 John hey Sasha, are you doing good? How are you? What are you? What are you doing? Well? I'm trying to gather Nutrinos of success and if I get enough of these I think maybe we can begin to look at what works In impact investing and try to get some more commonality between our practices Great What do you mean? Well, so I think you know we did the report on impact capital coordinating impact capital and one of the things that we were focusing on is You know how in fact Different sources of capital could pass at the time the other thing we noticed is hey somebody's moving the goalposts The impact investors who went in with a three to five-year time horizon are coming back and saying gee We really think that it's more like seven to thirteen years And I think that has some unintended consequences with with what we're doing so What I want to do is to extend a little bit more into the fabric of how do we get a more grand unified theory? Or in fact better yet a series of rules or practices that encourages better coordination between impact capital sources So one of the things that we talked about was look if an MRI meaning a mission related investor or program related investor went in to Extend some of their milestones so that they better prepared their grantee for the next phase of capital And they would approximate what you actually encounter in the universe of venture capital investing Which are ready pools of up-round equity capital waiting for winners to emerge from the previous route And I think those kinds of forces are what we need to bind a little bit better But I also thought your commentary about the role expanded role of philanthropy is terrific Because that blueprint to scale report you guys put out was quite a compliment to The one that we had already released last year. Well, thanks And you know Catherine polton talked about this a little bit yesterday and we'll go into it deeper in the session today but I'm sort of struck by Majora's moving talk and You know, I've been trying to think as there was report came out in April the simpler and simpler way to sort of summarize What it says, and I think it in simplest form. It says something that practitioners Know which is that this work is really hard that Building businesses in these environments is Costly and has a lot of turns and a lot of twists in the road and what really struck me listening to Majora's I think out of this conference for a number of years We've been talking about whether or not we're creating an asset class And when I listen to someone like Majora's speak I hear someone talking about solving problems and I Think that those are two pretty different undertaking and if you keep your eyes focused on the problem You're gonna come up with a whole Diversity of solutions versus an asset class here to come up basically with funds and fund structures So I think that this is our chance to shift the conversation terrific So one of the things I think about Is you know are there lessons that we could pull or perhaps ignore from venture capital and the first observation I make about that in terms of creating some of these natural forces for for change Is that you know you look at the process that we have an impact capital and there are big gaps When I look at the process in venture capital, there are a number of very strong binding properties. They are looking for impact For you know or at least places to Invest very local they syndicate locally and the product and service that is the outgrowth of that investment is actually global and scale We are almost the exact mirror opposite of that and that we source our Opportunities remotely we we look for our syndicate partners globally and the impact is usually on a community or regional scale And so making up for some of those the lack of forces there are That we don't enjoy an impact capital and as you say it's a tough job I often tease my venture capital friends that they have it easy compared to impact capital So when I think about equity, I also think about perhaps it teaches us a little bit of the wrong Thing in that it's reflexive It's like muscle memory and when we construct our portfolios We're looking perhaps too far ahead in our expectations looking for a 10x assembling a 10x Return on every single investment that we make and it ends up screening out the wrong kind of Investment very solid social enterprises. Don't you see the same thing in fund construction? Yeah, I mean I think what what you know, I would just add to that The investment, you know, what I've really learned from you John is a lot about What kind of products do we need to put into what kind of investment products? Do we need to be kind of the standard for the space? And I think when I take a broader view of why the space has kind of evolved the way it has it has a lot to do with The characteristics of funds themselves and we were talking a little bit yesterday and Anthony Buglevine Started off our panel saying with the blueprint to scale panel saying that One of the things that our sector is trying to do is buck the notion that there's this bifurcated world view whereby you either have Philanthropy or you have investment capital and kind of low and behold the synthesis of those two opposing worldviews is impact investing and I would posit that we're really not there yet and You know our experience at Acumen and just talking to our peers in the space when you go in to talk to a potential LP They very quickly want to put you in one of two buckets And I think as a sector we still actually have that bifurcated world view where it is either Philanthropy and we've been talking in the report about a better kind of enterprise philanthropy or its investment capital with Basically a tweak around the edges that says maybe I can lower your return a little bit Maybe I can think about the time horizon a little bit differently rather than actually saying what are the focal points of? Types of funds that actually get us impact. What do we mean by that impact? What are the returns that you can reasonably respect to get if you're to get that impact? And I guess what I'd like to see happen is an honest dialogue and conversation Not only observing that this is really hard, but then both fund managers trying to raise funds People are innovating around fund type and even LPs coming to the table and saying you know We're not going to get new results with kind of these old traditional private equity fund structures And I think what we have in the report is the observation of what the characteristics of this sector look like ten years in What I think I would love to see is more LPs Looking at that and saying hey wait a minute if that's the case Then we can't approach this in the same way in terms of what we expect our capital to do So is this sort of LP? You know One can always dream I think that what we need is people to step forward and I think the challenge right now is the people with the really really big balance sheets are kind of waiting for the Activists if you will in this room to come up with new ideas And I think the more that people can meet in the middle I think it's very difficult for someone who wants to kind of raise a new fund to just come up with something brand New and have a real serious conversation with LPs And I think the reason is because we can't yet talk about impact as clearly as we can talk about returns And it's much safer and much easier to feel like you've got rigor around returns as if that's going to kind of buy you the whole Exactly right so it's why I start thinking about What do we do for alternative forms of investment one of the worries that I have is there's not truth in advertising here and that If I'm a financial physicist for impact capital What I want to do is to to look at an equation and solve for x where the equation is equity is to venture capital as X is to impact capital and the reason I don't think that equity is the answer for impact capital in many instances Is because it's a promise that the entrepreneur cannot keep they don't have ready-made IPO markets And if selling their company is the only way that they have to pay back their equity investor It's a promise they don't want to keep because they lose control or or are disenfranchised from their effort So I think that finding Alternative forms of investment capital that help create a more uniform or help better match the true experience on the ground for social enterprise Is exactly where we need to go and I'm hoping that that's also some of the activism that the limited partners look at And that we could be a little more Sanguine about what are the true rates of return that we can expect and do those instruments encourage round-trip of capital Reliability over Mike might be off there we go. I think it's an important time for our sector I think we have more information than we've ever had before and what I'd like to see is that New information actually leading to new action and I think it can happen at every level It can happen in the conversation between the investor and the investee between the investor The fund manager if you will and their limited partners and to really look honestly at this ecosystem and say hey We have space for all of these things We have space for more aggressive returns and we have space for more aggressive impact and to acknowledge it Sometimes those things are going to go hand-in-hand and sometimes they're going to be actual and real trade-off So I think the sooner we can have those conversations the quicker we're going to move So we're going to start this afternoon. Yep, we've got a great session It's a panel discussion that will analyze or look at a number of different facets of this topic It will also look at the promise and if term sheets are the contractual instantiation of the promise between investor and social enterprise and we're going to look at that promise in a much different way We're hopefully going to co-create some of those Answers and then we have a real treat for you brought to you by the Campbell law group Which is an automated term sheet generator So hopefully everybody can join us at 245 in the fleet room and with that Sasha. I'll see you at our lab this afternoon