TwenTy-Five years oF social invesTing: Four

TwenTy-Five years oF social invesTing:
Four lessons From The FronT line
By Cheryl L. Dorsey, President, Echoing Green
Echoing Green’s mission is to unleash the next generation of talent to solve the world’s
biggest social problems. Founded twenty-five years ago to scout out young leaders
on leading college and university campuses, Echoing Green has become one of the
world’s foremost angel investors in emerging social entrepreneurs. Through an annual
global social business plan competition that last year alone attracted more than 3,500
submissions from 128 countries, Echoing Green has provided $31 million in seed
capital and support to more than 520 start-up social entrepreneurs working in 49
countries and 40 states.
Some of today’s leading social entrepreneurs and their organizations got their start
through Echoing Green. These include Wendy Kopp of Teach For America; Michael
Brown and Alan Khazei of City Year; Maya Ajmera of The Global Fund for Children;
Eric Schwarz of Citizen Schools; Eric Adler and Rajiv Vinnakota of the SEED School;
and Vikram Akula of SKS Microfinance.
The notion of marrying infusions of capital with strategic assistance in a culture of
leadership excellence stems from the approach and philosophy of Echoing Green’s
founders, General Atlantic, a leading global growth equity firm. Echoing Green invests
at the outset in people deeply committed to driving positive social change and has, over
the years, created a global network of world-class leaders. Ultimately, the approach has
shown that this most patient of capital can lead to significant returns on investment.
In reviewing a representative sample of investments, we found that sixty-seven percent
of the social entrepreneurial organizations launched with Echoing Green’s support
are sustainable over time (compared with the vast majority of new ventures, be they
nonprofit or for-profit, which fail); eighty-five percent of the next generation leaders
identified and supported by Echoing Green remain committed to the public good in
key leadership positions (such as Providence, Rhode Island’s first Latino mayor, Angel
Taveras; award-winning author and journalist, Philip Gourevitch; and Mrs. Michelle
Obama); and according to a recent study, Echoing Green Fellows have raised nearly $1
billion in additional private and public funding, delivering an “ROI” of 44:1.
As a pioneer in the field of social entrepreneurship, we are grateful on this, our silver
anniversary, to reflect on what we have learned along the way, and we hope to spark
conversations about the most effective strategies to identify and support nextgeneration talent.
echoing green’s core PrinciPles For angel invesTing
1. Bet on the Jockey
2. Incent the Right Risk-Taking
3. Embrace Agnosticism
4. Bubble Up the Best Talent
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Echoing grEEn:
BeT on The Jockey • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •
George Gendron, founder and director of the Innovation Entrepreneurship program at Clark
University and former editor-in-chief of Inc. Magazine, once remarked that entrepreneurship
in its purest form is all about the transformation of human capital—risk-taking, imagination,
resourcefulness—into financial wealth. While Echoing Green is squarely focused on creating
shared public value, the primacy of the right people relative to the right ideas and ability to
execute, resonates deeply.
[
In other words, the jockey is
more important than the horse.
While we have had occasion to evaluate thousands
of “jockeys” of social enterprise since 1987, we have
invested in proportionately few. And while the
enterprises they mount comprise a wide array of
program and geographic areas, their leadership profiles look remarkably similar. In other words,
the jockey is more important than the horse. Over the years, we’ve begun to codify the winning
leadership qualities and traits into a selection filter called “Social Entrepreneurship Quotient,”
or SEQ. The four pillars of SEQ are perspective, purpose, point of entry and power source. We
believe that the world’s most successful social entrepreneurs exhibit each in abundance.
Perspective: Successful social entrepreneurs come with a natural lens through which they
view the world—one that conjures images of shared humanity and common dignity. The causes
they undertake are inextricably linked to both their core values and personal experiences and
bend toward equality of opportunity for all.
For example, take the amazing journey of
kennedy odede, a 2010 Echoing Green Fellow
from the streets of Kibera, Africa’s largest slum,
to Wesleyan University, where in June 2012
he became the first person from this Nairobi
community to graduate from an American
university. His first-hand experience instilled
in him a deep belief that access to education
and basic services like clean water, sanitation
and healthcare are universal human rights.
Witnessing the harsh realities in Kibera for
the women whom he loved, from his mother
to his sisters, Kennedy posited that one of the
best ways to combat gender inequality was to
uphold the value of girls through the provision
of key community services. With Jessica
Posner, Kennedy co-founded Shining Hope for Communities, a comprehensive community
development organization that includes: Kibera’s first tuition-free school for girls, a health
care clinic, a bio-latrine project that builds clean toilets, a clean water project and other critical
community services. Shining Hope already has served more than 30,000 Kibera residents and
with an aggressive growth trajectory has rapidly become a leading development initiative in
that community.
Purpose: Top social entrepreneurs are driven by a sense of purpose and have a particular
vision of social change that ultimately is more important than any one social solution. They are
warriors for their cause and this cause-based commitment often propels them to the vanguard
as social movement leaders.
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For example, Priya haji, 1993 Echoing Green Fellow, has spent a lifetime fighting for social and
economic equality. As a recent Stanford University graduate, she co-founded and led Free at Last,
which became a national model for community-based substance abuse treatment and HIV/AIDS
intervention for African Americans and Latinos. It eventually served 3,000 people per year in East Palo
Alto, California, and raised more than $20 million in special investments. Her second venture, World of
Good—an online retail marketplace and wholesaler of sustainable goods that created market access for
poor women artisans in 55 countries—was acquired by eBay in 2010. Her most recent venture seeks to
stem the crisis of debt confronting millions of Americans. SaveUp is a new personal finance company
that rewards users for financial responsibility and is the nation’s first free rewards program for saving
money and reducing debt using a points system.
Doug ulman, 1999 Echoing Green Fellow, is a three-time cancer survivor, overcoming
chondrosarcoma during his sophomore year in college and malignant melanoma twice. Doug
founded the Ulman Cancer Fund for Young Adults, a nonprofit organization to provide support,
education and resources to young adults, families and friends who are affected by cancer. His
work attracted the attention of Lance Armstrong and today Doug serves as President and CEO of
LIVESTRONG, through which he has become a leader of the global cancer-survivorship movement.
Point of entry: The most effective social entrepreneurs possess a unique grasp of how to enter
situations to achieve results. They demonstrate a special sort of savvy that is grounded in assetbased thinking—a perspective that relentlessly seeks to maximize the strengths, talents and
opportunities in any situation.
andrew youn, 2006 Echoing Green Fellow, parlayed time spent as a strategic consultant for Fortune
500 companies and a transformative MBA summer internship experience in Africa into one of
today’s fastest-growing social enterprises. In studying the problem of chronic hunger in Africa,
especially amongst the poorest and most rural farmers, he became increasingly convinced that the
solution to the crisis lay in their own fields. Andrew co-founded One Acre Fund, which takes an
integrated value-chain approach to empowering the poorest rural farmers in Kenya and Rwanda,
providing them with farming inputs, training and capacity building, and access to markets. By
moving away from stop-gap measures like food aid to an investment approach, the organization is
beginning to unlock the permanent growth potential of these farmers. In less than six years, One
Acre Fund has helped triple the harvests and double the income per acre for 125,000 subsistence
farmers and their families, with the goal of reaching millions more in the next ten years across subSaharan Africa.
Power source: The world’s leading social entrepreneurs develop an extraordinary ability to enlist
others in their cause and attract significant financial and other support. This quality of “resource
magnetism” is something beyond charisma and can be measured directly through outcomes.
Take sara horowitz, 1996 Echoing Green Fellow, a third-generation union lawyer. Her father was a
labor lawyer and her grandfather was vice president of the International Ladies Garment Workers
Union in New York. Early in her own career, she quickly recognized that existing labor laws and
regulations didn’t jibe with the country’s increasingly independent and mobile workforce. So,
she set about rethinking unionism from first principles. Sara founded Freelancers Union, a new
support system for the country’s independent workers that brings freelancers together to create
power in markets and power in politics. Freelancers Union, which The Economist deemed the “new
unionism,” has grown into a $100 million self-sustaining social enterprise with more than 177,000
members in all fifty states. Freelancers Union was selected recently to sponsor Consumer Operated
and Oriented Plans (CO-OPs) in New York, New Jersey and Oregon, with $340 million in federal
funding. Launching in 2014, these cooperative health plans will expand health care to the nation’s 42
million independent workers.
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Echoing grEEn:
incenT The righT risk-Taking • • • • • • • • • • • • • • • • • • • • • • • • • • • • •
[
We all know that incentives matter for
innovation, and Echoing Green believes that it
has identified some of the right ones to entice
nascent innovators to roll up their sleeves, put
in the time and take the risks to transform great
new ideas into systems-changing breakthroughs. Our risk-seeking capital and the ecosystem in
which we embed our social entrepreneurs help to spur innovation by: 1) establishing a long time
horizon; 2) rewarding efforts and not necessarily results; and, relatedly, 3) tolerating failure.
Next-generation ideas take not
only time, but perseverance.
While Echoing Green provides two years of start-up funding, our technical assistance, networking
and peer-to-peer in-kind support extends out years beyond cutting the final check, creating an
ongoing community of fellows. This not only acknowledges the long-term time commitment
required to build and sustain impact-driven social enterprises but also mitigates against prioritizing
efforts where there is a high chance of success simply to achieve short term results.
Especially for start-up social entrepreneurs, rewarding efforts and not necessarily results removes
the pressure of producing short-term and often incremental improvements on established results.
Next-generation ideas take not only time, but perseverance. Innovators constantly hit dead ends and
retool and then encounter further failures along the way. Giving them the leeway to determine how
to direct their efforts encourages the kinds of risks that lead to big ideas and breakthrough solutions.
ashni mohnot, Echoing Green Fellow 2010,
illustrates this beautifully. Raised in Bombay and
admitted to Stanford University, she experienced
firsthand the frustrations of many international
students who lack access to low-interest loans.
Seeking to reduce the financial barrier to education
and create a new asset class by enabling ordinary
people to invest in students’ higher education
in exchange for a share in future income, she
founded Enzi, a Person-to-Person (P2P) investing
platform. Often working out of our offices in New
York, Ashni attempted to navigate myriad legal
and financial complexities but ultimately decided
that focusing on the US education market was
not sustainable because of the price point and she
could have a much greater impact in India with
smaller education loans. Leaving for Bombay, Ashni retooled Enzi to take advantage of the Indian
government’s recent mandate to increase enrollment in vocational education. Radically shifting her
business model from offering large dollar loans to relatively few students to small dollar loans for a
large pool of customers has opened up wider new possibilities for this innovative social enterprise.
As further reinforcement of effort over easy results, Echoing Green celebrates failure. We do so in
part to remove the shame and stigma so many high-achieving, accomplished young people place
on stumbling. Failure is part of the process of exploring what does and does not work and we have
tried hard to underscore in our messages that smart failures are a critical part of the nascent social
entrepreneur’s journey. We ask Fellows to highlight their learnings from failure in their quarterly
reports and, better still, share these lessons during our leadership retreats. One of our most popular
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TwEnTy-FivE yEars oF social invEsTing
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retreat workshops is led by Public Allies CEO and top social entrepreneur Paul Schmitz. It’s called
“The Worst Practices of Social Entrepreneurship,” which begins with a visual of Paul in a dunce
cap, and has him reviewing his fourteen biggest mistakes as a young leader. It’s a real-life tale of
managing and growing an organization and it inherently gives permission to our Fellows to open
up about their mistakes. In fact, failure is a consistent and popular theme for all of our Fellow
gatherings and conferences, where Fellows even lead their own sessions on the topic and share ways
that they bring a tolerance for failure into their own organizations.
emBrace agnosTicism • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •
In pursuing for-profit investments, angels and venture capitalists often concentrate on specific
industries or sectors. The reason is simple enough: That’s where these investors have expertise and
where it often takes a critical mass of people with similar education, backgrounds and experience to
come up with a cutting-edge idea.
We get our best results, on the other hand, by remaining agnostic and funding the strongest chance
for outcomes regardless of specific field. A traditional investor might be skeptical of our bias to
remain open to all the areas in which our social entrepreneurs work (both programmatically and
geographically) and underscore the value in choosing a particular area in order to deepen expertise,
observe trends and recognize patterns. Yet we are, in fact, also subject-area experts—social
innovation experts—who excel at identifying individuals who have the potential to create social
impact.
Our approach reaps rewards for three reasons. First, we value the power dynamic it creates. Rather
than Echoing Green dictating the areas we believe are worthy of funding, we are able to learn from
incredibly smart young leaders who are deeply connected to the needs and potential solutions that
may work best in their communities. Second, because we don’t approach policy or subject matters
from a particular point of view, we believe we are as receptive as we can be to innovators whose new
ideas may truly go against the grain but be worthy of investment to disrupt the status quo. And third,
our community of social entrepreneurs has benefitted greatly through exposure to one another, and
those farthest apart in terms of geography and field often learn the most from each other.
andrew youn, of One Acre Fund, recounts a
pivotal late night conversation at his first Echoing
Green retreat, during a snack run with Mark
Hanis, another 2006 Echoing Green Fellow and
co-founder of Genocide Intervention Network
(now United to End Genocide), an advocacy
organization established to create a permanent
anti-genocide constituency in the United States.
Mark’s early vision for a mass mobilization
strategy had an audacious growth proposition
(ultimately borne out by more than 1,000 active
student chapters around the country and a firstof-its-kind anti-genocide hotline empowering
more than 30,000 callers). Its magnitude prompted
Andrew to fundamentally rethink the reach and
scope of his direct-services organization at a scale
far beyond his initial planning.
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Echoing grEEn:
BuBBle uP The BesT TalenT • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •
Echoing Green believes strongly that a competitive process for fellowship selection pushes social
entrepreneurs to better hone their ideas and thinking and helps the best ideas rise to the top. As a
result, we have developed an annual selection process, rather than a rolling review, that creates a
funnel through which top talent emerges.
The “tournament nature” of our selection process is daunting and boils down to “10-10-1.” Each
autumn the annual search process for next-generation talent committed to positive social change
begins as we identify and work with partners—nonprofits, for-profits, individuals, universities, and
others—to source potential applicants and advertise the fellowship application process. Our twophased application submission process winnows initial submissions to, first the top ten percent of
applicants and then after receiving full social business plans from them just the top ten percent of
these. Only at the finalist stage do we convene those remaining for an intensive two-day interview
and pitch process. Ultimately, only about one percent of the initial applicant pool will be selected
for investment.
After years of mounting this annual competition, we have learned a number of interesting things.
Far from disenfranchising the vast majority of applicants who receive rejection notices, they come
away appreciating the discipline of running the selection “gauntlet,” as it improves their social
business plans. Those who make semi-final and finalist rounds often cite a halo effect in making it
through and will speak of their feat as providing great cachet. In addition, the volunteer manpower
required to cull an initial application pool from an excess of 3,500 social business plans to twenty
selected for funding has given us an ideal opportunity to engage an ever-increasing community of
donors and supporters interested in high-impact philanthropy.
•••
Applied well, the four lessons that Echoing Green has distilled over a quarter of a century of
fostering and funding young social entrepreneurs can help guide those interested in unleashing
next-generation change agents into the world. For we need them now more than ever. To quote
Dave Hodgson, Managing Director, General Atlantic and Echoing Green’s Board Chairman: “We are
at a critical time in the history of our planet and the challenges we face are often daunting, but I am
more optimistic now than I’ve ever been. More smart young entrepreneurs are eager to take on the
challenges. More of us believe in the importance of supporting their efforts.”
Photography by Tony Deifell. Wdydwyd? ™ 2008
TwEnTy-FivE yEars oF social invEsTing
echoing green FunDeD organizaTions: a snaPshoT
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About Echoing Green
Founded in 1987 by global growth equity firm, General Atlantic, Echoing Green unleashes next
generation talent to solve the world’s biggest problems. To date, Echoing Green has invested over
$31 million in seed funding in more than 500 social entrepreneurs (Echoing Green Fellows) and
their innovative organizations across the globe. Recognized Echoing Green Fellows include the
founders of Teach For America, City Year, College Summit, Citizen Schools, One Acre Fund, and SKS
Microfinance. Further, Echoing Green provides content, tools and access to networks for young people
to build meaningful, impact-driven careers. Additional information can be found by visiting www.
echoinggreen.org.
Echoing Green
494 Eighth Avenue
Second Floor
New York, NY 10001
212-689-1165
www.echoinggreen.org