How to Pick Winners at an Early Stage

On November 4, Sheila Herrling, the Case Foundation’s senior vice president of social innovation, joined the S&R Foundation’s Illuminate event to discuss how to assess risk and find winners in early-stage startups.

Moderated by Ryan Ross, program manager for the Halcyon Incubator, the panel included Sheila, Tien Wong, Todd Klein and Yanev Suiss. Together, they engaged in a robust discussion on picking “winners” at an early stage—including how they deal with the lack of data in early-stage investing, the need for diversifying the geography of venture capital investments, leveling the playing field for entrepreneurs of color and women entrepreneurs and more.

Below is a video of the entire conversation. The first question, and Sheila’s opening statement, begins at the 4:18 minute mark.

https://player.vimeo.com/video/145148162

Here is a little more about the distinguished panelists featured in the video:

Sheila Herrling
Sheila Herrling, senior vice president for social innovation at Case Foundation, leads the foundation’s efforts to develop and implement mission-driven domestic and international initiatives, expand tech for good platforms, leverage partnerships, promote entrepreneurial approaches to social change, and build a robust portfolio of social and impact investments.

Tien Wong
Mr. Tien Wong is chairman and CEO of Tech 2000, Inc., a Virginia-based EdTech company providing e-learning, learning analytics and mobile sales enablement software to Fortune 500, education and government clients. An active angel investor, he is also chairman of Opus8, Inc., a private investment and consulting firm which helps private equity and venture capital funds raise capital overseas.

Todd Klein
Mr. Klein is a successful private equity investor and author who focuses on identifying, investing in and helping build transformative companies – those that not only succeed but transform their industries, their markets and the world around them. During his career he has been involved in financing over 130 venture and growth stage companies.

Yanev Suissa
Yanev is the founder of SineWave Ventures, a new venture capital fund focused on connecting the top technology companies of the top VC firms to access the public sector.

New Research Shows Impact Investments are Living up to Great Expectations

This post was contributed by Steven Rodriguez, intern at the Case Foundation.

The Wharton Social Impact Initiative (WSII) at the Wharton School of the University of Pennsylvania recently released a study called Great Expectations: Mission Preservation and Financial Performance in Impact Investments. It included 53 impact investing private equity funds and revealed exciting data for those who are eager to know how these investments can and do perform compared to market benchmarks. According to this research, there is evidence that market rate returns for mission-aligned investments are, in fact, possible*. While the impact investing market remains relatively small, there are active investors who do not think doing good should mean sacrificing returns. For these market-rate-seeking impact investors, the new Wharton report should come as very good news!

As Kate Ahern from the Case Foundation explained during a recent webinar, Everything you Need to Know About Impact Investing (In 1 Hour!), investors can approach the sector with a range of financial and social impact return expectations—from a sector first focus, to blended returns, market rate or even impact alpha. While the WSII research focused on investments seeking market rate returns, something worth noting in the findings is evidence that mission-aligned exits led to even greater performance than non-mission aligned exits. Additionally, Wharton found that “concessionary financial returns were not required to preserve the social or environmental effect of impact investments.”

This report provides evidence that investment managers can align impact goals with financial expectations without sacrificing performance. According to an article in The Chronicle of Philanthropy, Wharton Finance professor, Chris Geczy, who supervised the research, said, “It represents an exciting initial advancement in our ongoing social impact research agenda.”

While the data demonstrates favorable outcomes for impact investing and for fund managers seeking market rate returns, it is important to keep complexities associated with various return expectations in mind. As Professor Geczy explained, “The industry includes distinct market segments with very different social and financial value propositions. One must be very careful not to generalize the performance of the market rate-seeking segment of funds that we studied to the entire, multidimensional industry.” It is important to remember the spectrum of opportunities available for the diverse impact investing community, from foundations making below-market Program Related Investments (PRIs) to early stage venture firms making direct investments in companies, like Happy Family, that generated huge returns from a successful exit.

The Wharton report is one of a growing number of similar research projects focused on the financial viability, competitive performance, risk and expectations of impact investments, particularly fund investments. One additional example that appeared earlier this year is a report from the GIIN and Cambridge Associates, Introducing the Impact Investing Benchmark, a study of 50 impact funds launched after 1998. The study found that these funds delivered returns comparable to other, non-impact seeking funds.

We at the Case Foundation are excited to see the knowledge base continue to grow in this sector. We hope these reports will serve as support for more and better informed investment decision making that includes impact investments from the full range of asset classes, returns and risk profiles.

To learn more about getting started in impact investing you can also check out our updated Short Guide to Impact Investing!

*The financial performance of the funds studied were benchmarked against the Russell 2000, an index that measures the performance of small capitalization companies (between $300 million and $2 billion), along with other indexes and found comparable results.

Be Fearless Spotlight: YWCA of Northwest Georgia

This Spotlight is crafted in partnership with BoardSource and authored by guest writer Caitlin Kelly as part of a special blog series by the Case Foundation featuring Be Fearless stories from the field. Follow along with us as we meet people and learn about organizations that are taking risks, being bold and failing forward in their efforts to create transformative change in the social sector.

It takes guts to stop a capital campaign right in the middle — not to mention returning the funds already raised. But Holly Tuchman, CEO and Executive Director of the YWCA of Northwest Georgia (the Y), is a woman with a truly fearless approach to achieving her organizational goals.

Having opened the first domestic violence shelter in Georgia over 35 years ago, the goal of the Y is to empower women and work for peace, justice, freedom and dignity for all people. With the support and dedication of their community, the Y’s work focuses on programs to reduce domestic violence and sexual assault, ultimately “helping clients lead safe, healthy and self-sufficient lives.”

When she arrived to lead the Y, just over eight years ago, she found a main building constructed in 1962 in desperate need of renovation and a domestic violence shelter with bunk beds so old and rickety that the Salvation Army refused to take them. Radical change was necessary, but she was determined to see it done smoothly, thoughtfully and strategically.

This was easier said then done. At the time the organization was losing $30,000 to $40,000 a month. “I had no idea it was as bad as it was,” she says. “After much discussion with our board of directors and community stakeholders, we decided to stop the capital campaign.” Tuchman returned the money to astonished donors, explaining there was now a new team and new approach in place.

Rooted in the new approach was the replacement of the Y’s swimming pool. A long-time symbol of a traditional Y and a fixture in the community, it was replaced with 12 transitional apartments for women fleeing domestic violence—giving them a safe space to stay while they continued to heal, live a violence-free life and work towards self-sufficiency.

Working closely with their engineer and interior designer, both of whom offered some skills pro bono, meant Tuchman and the Board could push for an attractive yet affordable final result all could be proud of. The shelter’s bunkbeds were falling apart; advised to keep them to save money, they insisted on new, more welcoming furniture instead. They were able to expand the Y’s training room space, counseling department, and office space for administrative and programmatic staff.

Tuchman, along with Capital Campaign Chair, Kim Gresh and a committed and compassionate board, re-launched their capital campaign with the new direction in mind. They infused the team with a real sense of urgency. “We just don’t ever stop! We work for our clients 24/7, 365 days a year. Our staff never quits!” As the only YWCA of its kind in Georgia, devoted to aiding women fleeing domestic abuse, “we’ve had many successes. But we have also had clients who unfortunately became a domestic violence murder victim. But we keep on going, because the next person needs our help,” she says.

Being bold and taking risks are essential parts of Tuchman’s professional DNA and have helped to make the organization stronger. “We launched our [new] capital campaign in early 2009, at one of the worst times we could possibly have started, and we finished it with no long-term debt,” she says. The campaign raised $7.28 million over five years, which allowed them to renovate their building and shelter. All renovation was completed this past May—bypassing the original sum of $6.5 million that a fund-raising consultant they’d hired had already told them was impossible. “It wasn’t enough,” Tuchman replied firmly. “We raised probably another $500,000 beyond that.”

But Tuchman doesn’t do it alone. She relies heavily on the expertise and energy of an unusually large board, with 30 members, eight of them men. Talk about reaching beyond your bubble! “When I first came to the YWCA eight and a half years ago, we had to petition our national organization to allow men to join our board.” She did so for a compelling reason: “We could have lost $1 million in donations if we didn’t.” In fact, when she began asking men for donations to the capital campaign, the pushback was real: “You want me to support your organization, but I can’t be on your board?”

That is no longer the case. In addition to the eight male board members, the board will also welcome its first male chairman in July 2016, the culmination of a lengthy process of conscious growth. “It was a combination of a couple of things,” she explains. “We started Y’s Guys, a committee of men who wanted to talk to men about domestic violence, and we created a men’s breakfast to get men involved in the issue. If we’re going to stop domestic violence men have to stand up and say ‘This isn’t acceptable in our community.’”

The board, which meets monthly, offers Tuchman and her staff skills most useful for “the big picture” like marketing, fundraising and finance. “They offer the strategy and our financial ability to sustain the organization. They’re not micro-managers. They stand along us and fearlessly lead.”

Feeling inspired? If you’re ready to begin your own Be Fearless journey start by downloading our free Be Fearless Action Guide and Case Studies.

Apple Watch: The Good, the Not-So-Good and the Social Good

About six months ago, to great fanfare, Apple debuted the Apple Watch. And for good reason… Smartwatches will account for 59 percent of total wearable device shipments in 2015, and that share is expected to expand to just over 70 percent of shipments by 2019. The company’s long awaited foray into wearable technology has been met with mixed reactions by consumers. Over the last few months, we’ve been testing out the Apple Watch to help our team at the Case Foundation learn about this new tool and how this innovative technology could be used to change the social sector landscape. With the latest update to the operating system (OS), we thought it was a good time for a brief report out. Below, is a summary of what I like, what I suggest could be improved and where I see potential for the Apple Watch to be used for social good.

Have your own thoughts about the Apple Watch or wearables? Please share them with us on Twitter using @CaseFoundation and #wearables.

The Good:

The most obvious thing to love about the Apple Watch is the incredible convenience it brings. Being able to merely turn your wrist and instantly see those things that are most important to you—the date, what your next appointment is, what the temperature is outside and more—without having to dig out a cell phone or open up your computer—can’t be beat.

For many of us testing the Apple Watch, the main question boils down to: “When would I rather use the Apple Watch than my phone?” And the answer for many applications is usually, I wouldn’t. That being said, there is much to appreciate with this device:

  • Complications: These are small elements that appear on the watch face and provide quick access to frequently used data, offering unparalleled convenience. For example, apps like Dark Sky that can notify you that it’s about to rain, or App in the Air that will push flight statuses to your wrist while walking through the airport. And obviously, as a wearable, the possibilities are huge in the health and fitness space. A running list of available apps and complications for the Apple Watch is here.
  • Haptic alerts and alarm: It is great for minimizing distractions in meetings as the watch merely vibrates quietly to tell you when you have a call or a text coming in and is not as disruptive as a phone. The same feature also allows the watch to act as a much more pleasant alarm, gently tapping your wrist to wake you in the morning.
  • Voice recognition and voice to text feature: When you receive a text, you can quickly reply by speaking into the watch. This feature is really helpful for driving, exercising or simply for when your phone is out of reach; with just a tap of the watch, you can speak your reply. It picks up speech amazingly well.

The Not so Good:

While the convenience is impressive, there are a few features that, in my opinion, could be tweaked to drastically improve the user experience.

  • Battery life: The watch’s battery is only good for 18 hours, meaning you’re left recharging the watch daily. This inconvenience might not be so bad if there were an easier way to tell what the battery level is, but one has to go through multiple steps to see what the power level is or set it up as a complication. A suggestion is to perhaps utilize the outer ring of the bezel as the battery indicator for example. It might also be less cumbersome if there were an easier way of taking the watch off and on. For example, a simple-to-use quick release mechanism to actually pop the watch away from the band for charging.
  • User experience: It is not clear when to use the screen itself by tapping; swiping or “force touch”; when to use the crown; and when to use the button that sits below the crown. I suspect the integration of these elements will likely improve over time as Apple and other developers gain more user data and create a more consistent set of guidelines and best practices for watch interfaces.
  • Waterproof: It’s not. While this may not be a deal breaker, it does feel restrictive given the integration of wearable technology to track our every move and heart beat. The watch could be great for sports for instance, but right now you will always have to worry about taking it out kayaking or canoeing, and if you are a swimmer you can’t use it for that. The lack of a waterproof feature just feels limiting.

The Social Good:

So where does that leave us for social good? The possibilities are endless. One could imagine an application that utilizes proximity marketing technology that pushes notifications to customers about social good deals as people walk through the mall—notifying shoppers that the store to their right is donating a percentage of revenue to a local nonprofit for every purchase made today. This would help connect individuals with the organizations and causes that they care about the most.

This may just be an imagined application for the watch now, but it isn’t so far-fetched. There is a long history of tools designed for commercial uses pivoting to support social good. For example, many of the e-commerce tools of the past were developed into non-profit donation tools. Recently, UNICEF’s “Wearables for Good” competition challenged changemakers to ideate on new uses for wearable technology, and has hit upon some incredible ideas, including devices that: facilitate record keeping; aid in the tracking of medications; purify drinking water; and even track vaccinations. Indeed, much of the “tech for good” movement, powered by driven social entrepreneurs, embodies these principles of repurposing commercial technologies for social impact.

When game-changing technologies like the Apple Watch come out, it opens up a world of possibilities for social entrepreneurs to apply their skills and talent, experiment, fail, experiment again and come up with applications for these innovative technologies that could change the world. My hope is that pioneering social entrepreneurs, like the finalists in UNICEF’s “Wearables for Good” competition, will take the lead in developing these new technologies. It’s time for social good applications to be integrated into our technology. I can’t wait to see what’s next for the evolution of the Apple Watch and other wearable tech like it!