SOCAP09 came with the anticipation, fire and fury of a movement in the making. Easily a thousand investors, entrepreneurs, philanthropists, intermediaries, and service providers gathered in the main and parallel side events built around the mother ship. For this disparate group – from former investment bankers sporting Hermes ties to tattooed volunteers who paid for their own meals – SOCAP was the big tent for a world-class mashup of people that want to build a capital market that “does good.”

The overall feel was one of hard-nosed optimism. The slightly hallucinogenic effect of last year’s SOCAP08 – which took place during the very days that the world capitalist system seemed to be imploding – was gone. This year, in spite of a tough market, there were plenty of signs of hope that, by gosh, maybe things will really change this time.

One indicator frequently cited was simply the size of the event. The growing base of talent and commitment to the industry is surely a good sign. But beyond the crowds, one heard about the growing number of investors – from Charly Kleissner of Felicitas to Bob Portillo of Gray Matters Capital – that outperformed the market by placing their assets into impact-oriented investments such as microfinance.

Brian Trelstad of Acumen Fund told war stories of meeting with potential donors only to have them turn the tables and pitch Acumen for funding. But in spite of the worst financial turmoil since the 1930s, Acumen has been able to raise funds for Acumen Capital Markets, its first for-profit investment vehicle tapping into larger pools of private funding.

We also heard about the progress in building the infrastructure needed to take the industry to scale. The Global Impact Investing Ratings System group is working to build shared language and standards for impact metrics, standards, and reporting. Another group was launching a “fund of funds” to allow institutional investors and family offices easier access to impact investment opportunities.

The Global Impact Investing Network, the Aspen Network of Development Entrepreneurs, B-Corp, Calvert’s Impact Investing Roundtable, More for Mission, and a growing list of other organizations are working to facilitate deal sharing and relationship-building among investors, raising the game of intermediaries and service providers and levering significant growth in funding.

All of which is great stuff. And yet…

On the opening plenary panel, I asked “Why do we care about social capital markets?” Is it the warm and fuzzy feeling that we are doing good? Or is it to maximize the potential for large-scale positive change?

If we want the latter, we should recognize that, even with aggressive growth, social capital markets will not reach significant scale (say, 10 percent of GDP?) any time soon. Getting to major scale simply won’t happen on the basis of philanthropically oriented capital. Foundations and other investors willing to take a ‘social haircut’ shouldn’t kid themselves that private funders will continue to subsidize their creations along an S curve of significant growth.

Instead, we should focus our work on three priorities.

Get the business model right. Beyond microfinance, we’ve simply seen too few models that have succeeded at scale. To build more business models for scale, the primary focus of social capital markets should be to hatch and nourish innovation. In sharp contrast to traditional entrepreneurship, the ‘conveyer belt’ of seed-stage angel investors, A-round venture money, mezzanine funding, and IPOs is patchy at best for social entrepreneurs. Make no mistake: smart subsidies from investors and funders will be needed to make this happen. After all, the technology industry was created on the back of decades of government and private support for research, development and, yes, subsidy to the venture capital system.

Tap into funding for scale. As more business models mature and are ready for growth measured in orders of magnitude, they will need access to traditional capital markets and corporations. Government, too, may be able to provide significant funding for some business models. But in reality, the government cruiseship is not likely to turn quickly and will continue to shed passengers as budget deficits bite in the coming years.

Change the rules of the game. This final piece has traditionally been overlooked by boosters of social capital markets, who mainly entered the field to circumvent the dysfunction of markets and government. But some social entrepreneurs are creatively engaging with business and government to internalize the ‘negative externalities’ of environmental and social degradation into the daily decisions of market participants. In this way, social capital markets may one day change the equilibrium of how business is done and, in effect, put themselves out of business.