Kevin Jones was in transit at Hong Kong International Airport in 2007 when he read an email from an investor — and it sparked the thought that changed his life. “I think we have the right people in the room,” it said. “We don’t need to work with anybody else.”
Jones, who was running a new socially-minded investment firm called Good Capital, had been discussing the future of investing in clean technology with angel investors, foundations, and social entrepreneurs. “There were tons of laborious discussions by the same groups of people in increasingly airless rooms saying, what can we do to make this market take off? They’d go into their bunkers, hit the whiteboard, and exhaust everybody.”
From experience, then, Jones knew that email was wrong. Having the right people in the room was the wrong approach. “Markets are more like grand bazaars than country clubs,” he tells Fast Company. “They’re about chance encounters with people you don’t expect. A city grows faster when you bridge the silos.”
So he decided to create his own marketplace. Building on his experience of running a $18 million conference business in the dotcom days, he hosted a gathering of 600 investors, donors, development agencies, foundations, and social entrepreneurs in San Francisco in September of 2008. He called it Social Capital Markets, or SoCap: “It has the characteristics of a purely capital-focused market, and it sells this new idea that there’s a market at the intersection of money and meaning. You don’t have to divorce the two.”
Jones had a circuitous route to success. He started out as a weekly newspaper editor in a small town of 2,500 called Itawamba, Mississippi. He then spent three years building the catfish industry in his wife’s hometown. “It was an emerging market,” he says. “When you put catfish in a clean pond and feed it good grains, it becomes tastier and more consistent in flavor.” He ran a web-based legislative monitoring system called Statewatch in the mid-90s, then started Net Market Makers–the conference businesses–and sold it 10 days before the NASDAQ crash in 2000. “That’s when I entered the ‘what do I do with my life?’ phase,” Jones says.
Now, with Good Capital, Jones provides social entrepreneurs with expansion capital and offers investors financially and socially healthy funds. Jones makes sure that his portfolio companies stay true to their mission while supporting growth capital build, good marketing, and scalability. This, he tells us, requires good fast-thinking mentors, a robust executive team, and the proper positioning of founders: “Founders are like cottage cheese,” says Jones. “They have a sell-by date; they shouldn’t be running things too long unless they’re exceptional”.
Good Capital’s first portfolio company was Better World Books, an online bookseller that funds literacy initiatives in developing countries. Jones helped BWB hire a logistics manager, design an analytics system to get books donated from libraries and college book drives, and brought in leaders in branding, social media, and search engine optimization. After an A round of $4 million, the company is now valued at $75 million. “A lot of the work of a good investor is figuring out problems, getting the company on board to see it that way, and finding the right people to bring in to build new capabilities inside the business,” Jones says.
With younger, smarter entrepreneurs, mid-career gen-Xers transitioning from more conventional jobs to take executive-level leadership, and well-off baby boomers willing to fund new ventures, the marketplace that Jones imagined at Hong Kong airport is truly taking off. This year’s SoCap had 1,350 attendees from 40 different countries, and the conference is going global in 2011: SoCap Europe will take place in Amsterdam at the end of May, and SoCap State–which will explore how some social enterprises may scale to state-level social services–will take place in Washington DC later in the year.
“The marketplace is real, and it’s growing,” Jones says. “This year, we had a wealthy Islamic entrepreneur looking at the use of non-interest-bearing sharia loans to developing countries under a platform like Kiva. You just don’t run into guys like that every day.” Or by sticking with just the right people in the room.