The second day of the Social Capital Market Conference in San Francisco offered a smorgasbord of options for folks interested in finance in the social sector.  With ten parallel session tracks, there was almost too much choice.  Katherine Fulton of the Monitor Institute kicked the day off with a thought-provoking keynote.  She argued that social capital is at a transition stage as an industry, moving from uncoordinated innovation toward building a marketplace.  A series of converging forces - including money seeking diversification, growing environmental and income inequality challenges, a track record of early success, and some policy improvements - are creating a situation ripe for growth.  A key need now is infrastructure, to lower the cost and increase the volume of transations in social capital markets.  We need to unlock the latent supply of capital by providing efficient interactions; build an enabling infrastructure; and develop the absorptive capacity of recipients for this investment capital.   The opportunity - as well as the challenge  - is huge:  only a tiny fraction of the $60 plus trillion of investments around the world can be considered social capital investments today.

The keynote was followed by a roundtable with Jed Emerson, the father of the blended value concept, Matthew Bishop, business writer for the Economist and co-author of “Philanthrocapitalism: How the Rich Can Save the World”, and David Chen of Equilibrium Capital Group.  A few nuggets from that session:

- Today, you simply can’t invest for the long term without considering environmental sustainability and supply chain intergrity issues.

- We don’t need silver bullets, we need silver buckshot (great line from Jed) - i.e. we need to get out and try a number of approaches. There is no single answer.

- Brand authenticity will be resurgent after the financial market meltdowns.  Social entrepreneurs and social businesses have that authenticity.

- There is much opportunity pulling social capital forward from above, but there’s also risk management exerting similar pressure from below.  Companies are working to mitigate negative risks around carbon, supply chains, and the like.

-  Even if we don’t have all the answers,  we are making progress collaboratively.  We have to keep trying new things, and not let the perfect be the enemy of the good.

I attended breakout sessions on moving beyond microfinance (where Skoll social entrepreneur Willie Foote of Root Capital provided his always cogent analysis of what was happening in both the commercial and social capital markets), a session on perspectives from developing world social finance practitioners, a panel with African representatives talking about the state of play of social finance in Africa (it’s nascent, but the  opportunity is large), and a final session where members of the Aspen Network for Development Entrepreneurs spoke about a shared model for business support, monitoring and measuring for social entrepreneurs.

The day closed with a final keynote by Matthew Bishop, in which he outlined the main themes of his book.  Matthew pointed out that governments will now be stretched even thinner by the financial commitments they’re making to forestall commercial meltdowns, putting an even greater premium on social sector action.  He sees great progress in the sector, but pointed out continued challenges around scale, transparency, capacity building and duplication of efforts.  He argued that the philanthrocapitalists of today are different than earlier philanthropists in the comprehensiveness of their approaches to addressing root problems.  Speaking to a theme that was present in nearly every session - whether social capital has to return (or optimize) profit - he made the point that certain things will never - and shouldn’t - have a revenue stream associated with them.  In closing , Matthew moderated a “debate” around the thesis that social good is best maximized by profit maximization.  Folks had fun with it, and the profit maximizer team was highly energetic, even if they didn’t sway too many in the audience.  It was an entertaining and useful exercise to probe deeper some of the fairly basic - but critical - questions around what social capital really means.

My key takeaway from the conference is that there is significant momentum and innovation around the concept of social capital.  Most at the conference would agree with the statement that there’s a market, but not a marketplace, with key ecosystem pieces  - legal, audit, metrics, standards, taxes - still to be determined.  But it’s clear that there are some smart people working on these issues.  And the potential is big.  A representative from JonesDay, a large, global legal firm who sponsored the event, said they were interested in the sector because it represents “the largest pre-profit segment in the world.”   That sounds like opportunity to me.