How Millennials will determine which companies will succeed

A strong purchasing power coupled with a strong preference for creating social change, Millennials will choose companies that create impact.

Often I get asked “Is your company a charity or is it a business?” Then I go on to explain that Narra is a social enterprise. “A business that has an inherent & imbedded social impact.”

For most people below the age of 35, business and social impact are inextricably linked and perhaps a truism. But for many investors over 40, where a large portion of capital is still being controlled, business and social impact do not overlap.

But… Let’s be clear, you can make money and create a social impact simultaneously. In fact, many people do. And even more true is that this business sector is the fastest growing segment in the startup eco-system. For which, this will be the new, future business standard.

Rather than separating the revenue generating side of the business from the philanthropic side, companies such as myself and impact companies like Teeki, Rareform and LSTN are thinking progressively.

Profit &Purpose can co-exist harmoniously.

The social innovation model in business is the way forward and the research suggests that. And who’ll be leading the way? Millennials!

Millennials will inherit up to $59 trillion of wealth between now and 2060, the largest intergenerational wealth transfer in history

With a large buying power and a willing to personally sacrifice to make an impact on issues they care about, Millennials will determine which companies will succeed from those that won’t.

So, be it investors who ask “Are you a non-profit or a business” or companies not creating some form of social change, we need to get educated.

Transfer of wealth Highlights:
·
Through estates, heirs will receive $36 trillion.
· Federal estate taxes will claim $5.6 trillion.
· The sum directed from final estates (for which there is no surviving spouse) toward charity is estimated at $6.3 trillion.
· Total gifts to charity during the study period are vastly greater, according to the study, which estimates that lifetime giving will yield an additional $20.6 trillion for charity from 2007–2061.

So…. How will Millennial’s behavior determine a company’s success?

The most comprehensive snapshot of how Millennials engage with CSR (Corporate Social Responsibility) efforts in the U.S., reveals that they will:

·1)Switch brands to one associated with a cause (91%).
·2) Pay more for a product with a cause (70%)
· 3)Share products rather than buy (66%)
· 4)Take a pay cut to work for a responsible company (62%)

Research by Chivas Regal and the Skoll Centre, at Oxford’s Saïd Business, shows that the best talent want to work for businesses that affect positive social change. Research by Deloitte also show the same data, that those born after 1982 wanted to work for businesses which helped them build their social contributions.

This same group will create businesses within businesses that change lives. In fact, they already are.

1. Vodafone’s Nick Hughes helped build Kenya’s largest SMS payment network.

2. Microsoft’s Sidharth Sehgal’s helped speech impaired people using the company’s Kinect motion sensor gaming tool.

Changing the way profit and balance sheet is viewed

Investors and corporates alike need to create a paradigm shift in how they view profit and balance sheet. Making money is pivotal to the sustainability of a business and for investors to continue to be involved. However, in order to solve some of the world’s problems, we can not rely solely on the government to do so. Investors need to support entrepreneurs in this space.

There are, however, notable exceptions to this investor group. Investors like i(x) are well aware of this growing trend of impact investing. They are using capital to create social change. Their investment philosophy is so engrained into their corporate ethos, they’ve even created an equation question as their corporate name — i(x), a formula which stands for:: how will you use your time and your investment(s) to make the world a better place?

I(x) is aware that you CAN make money and create catalytic social change.

In fact, A 2015 Report by Morgan Stanley research report indicated that sustainable investing funds have actually met or exceeded the median returns of traditional equity funds.

A growing list of companies are redefining Impact investing…

Better Ventures: Better Ventures backs entrepreneurs building a better world. They provide funding and support to early-stage technology companies pursuing social and environmental objectives with high-growth business models

Acumen Fund: mission is to change the way the world tackles poverty by investing in companies, leaders, and ideas. They raise charitable donations to invest patient capital in business models that deliver critical goods and services to the world’s poor.

Dream Labs: is a $50 million fund established to invest in companies, leaders, and ideas that positively impact the lives of people. The aim is to work with entrepreneurs who seek to invent new market categories or transform and disrupt existing ones. The main focus is to invest in entrepreneurs with ideas that will generate both strong social & financial returns.

Bamboo Finance: Bamboo Finance launched in 2007 with a goal to demonstrate that private capital can be profitably deployed as a tool for effective change. To date, they manage 250M USD; representing two global funds and a combined portfolio of 46 investments operating in 30 emerging market countries. Bamboo has a track record of demonstrated commercial returns, and a portfolio of investments that have provided 16 million clients with access to services and created more than 20,000 jobs.

So, “No, Narra isn’t a non-profit, we’re solving the financial inclusion problem in the developing world and we’re using innovative technology to do that. And Yes, we’re a for-profit enterprise.”