October 16, 2010
The Innovation Scouts program, developed by Root Change, leverages a global network of practitioners and web-based tools to identify and support promising investment opportunities in the social enterprise sector in countries such as Vietnam and Tanzania. These “Scouts” are business development service (BDS) providers and indigenous social investment funds trained to screen small and growing businesses (SGBs) with social value. They host Investment Opportunity Screening Workshops where local social entrepreneurs present their enterprises, and the most promising opportunities are showcased on the Innovation Scouts web platform for public and investor engagement.
The program targets social businesses at various stages of development, from early-stage ventures seeking $10,000 to $50,000 to more established enterprises looking for $150,000 to $1 million. The Innovation Scouts web platform allows investors and the public to review, comment, and invest in these social enterprises using virtual currency. This marketplace fosters a dynamic environment where the value of investment opportunities can rise and fall based on new information, enabling investors to make informed decisions and collaborate on strategic investment portfolios.
Impact investing has the potential to grow exponentially in the next decade, driven by the increasing global focus on social impact. However, the biggest constraint to its growth is not a lack of capital but the absence of enabling infrastructure to identify and cultivate viable investment opportunities at scale. Achieving meaningful impact requires robust deal flow and technical capability. Innovation Scouts offers a low-cost solution to the challenge of screening and strengthening innovative social businesses for investment, providing local presence and expertise. Additionally, impact investors have learned that financial capital alone is insufficient; entrepreneurs need support beyond financing, particularly in management and market knowledge. The Innovation Scouts Initiative addresses these needs by offering technical assistance and building sustainable local markets of business development service providers, thereby enhancing both investment opportunity screening and local capacity development.
Using field-based opportunity screening workshops and web-based crowdsourcing to create a low-cost innovation discovery network, country by country, Root Change hopes to build a global infrastructure to screen and prepare social businesses for investment and scale-up. Plans for 2011 include the expansion of the initiative into Kenya, Uganda, Nigeria, and Peru.
Root Change has continued to build and strengthen the relationship between the Innovation Scouts program and the Monterey Institute of International Studies. This relationship has influenced the development of an Impact Investing Certificate program through the business school, and MIIS own Scouts Program.
