is why we do the blog post, right? You want to begin to have that engagement and say okay, how let's think of philanthropy not as charity and here is likes to make a distinction. Charity is giving the money away. Philanthropy is driving broad social benefit. Charity is a part of philanthropy but philanthropy more generally is advancing our collective well-being and it's not necessarily great. Here initially when quickly after eBay went public he committed to putting the line term as well to active use for the betterment of mankind. He created first the foundation. You heard this story about Sheridan in a group here, it's essential to how we think about things. He first created a foundation that's how people do what they do. Create a foundation to give money and money to organizations that are doing good work. So what you're asking is you buy a plane, you buy a plane. It's what you do but he pretty quickly felt constrained because he said hold on I created this thing called eBay which created a million jobs $60 billion worth of economic activity. I didn't accept any charity. That's not to say that business is always the answer but hey business was able in this case to have a significant positive impact on society. So why if I'm focused on having a significant positive impact on society do I only do brands? It's like putting time on hand being on the back and the social change game. So that's why he then created an LLC an investing entity so that we have now a foundation investment entity side by side. I didn't go into the legal details of that but that's what enables us to invest across the entire team. So that's the discussion I'd like to have with philanthropists who are committed to social change. Why tie a hand down your back? Why not get about the entire suite of tools you have about social change? That's one group and the beginning is the answer and then they have the market already and that's one thing. How do you get philanthropists to realize that you have a whole suite of tools that you have these problems you want to address and sometimes investing is the answer. Getting the investing is the answer or the whole suite? The whole suite of tools. Investing is one of the things. Investing is part of the savings. I think to start is those who already are convinced that investing is part of the answer. I think there are a lot of those to have this conversation with. And then you have to get them to go earlier stage. How do you get them to take more risk to do the early stage things? To take one for the team to build a second? That's the more challenge. I think you highlight the potential of the impact of doing it. There are a lot of philanthropists who are committed to just doing good and they want to find the most efficient effective way of doing it and they care less about getting credit. This is not about getting credit, it's not about generating the high returners. That's the easy stuff. High returners, high social impact. That's the easy stuff with the trophy investments. I think there are people who are committed to social change who are willing to invest early stage I think providing intellectual frameworks for how it might go about that is one step in the right direction and really one of the purposes of putting out the broad screen. And how is the media going to act differently next year based on your realization you don't want to just invest in the firm you want to invest in the sector and the things that maybe it fails the sector moves forward. It's an evolutionary step forward for the next business. How does that change your profile for risk? Will that cause you to invest earlier stage yourself? Well, so since inception we focused on sector development and this is getting the end of this album. The evolution for us over the last several years is to relax this constraint on risk adjustment returns and think of the total total impact, total social impact in terms. That's the point of evolution for us. How we evolve I think we'll probably invest in a similar way but I think we'll spend more time pulling the lessons learned and sharing the lessons learned and sharing some of the things that didn't work as well. That's one of the things about our stage is it's like in the valley here, a lot of your deals aren't going to work. And unfortunately in the social sector people don't like to talk about their deals that didn't work and I think part of investing early stage is realizing that a reasonably high percentage of them like in the valley are not going to work but each of them should hopefully yield some insight. Can you give me an example from your portfolio of a deal that moved the sector forward? Was it a positive evolution that it looked at as an investment kind of a bust? Yeah, so probably the a remedy for this part Well, I think that some of some of our most significant disappointments happened in microfinance where we did a lot of early investing as you can hear in the press we still do a lot of investing in financial conclusions but there were hiccups in the microfinance market and I mentioned Nicaragua, we had some funds invested in Nicaragua and this is one of those things people will say, oh okay commercial microfinance is in these highways of return and they forget all sort of the things that did work along the way and by the way that's one of the challenges is, one of the tensions we did talk about is we really need some successful investments to prove a point around in that investment. And this is one of the dangers of subsidy, right? If you subsidize a lot of firms that ultimately are never able to scale and I think you can read a little bit of the cynicism about the sector if Nicaragua invests in, say, four or five firms and one is able to obtain massive scale then that's difficult to scale for the sector and so there's this strange sort of risk adversity that sometimes can get in the way of scaling up more but the new speaks also of course, the nuances of subsidy that we really gotta be careful with the subsidy makes sense and we gotta say it's a tough decision I think there are several factors the firms contribution moving the sector forward has been discussed as one important factor size of the market and the disposal income of the customers that you're trying to serve are two other very critical factors obviously in a small small area so in the region of poor folks that you reach out to for investors yes so an example I used last night was before we funded we invested in BRACS microfinance initiatives in Sierra Leone, Liberia we didn't go in and expect investors to return there's a small war-torn market with lots of asset poverty and if you are in that investment we're trying to just give people opportunity to move out from that asset poverty so if we're investing in a mobile money plan in Asia that is surveying above the base of the pyramid then it seems to me we should be expected to adjust to the terms because the customers have somebody customers have money as close as possible in a relatively large market so that should be closer to being able to take off and being in a straight commercial market and so in Sierra Leone and Liberia what is success what will success be if you execute well how interesting is Susie Davis was here from BRAC but I think if that entity is sustainable and that's the first hurdle to clear then after that how much cash flow will be generated to expand the efforts there Sierra Leone will start so there's still a big change that has to happen for an investor who receives the money in a fund or as a fund into a company into an enterprise with no business and then to say I'm also investing in the rose to get me to that business on high how do people have to act differently to think to take a sector approach I think it goes back to finding people who are in the first place that person who is focused on the adjusted returns they're not going to be convinced by them they're folks who they want to save the world and do this yes, so that's not necessarily what we're talking about here one rule that we didn't talk about is the development banks and they historically have invested in businesses and you see USAID different OPEC with some of their work increasingly interested in early-stage investments so I think that's an additional pool of capital where you have people who do have investment skills who are committed to models of short-hand who are looking to go clear of stage I think there is some positive movement there as well it's really great to see that we have this huge trend of code because they exist in their own time so in time line and they don't move at each of us has our own constraints and there are certain constraints working with government entities but there are fabulous, very impressive people working in those organizations who are absolutely committed who can break through those barriers and deliver the results so I do think I'm still optimistic that we can see some progress there among foundations with their ability to think about sectors and policy, I think there's some opportunity there for high-neighborhood individuals it's a huge sumcap opportunity by the way, let's not just talk about high-neighborhood individuals in the US you're seeing emerging wealth elsewhere in Latin America or in the US, China the emergence of the whole philanthropic sector in ethos in other countries outside of the US is also fascinating, right? Even for investors, they're willing and they how do they think about their what their money has done in terms of how do you measure the impact across the sector? I guess that's what you have to be looking at in practice, not just what there's a grid of cash in this money or examples, it's a particular private school in Kenya and going to other places but you want to say how am I growing this whole sector? How do I, because there's a sense of agency that the investor on it wants I want to say what's my money done and if I'm willing to take a reduced rate of return to get this kind of impact how do I get a sense of of what I've been with the sector? The verge example is reasonably straightforward I think we know about sector impact you see getting rid of this sprouting up around the world you see people say, aha, isn't that interesting what they're doing? I can do it I can learn from what they're doing maybe I can do a little better but that's success and one of our other investments is delight of some solar lanterns and they've now impacted more than a million lights with their solar lanterns have the cost of the solar lantern down to eight blocks for a kid to study and doesn't have electricity depending upon the carousel this is potentially a transformative product it's not just delights right now there are others entering the market so delights can say, okay we're in and so are these others actually not going to contribute to really pushing the market forward there need to be some level of sector-based intermediaries who are telling these stories and explaining how to be the next delight how to be the next bridge is there something in the role of an organization here that makes it for microfinance? I think there probably is it probably depends upon sector and depends upon country as well one of the things that were helpful happens over time because we now have an office in Johannesburg office in Mumbai we also have an office in London and over time we open elsewhere we like to get this transmission mechanism going where you can get innovations spread quickly across the world there's a lot of south south solutions that potentially can emerge and if we have people who are in each of those markets we're already seeing this by the way how to talk about it but many of our network does work that's not just in that investing we do work in property rights we do work in technology for transparency and accountability there's actually a really good example there of getting that innovation transmitted I was just reading about it this morning a terrific organization to support in India that has a website called live88briot.com which is a pretty science laboratory that enables people to launch their planes where they had to play a broad and it's such a fabulous idea that now with some assistance from Moana a lot of are having organically they're in a dozen countries and they just I just saw an email this morning about them launching in Greece so there's some people being really transparent about this I really made a broad name Sergey that's a little bit tricky but their the location of the bribe, the type of bribe why they paid it and it can't have an impact because while David was a CEO there was explained to me that the transport minister in Bangalore was upset he seemed to have a high rate of bribery so he actually sat down with them and kind of re-engineered some of these processes so there are a few bright dating opportunities so there are ways that some of these innovations can impact on the ground my broader point of that is how do we take these innovations and accelerate the spread of this innovation because it's relevant in India it's relevant in Greece it's relevant in many many other places around the world and so that's a different way it's a non-commercial way it's a non-commercial example but an example of how you actually can create a sector not only within a geography but across multiple jobs and how do you get people to do this is really is huge $250,000 to a million dollar deal something that could be transformative but it is really not where it has to be how do you really count on that? I think you fundamentally have to appeal to their sense that they want to count the big as possible in that you know what, that's what we're going to be able to take as possible because if you're investing in a later stage, risk to test your returns you're actually not being incremental you're not driving that vision because it's changing the policy so I think you need to appeal to the sense of hey, here's a point where you actually will be in the very beginning fundamentally create a sector fundamentally change the trajectory of a sector that can be massively still and then to assess the risk around that around a particular country a particular geography, a particular market who needs to help guide an individual angel to see those sorts of deals I think it's going to make sense of that opportunity I think it's going to take more resources on the ground with great skills and it's going to take development over time fundamentally I mean our experience is you need people who are very familiar with that market and it takes a while to build that expertise and we're very fortunate we've been able to hire some exceptional investment professionals who have that expertise we also need to develop more of that over time so we can't be making those bets we also need to develop in the overall entrepreneurial ecosystem in these countries like Endeavour is doing so you have more entrepreneurs emerge who have mentorship and access to other professionals it's interesting, I was talking to somebody from Endeavour and he said you know the macroeconomic environment is important for entrepreneurship in the country but perhaps the most critical factor is the the network of entrepreneurs that are existing in that country and Endeavour has a terrific example from Argentina where they show they demonstrate that Argentina has a very high percentage of entrepreneurs including a lot of tech entrepreneurs and how they're all connected and by the way many of them have been connected through Endeavour but how they're all connected and collectively assisted the uplift in the entire entrepreneurial environment in Argentina and now you have some of the early entrepreneurs spinning out to be the early venture capitalists and there's this, by the way they're talking about entrepreneurial ecosystems there's this view that some hold that we've just got to make the next Silicon Valley in the end of the country I think that's pipeline I think it starts with these early networks of entrepreneurs and finding ways to support these entrepreneurs and build on each other's learnings and understandings and mistakes and kind of build that to the ground up so that whole entrepreneurial goes into extremely important. You've done this six-part series of blogs what would be the ideal outcome for these ideas what would be the next stage that you'd want to get these ideas out who would you want to get out and what would you want to see happen I think the first thing would be a discussion to emerge any time you put ideas out there you want them necessarily to be taken up and adopted in this case for people to engage with those ideas and for that to be risked for their thinking that ultimately informs their actions so the first step here is it's not okay now we publish the blog post and let's see $200 million as long as they're really staying it's okay but that's a little unrealistic at least in the first week or two but the point is to get the ideas out there to engage with those people who really want to engage on these issues for whom these may be influential in terms of how they think about having impact in the world and that's what we want to engage that is success really we have represented individuals from the various pools of capital this sparks a thing that's hot some more who do you see this as being most challenging to do this new idea of investing in the sector whose world is it wrong you know I you know the challenging it could be challenging for those who are just thinking about always wanting to risk the test of returns I'm not sure it's going to block their world for a second this should not be a threat to anybody this is going to be a problem some might accept it if you're a commercial capital player you want this deal for them you want this deal for them you're probably cheering on those guys who are coming to the police station you may not want to do it yourself but you want somebody climbing the bump so you get that waterfall I think this is really added to the sector and it's the people who are trying to think okay how can I help my biggest where am I going to get the biggest bank of social impact and we're saying go early staged where you can not only spark a new market but you can change the trajectory of market that's where the leverage is any line you see the most leverage you get in that line is changing what happens in the most first couple of years so those are the people we want to target people who are excited about having the biggest possible I think the biggest problem in the sector that I see at this point is that there's not enough early stage in the sector how would you tell if you could just elaborate on what you get how would you tell folks it's okay to take a factor risk and you might make less money you might not be risk-adjusted you might move the whole sector how would you get folks to have a different attitude toward risk risk flows from the attitude about where you want to impact flows from saying okay I've got impact in this sector that's the biggest possible impact once you get people committed to that notion then you say okay now let's talk about what we need to move in the entire sector it's early stage commercial investing it's infrastructure it's policy okay that sounds really complicated but I get policy I want to help them or that sounds really complicated policy infrastructure but I'm really good at early stage investing early stage investing we realize again we're in a privileged position where we can have all the types of capital that we need to deploy in the sector some folks may just have one type of capital so the big thing is to think about the sector the next thing is where are you going to have the most leverage we think it's early stage what kind of early stage investing are you going to commit to do you have a case where you're happy having lost 93% yeah so we support a lot of organizations that are grant-based organizations that are doing fabulous work we have invested we have invested we have invested $10-15 million dollars or so on grants we also invested in something they have a capitalist fund it's called a capitalist fund where we have provided them grant capital and they're going to use that capital to invest and the entrepreneurs are going to support it and then the returns almost on that capital is going to come back and fund it on the profit so it's a very clever way of using grant money to create a sustainable enterprise we really dealt with a lot of investments straight by the way in the back of my theory we did a $3 million grant for health care activities so that's sometimes the right way to go again it's the right tool at the right time so how should we elaborate on what sectors make sense to you in the video right now so I think people gotta choose the sectors they think are going to have the biggest impact where they can make a sustainable difference right so a few of the sectors we looked at we looked at consumer internet mobile, we invested in consumer internet and mobile in the US and in the development world being on the Silicon Valley we worked for high-tech startups that certainly are getting a little bit a very comfortable place for us to be one sector that's related to that that I've talked about is mobile payments again something we care deeply about things joined PayPal years ago I think if you get payments down you get mobile down it's transformative not only from a financial inclusion perspective but you're really laying the rails for a whole host of additional economic activity because mobile impact is about kind of triggered consumer internet, mobile payments the broad mobile payments is part of a broader look at financial inclusion with mobile payments we do education in the development world like the British and a couple investments in India we also do education we're looking at education in the US as well for disadvantaged populations in the US we should mention financial inclusion we're looking at investments in the US as well financial inclusion there's sort of a broad banner of entrepreneurship that we've talked a few things under and I also mentioned property rights and technology for transfer and mechanical you did their big report on medical technology for years or anything pushing that sector? we're looking at that sector and it's developing more slowly than we get thought but we still see some really interesting things there it's potentially so transformative you have medical devices for example that are really expensive here like in the west that you could deliver at a much lower cost and yield substantial benefit of the markets in the world but that's moving more slowly moving more slowly than we would like you know there are innovations regulations is a challenge the ecosystem is a challenge all those things that McKinsey highlighted they still need to be put in place there's shortage of organizations to our point there's shortage of organizations committed to doing them and it's a challenge but we'll continue at it because it can't be so impactful and so you've done this blog series what's the continuing outreach around these ideas that you can well we'll be back to our communications folks but we want to ideally the dialogue continues with everybody here in the room that's a long exhaustive dialogue we started by today hopefully these ideas are ideas that become the subject of discussion and debate and helpful thinking we obviously want to continue to engage ourselves and we'll be participating in various venues to continue to reinforce some of the messages and we want to be listening too because it's a set of ideas let's get to that what's been some of the most interesting responses to the blog series so far what have people written to positively? well overall I think it's been quite positive and we've been very encouraged there have been some very generous comments that people have provided one of the couple of interesting points one that I referred to before was like okay you guys are privileged in the sense that you have a pretty significant pool of capital and you can invest across the entire continuum that is completely fair of pouring again my additional comment would be yes but just pick your point it doesn't pick the point where you think you can have the biggest impact think a little more sector a lot of people at the earlier stage but everybody can have something to contribute here the issue around total firm value I think resonates really well I think people have been struggling with how to think about the subsidy issue and people have lined up on two camps rather than thinking about under what circumstances it might make sense to come off of a adjusted burden return as mindset this is I think still a vestige from what SOCAP has helped address so well which is this artificial division between a grand world and an investment world there are still vestiges of that subsidy, good subsidy, bad what are all the conditions so those are the things that the total firm value what's delivering to the sector what's it giving to the owners of the company I think the role of policy has also by the way they've just been the sector has been stunning in silence on the issue of policy so that's been one that has also emerged and so looking at five years, what would you like to see in this case? More of a stage investment committed in moving sectors that's the simple explanation of the 27 pages of our discussion and the presentation last night it's go early stage think about sectors what is the biggest I think the biggest risk is that there's too much hype around not investing and transform it and nothing happens and he mentioned the ratio of top deals and it had there was a known chuckle across the audience there was a social impact on this specific I think social impact arms are quite prominent but I think that most of the capital that is flowing into impact investing and the capital is still looking for a suggested return on cases and this just returns without a lot of risk pretty convinced so I think to me as a sector I'm totally committed to this notion that there are market based solutions to some of our most intractable problems or that markets have a significant role in addressing some of our most intractable problems and that impact investing is a critical component of that but I think we need to do the things that ensure that we can help to invest early today to move the sectors such that we get these fabulous investment opportunities that we go to scale now, success in five years is we have five microfinances in terms of solutions that we scale to 200 million if we can say hey there's a civil lighting mobile payments and public education low cost private education there are 50 million a piece fabulous because right now people talk about promises of impact investing and they default to microfinance which we default to as well but we need more and I think there are more at that cost we just need to get more people committed well thank you we want to open this up to questions yeah the young people are small we are actually C-states investors and my question is that it's very difficult for the last three years to kind of learn the hard way of what the process should be and I can actually do this and I'm wondering if there's something that will be the arcane people are doing that can help less than we learn because I think that it's more than just telling the story there's a level of detail in the level of knowledge sharing that needs to take place and it's very difficult for us I'm going to repeat it because we are recording so and early stage investors we've learned a lot about early stage high risk deals, how can we get those stories out how can we get those stories out I would love to hear your stories and your insight and your learns and that'd be terrific and sometimes I think we have that capability now to get those ideas out for various mechanisms and we are having some learnings to deal with but you guys are very close to it and we'd love to hear what you've learned and figure out a way to disseminate it appropriately I'd like to take this first of all from your talk last night the three conference awards we lost in the space we didn't have the best opportunity to talk to people about making that pitch to say we are early capital because I thought people were like we need to be here at the stage to come to the conference to meet you guys what's the 24th? maybe the same point it's a lovely early stage it really is if you talk to these seed firms they're going to say that we really can be certain that we're really going to get the types of firms that we're used to looking for why should we talk to the impact community and in the impact community we're a little bit of a loss because the U.S. based company focus on the U.S. department information here but also people say we want to take any early stage college so we may not be a group of 3 graduate students in a small country that's not just here to serve the U.S. people and we just can't get that piece or can't open to the audience and say help us at the early stage put that position to it there is absolutely a shortage there I don't know enough about your business be happy to send me an email I'll think about who we might know who might be over the 9th opportunity we have Hey Fisk the way you changed the nation you didn't make any small investments for the technical pregnancy some of the people around the world looking at this one of the challenges you face with bringing in investors is the two diligence that's going to take the cost and the margin of business that's going to do any best practices that's going to do the difference between small markets yeah so the question is around efficient due diligence that's again highlighting one of the fundamental challenges sometimes the due diligence on a $200,000 deal is the same as on a $2 million dollar deal or a $20 million dollar deal and actually sometimes and our answer is subsidy is worth not a profit but that's not the answer for that much of it yeah I think it does it's probably being willing to take more risks it does go back to being more flexible I think our teams probably in India for example have probably done a nice job of trying to get the costs down but again you're addressing them you're raising the fundamental issue people when they come in to the race to age they have to understand that's one of the challenges by the way I got to something Paula before you leave you really pulled together all the bots around the block series and I have no opportunity to publicly recognize her and thank her so thank you so much Paula this is more impressive and more of a charitable grant making than it is in capital investments I wish I had jumped for it to get a grant of $200,000 it's equal if I break it I wish I had jumped for it to get more impact so this whole notion of needing to give grants and they have to risk it to a promising one I think this is an uncertain understanding of a genuine grant and I'm just giving you the only advice we don't know what to do with this I think this is a traditional and so to me that's a lot of the sort of saying the same way the angel community evolved 15-20 years ago and if you see this that's where he has to get to is that they're an angel grant it's a short amount of money so you make several interesting points and set it in there by the way my experience with OM it's actually we do a lot more new diligence on investments than we do on grants there's still a lot new diligence on both of them but I don't understand how that's not important so in terms of I mean there absolutely doesn't need to be some innovation I think this is where the development institutions are actually pretty good is there willing to make different tranches of risk around different turn expectations there's some pretty interesting structure including by the way social impact bonds where there can be different tranches so I think the structures of financial architecture where innovations exist you come back to the other point you're making though who wants to and we've been in these negotiations there's different tranches who wants to take the first loss tranche because everybody will I'm accountable to so and so to get the money back once a little bit so the the tranching is innovative absolutely terrific approach it can work you're still stuck with this issue that you highlighted several times how do you get people to commit in an iris way and how do you fundamentally tell somebody look you're going to be climbing the pump for this type of thing that returns and so you've got to appeal to the the sense that people want to have that their objective is not to return it's a social impact and sometimes it's a willingness to take that low return tranche that is going to be ultimately the most catabit and that's the argument that you have to appeal to the better angels you have to appeal to the desire to have the most positive social impact and I think there are enough people out there that if we can convince them about the importance of real estate to be able to appeal to them is there one more question I think it's quite promising Kickstarter has been enormous and successful and there's a lot of college industry there so I think it's one of those innovations that's incredibly exciting potentially transformative still very young so we'll have to call it very closely okay well thank you everybody for being here and listening