A few weeks ago, I had the pleasure of interviewing Ted London, a Senior Research Fellow at the William Davidson Institute and faculty member at the Ross School of Business at the University of Michigan. He recently co-authored the book Next Generation Business Strategies for Businesses for the Bottom of the Pyramid which collaborates with a handful of major players in the social enterprise industry to move the discussion forward from simply finding a fortune at the Bottom of the Pyramid (BoP) to creating a fortune with the BoP. This is part two of a two part interview
RP: You speak of risk: the risk that you bear, but also the risk that you share with others, whether it’s your consumer or your partner. On the flip side there’s also the risk to the investors as well. We have seen and learned from Acumen this concept of ‘patient capital’. What are your thoughts on mixing investors with different success metrics? If your goal is to prove that there is a market based solution, the profit may come in different shapes and forms as compared to your traditional multinational for-profit organizations. When you’re starting up, should you focus purely on patient capital vs. traditional investors or mixing the two?
TL: The simple answer is ‘it depends’, but I think there are two big aspects to this issue. One is the need for better transparency across different sectors. In some sense we’re using a venture capital model or applying the power of markets and free enterprise in the patient capital world often without the explicit recognition that this is subsidized capital. We’re providing subsidized capital to help catalyze these enterprises which I think is a fantastic idea that makes a lot of sense.
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