Enthusiasm High, Numbers Still Murky for Socially Concious VC

Will it become a “real” asset class? Or will it remain merely something that well-intentioned people aspire to turn into one?

That’s been the long-running debate around the sector broadly known as socially-conscious venture capital, or double- and triple-bottom line investing. And while adherents may argue that a plethora of dedicated funds, endowments and family offices indicate that it has arrived, studies show that there is still more money investigating the space than actually investing.

Certainly, though, it’s attracting more people. This week’s Social Capital Markets (SoCap) 2010 in San Francisco was expecting about 1,200 people from about 40 countries, an order of magnitude bigger than last year. The gathering runs the gamut from what co-founder Kevin Jones describes as “couch-surfing, ramen-eating startup folks,” as well as NGOs, government agencies, and investors. Among organizers, Jones says, there’s also some enthusiasm around the notion that investors are, to date, rather under-committed to the sector. (I spoke to Jones over the phone prior to the conference.)

One recent survey of 4,000 affluent U.S. investors, conducted by the Money for Good initiative, for instance, found that individual U.S. investors are willing to make an additional $120 billion in impact investments – generally a mix of mission-focused for-profit ventures and high-growth non-profits. The cynic in me wants to point out if one asks people how much they plan to contribute to socially conscious ventures, the number is apt to be a high estimate. Everyone wants to think of themselves as generous.

Still, even cynics would admit there’s significant money already on the table. Omidyar Network, the philanthropic arm of eBay founder Pierre Omidyar and his wife, Pam, for instance, is currently investing about $100 million a year on mission-focused ventures, split about 50/50 between for-profit and non-profit organizations. Taking a page from eBay, one of Omidyar’s two core areas of focus is media, such as how to use technology to empower people and improve government transparency. The other focus has more the flavor of an NGO, targeting microfinance and property rights, with a concentration in India and sub-Saharan Africa.

The dual focus means Omidyar has a geographically far-flung portfolio, encompassing everything from FourSquare, the New York-based location-based mobile platform, to Ushahidi, an open source site for citizens to report on crises that was initially developed by a group of Kenyans reporting on post-election violence.

“There’s a ton of innovation that happens in the Valley, but there’s a different kind of innovation coming from the developing world,” Matt Halprin (pictured), a partner at Omidyar Network, said in a phone interview prior to the conference.

Omidyar has sizeable investments teams in both Silicon Valley and India. Currently, Halprin says, the fund is particularly focused on the mobile space. At this week’s conference, Omidyar was a sponsor of a pitching session I attended that included entrepreneurs with mobile-focused business models targeting developing countries, where far more people have access to cell phones than PCs.

Presenters included Assured Labor, which runs a cell phone-enabled service in Central America for matching employers with employees, Simpa Networks, a company offering installment payment plans for solar power generation to Indian households, and mDhil, a startup providing health information over mobile phones. Assured Labor won the pitch contest, which will allow them to pitch to other potential funders, including Omidyar.

Jones predicts that the social investing space will see increased investment in particular from family offices. In the space of about a week preceding the conference, he says, he talked to “a dozen or so” family offices, each with a net worth “north of nine figures.” How much of that vast net worth the are willing to venture in the socially conscious investment space, however, remains to be seen.