Innovation and Debate at IC
May 4, 2009
By Terri Spath
Last week in San Francisco, close to 300 pioneers, visionaries, leaders, activists, philanthropists, game-changers, and investors met at the St. Francis hotel for the Investors’ Circle Spring conference. An investor conference in the current challenging economic environment could be a dreary prospect, but instead, the presentations by social enterprises, breakout sessions and the hallway discussions at IC exposed a spirit of stealth optimism.
This year was the debut of the “IC Debate,” and a lively discussion on the topic of “The Sell Out” was moderated by Mark Albion, the former Harvard Business School professor dubbed the “savior of B-school souls” by Business Week magazine. The panel included Judy Wicks, founder of Philadelphia’s landmark White Dog Café, and Pierre Ferrari, the Board Chair of Ben & Jerry’s and an investor, director and head of marketing for Guayaki, the company that combines scaled reforestation with the marketing of yerba mate beverages. People at the session were eager to know how they could connect more directly with each other, in addition to searching out financial support for their groundbreaking enterprises. One of the resounding themes coming from the questions asked was how to use capital to stoke entrepreneurial capacity, strengthen the planet, and earn a healthy return for investors with minimal volatility.
One initiative gaining traction involves structured debt with revenue royalties, an innovative form of mezzanine capital. While mezzanine financing has been around for years, its application to social enterprises has been limited, in part because the field of social entrepreneurship is still developing. Many social enterprises have found themselves in a capital gap: they are too small for traditional mezzanine providers but have fully tapped the pockets of family and friends. Venture capital could be an option, but this can often require a “build to flip” strategy that collides with the very DNA of the mission-built enterprise.
Structured debt with royalties may be the solution. Since this structure leaves the equity ownership untouched, an innovative enterprise can continue building its larger vision of a mission that is meant to last. At the same time, capital partners can earn a healthy return, with minimal volatility or reliance on the shifting winds of the broader equity markets. The RSF Mezzanine Fund, L.P.1 was created to meet this opportunity and to build a connection between investors and enterprises.
At RSF, we believe deeply that we cannot solve our current challenges unless we solve them together. Difficulties can’t serve as an excuse for inaction. To spark transformation of the way the world works with money, social enterprises must continue to march forward, and investors must connect with longer term solutions. It’s happening now.
Join the conversation.
Terri Spath is the Managing Director of RSF Capital Management, Inc.
1 Legal Disclaimer: This does not constitute an offer to sell interests in the fund described herein. Investments will be offered solely to accredited investors only through the Private Placement Memorandum and documents incorporated therein. No investment may occur from a state or jurisdiction in which an offer, solicitation, or sale is not authorized.
- Published by Jillian McCoy
- Categories: Deals, Economy, Investing, Lending, Money, Social Finance
No Comments »
No comments yet.
Leave a comment