First Place Winner of the NextBillion 2011 Case Writing CompetitionBob Pattillo is the founder of a firm that invests in for-profit companies that also seek social and environmental impact, but it has been difficult for Pattillo to find start-up social enterprises. So, Pattillo developed Village Capital, an innovative investment strategy that uses peer support cohorts of entrepreneurs. Inspired by the “village bank” methodology in microfinance, Pattillo commits to investing in enterprises in each cohort—but places the actual investment decisions in the hands of the entrepreneurs themselves.Pattillo invested almost $1 million in the Village Capital idea, but now, Pattillo needs to make several strategic decisions about the direction of the program that include (1) whether Village Capital be a for-profit or non-profit fund; (2) how to select new sites, choosing between the developed world and emerging markets; and (3) the challenge of developing secondary markets.
Village Capital: Using Peer Support to Accelerate Impact Investing
by: Peter Roberts, Carol Gee,
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After reading and discussing the material, students should:
- Students will:
- explore the ways that current impact investors combine grant and investment dollars in supporting social enterprises, and understand the pros and cons of each.
- explore the tension in the impact investing world between developed markets, where there are more funds, more investment dollars, and more established commercial returns, versus emerging markets, where there is a higher proportion of population living in poverty.
- explore the tradeoff between financial returns and social impacts in this sector and discuss which impact metrics across Village Capital enterprises should be most important to the organization’s strategy.
- understand the liquidity/secondary markets challenges in the impact investing space and then recognize how these challenges inform fundraising, non-profit vs. for-profit structure, and investment architecture for impact investors.
- select and defend a strategy for Village Capital with its current investment approach.