2012 Underbanked Innovators Challenge Finalists
We received many nominations for the best innovation serving the underbanked in America. Mostly startups, but also some big companies, including banks. Mostly payments, but also credit, savings and financial capability solutions. Mostly true innovations, but also quite a few doozies. Our judges looked for true innovation, demo-ability, and also product mix (so that not all finalists would be PFM's for, example). The four finalists - Helping Loans, Juntos Finanzas, Sociogramics and TIO Networks - will present on the center stage at CFSI and the American Bankers' Underbanked Financial Services Forum in San Francisco on June 15th in front of the largest group of industry experts ever assembled in one place. This audience - of bankers, alternative financial services companies, payments executives, card networks, advocates, hedge funds, regulators, community development leaders, consultants and investors - will vote for the winner in real time to choose the 2012 most innovative product for the underbanked in America.
Why these finalists? Here are some of my reasons:
Consumers, press and regulators have been beating up on short-term lenders for being predatory, while no one is filling the gap with smart alternatives. We were shocked to see a big foreign bank - Santander - introduce a low-cost, well structured short term loan in the form of an all-online auto equity loan, HelpingLoans. It offers longer terms, multiple payment, no balloons, great transparency on terms and a clean, modern user interface.
We have all marveled at, and then maligned Mint.com and the litany of Personal Financial Management tools that followed in its wake. Juntos Finanzas is incredibly low-tech (SMS manual input and paper), but was designed to actually help unbanked, low-income working Hispanic Americans understand and manage their cash-flows. Call us luddites, but we love what actually works vs what's simply wiz-bang.
With Facebook's IPO looming, the world is obsessed with "social media." Why has no one figured out a way not just to do leadgen with social (my mom can do that!), but to actually use our online social media lives to bring back what the community banker of yore did: really understand his customers? Sociogramics, led by the god-father of online dating, Match.com founder Gary Kremen, does just that.
Walk-in billpay purveyors, TIO Networks, have joined the mobile frenzy with yet another m-wallet. But pay attention to this: the TIO wallet offers something most don't: the hook and the ability to pay almost any bill from your phone. We think other wallets lack a necessity-based use case. Further, the TIO wallet allows payment by cash, prepaid, credit card and bank.
Don't miss the session at CFSI's Underbanked Financial Services Forum in San Francisco. You will have the opportunity to see live demonstrations of these innovators, ask questions via Twitter and vote for the winner via SMS in real time, to decide who deserves to be the most innovative product serving the underbanked in 2012.
Impact Advantage: Our view on impact investing and the double bottom line
We are a double bottom line fund. This means that we target excellent financial returns (first bottom line) and measurable positive social impact (second bottom line). When most people learn this, they assume we are a no-bottom line fund. I'd like to explain why this is an entirely reasonable misperception, and then our theory and practice of Impact Advantage.
Deeply ingrained in our culture is the idea that we make our money first and foremost - to increase our financial freedom - and then many of us think about giving back. We do well and do good in serial - one after the other. Rockefeller did this. Whitney did this. Vanderbilt did this. Soros did this. Gates is doing this. It is a well established and time tested pattern. It also follows the very sound logic that it is actually hard work to do either (making money and making social impact), so confounding one with the other is probably a recipe for disaster. If you can't push the boundaries of your capability and what is legal, by imposing constraints like serving your communities, decreasing your carbon footprint, hiring more women and minorities, creating jobs for low-income people, and reversing other social and environmental injustices, you are clipping the wings of your profit potential. Like it or not, this is true.
This view, of doing well and good in serial, may have tremendous precedence and indefatigable logic, but it is not the only way. We reject the idea that you have to do one and then the other in order to do either well. Of course, we're not the only ones who believe this. In fact, there is a cottage industry of double-bottom line, or impact investors. They believe you can do well and good in parallel, at the same time. Impact investors come in all stripes and colors, have been around for ages and should probably all take offense at the simplification of being plotted on the following continuum:
Missionary < ------------------------ > Mercenary
Folks on the missionary side will care more about social or environmental impact and less about financial return. In their terms of art, they will "discount" financial returns in favor of greater social "returns." For obvious reasons, a majority of impact investors tip to the missionary side. RSF in San Francisco is a great example. So is Nobel laureate's Yunus' Grameen America. So are most "community development venture capital" funds.
Labeled mercenary for effect, really, folks on the other side care more about financial returns and give lip-service to social impact. No one who calls themselves impact investors would want to be here, but the reality is there are plenty. It could be a mutual fund which invests in the S&P 500 minus "sin companies" (like tobacco, gambling, arms, etc). It could be a bank or pension fund which makes token amount of impact investments to order to cast themselves in a more positive light. Perfectly legit. Very common. I won't mention any names.
So where do we sit on this continuum? We don't believe venture capital makes much sense on the missionary side. Based on high risk and high return, the reality of venture capital returns fluctuates so wildly (from negative returns to 20%+ IRR) that "discounting" those returns by some fixed amount in favor of greater social returns strikes me as either meaningless or disingenuous. It would result in returns between even-more-negative to 10%+ IRR but with equally high risk associated. Why not take out a loan that offers some kind of impact for a certain 5-10%? You'd have plenty of options to pick from and much lower risk. A recent candidate for our senior associate position (we're hiring) made the reflexive mistake to assume we would be happy with a 3x return on a company, vs a 10x expected by a "normal" VC. Not invited back.
We don't see ourselves on the mercenary side, favoring financial returns and income maximization over some degree of social impact. We take social impact very seriously. We analyze it, we measure it, we underwrite against it, we are activists for it, we are evaluated for it, and we have tied part of our compensation against it. It's my purpose that gets me up in the morning and my passion to use the efficiency of free markets to address tough social problems. Impact is not an after thought.
We're also not in the middle, where arguably both bottom lines get equal weight. The reason for this relates to why people hear "no bottom line" when we say "double bottom line." I believe that simply giving equal weight to returns and impact in reality means that the impact requirement will limit the return potential. I'll call this the Impact Disadvantage. This is why limited partners who consider an impact fund will consider it a false choice intuitively: "how can you do both well?" "are you really going to do good or make money?" We got these questions frequently when raising our fund.
Instead, we aspire for a third axis: Impact Advantage. If our focus was semi-conductors or medical devices or precious metals or defense, this would limit the universe of deals significantly, but it would also give us the perceived advantage of expertise. Fewer deals, but better choices, assuming we're any good. When your focus is social impact, however, it will limit the universe of deals and offer the additional perceived disadvantage of lower returns (as a result of assumed Impact Disadvantage). Limited profit minus charity. Double governor, double bad.
Our investment thesis is not to invest in high impact businesses because it feels good, but because impact adds enterprise value. When social impact aligns with economic returns you've got a recipe for above market returns. Let's call this Impact Advantage. Harvard's Michael Porter calls this, more generally, shared value. It is a powerful idea.
When TIO Networks, for example, shifts from a transactional model of doing walk-in bill-pay to an account-based model, they are increasing impact by moving a cash preferred customer to relationship product which is more like a bank account and able to build some kind of credit. It also decreases churn, increases up-sell, cross-sell and inter-channel (kiosk, POS, mobile and web) access. Impact Advantage.
In our space - financial services for the unbanked and underbanked - we're basically betting that better use of technology can dramatically increase efficiencies, offer customers better prices and industry better margins. We're also betting that establishing a new style of long-term relationship is not just possible, but good for people and good for business. Our portfolio company, SavvyMoney, is providing an alternative to instant gratification, which got many of us up to our ears in debt, in a long-term relationship that offers hope and the practical tools to not just eliminate debt as quickly and cheaply as possible, but to instill the idea of paying yourself first, which includes saving for a rainy day or an important goal, not just getting out of debt.
Effing the Ineffable: Nike Fuel for Finance
Everyone agrees we need better (financial) health. We also agree that those who are less (financially) healthy need to make bigger behavior changes. This is hard stuff. It's also where most of the (financial) industry says they can only do so much.
As a culture, we have a lot more experience changing our physical health than we do our financial health. I think it's instructive, therefore, to study the best practices in health and adapt and apply them to our financial health.
Nike announced Nike Fuel at SXSW a month ago. I believe this is a brilliant app/product/behavior changer that the financial industry should appropriate as soon as possible. Here's the deal:
Nike Fuel is a sleek black plastic bracelet. Its supply is limited, its design chique and its marketing exciting. I want one. So do you! It interacts with a sexy iPhone app which lets you set a goal. Then it measures, by proxy, your movement and infers calories burned, in real time. When you click the discreet single button on the wristband, it displays your realtime data and your distance from your daily goal. Technically, the platform lacks sophistication: if you hold your hands still if your legs are moving, you wouldn't be any calories wiser.
What I think is so exciting about this gizmo is that it productizes a problem, connects long-term goals to short-term behavior, makes something abstract concrete (ironic, because it's actually making something concrete (the body) abstract (a virtual set of digits)), and makes an obligation into a game.
I've long been stymied by the fact that we all make economically irrational purchasing decisions that are entirely socially rational: Why pay a premium for a BMW, even if you can't afford one? Why get that flat screen TV? So many things we purchase give us status, tell others we're doing well, or help alleviate some bad feeling of being poor. Poor people are often more generous for this reason. Socially sensible, economic nonsense.
So why can't most appreciating assets give us this important social value? People can't see I'm doing well if I pay 0ff a credit card, or deposit money in a CD. But we all need others, and ourselves, to see we're doing well, unless we're very very rich. I bet this simple fact is what's between us and dramatically greater economic security.
Something like Nike Fuel could show others and ourselves that we're doing well financially, by linking something we wear to something that's hidden in an account. It would remind us of what we can do today to achieve a long-term abstract feeling goal. It can turn something serious into a game. As my college philosophy professor was keen of saying, "It can eff the ineffable."
Will the Underserved lead Mobile Wallet Adoption?
Core's Summer Associate, Aaron Mercurio, got started before the summer and is more bullish on the mobile wallet than I am:
The hype around the future of mobile payments and related services (e.g., real-time offers, P2P fund transfer, increased ‘one-to-one’ advertising) is focused on reaching the tech-savvy smartphone-carrying consumer. The opportunity for that is well-documented and the hype well-deserved; this is why we’ve seen such high level of investment from varied constituents both within the payment chain -- Payment Networks, Banks, Processors, Retailers -- as well as outsiders including mobile-network operators, technology companies and a plethora of entrepreneurs. Billions of dollars are being bet on the virtual wallet.
That said, many obstacles exist to achieving scaled adoption, not the least of which are a lack of standards for data transfer and security, IP rights and the ownership of customer and transaction data, merchant adoption of contactless terminals, and a settling of dust around the economics as many parties try to get a piece of the new value chain. Frankly, consumer adoption and impetus would appear to be the least of proponents’ worries today. But reflecting on the state of payments, the current system of plastic and ‘traditional’ rewards and offers driven by affinity, co-branded, and private label products simply isn’t broken – at least for consumers with access to traditional products.
If you believe that, then it follows that the immediate opportunity in mobile payments exists outside the mainstream. The US unbanked and underbanked consumers offer a compelling segment for several reasons:
- Displacement of cash transactions, a disproportionate amount of which comes from unbanked and underbanked consumers, will generate the most value for stakeholders. A volume share shift from credit products to mobile does not create value from incumbents in the payments landscape today without charging more to retailers – who often pass those costs onto consumers. Regulators have already hit debit interchange hard over the past year (perhaps an understatement); widespread increase in interchange pricing is not the answer to sustained financial growth.
- Mobile payments could certainly fill an unmet consumer need in this segment. The cost of cash and carrying cash on low-to-moderate income (LMI) consumers is particularly burdensome. There are less compelling tangible expenses related to destruction, germs, and theft. The real cost is related to the poor financial habits that cash encourages: use of high-cost check cashing services, lack of incentive to save, inability to track financial transactions including building credit, and the lack of access to lending that can hold the underbanked down.
- The mobile business model is well aligned with the underserved community. Product designs for the virtual wallet, especially around account acquisition and account servicing, most closely relate to GPR prepaid products, which target this segment today. Acquiring new customers who won’t require shifts of from many incumbent DDA accounts and expectations around existing financial products will be welcomed. Underserved consumers also shop heavily at the retail verticals that I expect to provide the most traction to mobile payment acceptance initially. Specifically, the overlap within QSR, Gas, Grocery, Convenience, big box retail, and discounters, is unmatched. Lastly, the menu of ancillary services that can be offered to underserved consumers once a provider owns the wallet relationship can drive economics beyond the core transaction.
Ultimately, we expect that winners in the virtual wallet war in the U.S. will be the innovators that design products that can access and support this growing market of underserved consumers.
Crowd source payday lending, a la Barclaycard Ring
Yesterday, my CFSI colleague, David Newville, was trying to persuade me that the payday industry should do what Barclay's new credit card, Barclaycard Ring, intends to do: offer its customers total transparency into the costs, profits and losses of its business and the opportunity to build the product themselves. Crowd sourced lending!
You can read about the Barclaycard here, here and here. Basically, they intend to share the profits with the customers, then let them decide what features to add and how to price the product. If the majority of users are want bigger profit sharing, the prices will be high. If they want lower costs, they'll "earn" less. It's a powerful idea.
In the realm of the underbanked, where credit issues are so controversial and all parties so ossified in their positions there is practically no real conversation - or change to the status quo. The "predatory" lenders are incredibly defensive at any suggestion they could do more for the welfare of their customers: "we serve a big need" is their (true) refrain. The consumer "advocates" are so blind with anger at the practices of the capitalists that they ignore the realities and consequences of the people they care so much about. As a result, nothing much happens: a rate cap pops up here; an offshore lender pops up there. Repeat.
Could a way to unwind this be to give the advocates the information they need to price and structure a product that reaches fewer with lower cost, and force THEM to find a balance? The trouble otherwise, is that nothing is ever enough.
With credit democratizer Chris Larsen and responsible lending pioneer James Gutierrez both leaving their posts this week, perhaps they should start a Barclaycard Ring for the underbanked: crowd sourced short-term credit targeting the emerging consumer. Core wants to fund it!
Are you up to the Core Challenge?
We want to shine a spotlight on the most innovative teams serving the underbanked. You could be an app developer in a dorm-room in Beloit, WI or work for one of the largest financial technology companies on earth. If you have built a product or service that works (or will work by June 15th) and addresses the unbanked or underbanked - that is, the American emerging market - submit it to the Core Innovators Challenge at challenge.corevc.com.
At stake is $10,000 but mostly, it's notoriety. Four finalists will be selected to present in prime-time at the only national conference focused on the underbanked, the CFSI Underbanked Financial Services Forum. An audience of 600-700 industry executives (read partners, clients, funders, regulators, and press) will vote for the winner via SMS in real-time. We'll issue press releases, make a fuss, make introductions, and sing your praises.
Last year GoalMine took the big prize. With the other finalists they ran the gamut: from tiny (Flexwage) to huge (FIS), from payments innovators (PayNearMe) to savings (GoalMine), from mobile (FIS) to the interface between cash and digital money (PayNearMe).
Check it out! challenge.corevc.com. No purchase necessary!
Give Credit Where Building it is Overdue
Suze Orman, Credit Karma and others are breathing new life into the important effort of helping people see, track and improve their credit score.
My friends at CFSI and at PERC have long been active in trying to expand the dataset used to build ones credit report. The idea was, and remains, that 50-odd-million people in the US have thin files or no files which renders them unscorable, and therefore denies them access to credit or only provides access to the worse priced and structured credit available. Worse, since credit reports may also be used for hiring, insurance underwriting, and rental applications. Then there are another 100-odd-million who have full files, but not a great score. For many this is an accurate reflection of not being a great risk, but for many more the credit bureau data simply don't tell the whole (or the right) story. Our objective is to increase access while keeping risk constant, NOT to increase access at any cost.
In 2010 Experian purchased RentBureau, giving that credit bureau access to millions of rental payers. Months later they made the unprecedented move to include RentBureau into its main credit report, thereby giving people with untraditional trade lines the ability to build good credit. The only problem is that while many lenders use Experian's credit report, very few use their credit score. For practical purposes, until FICO uses a data type in its ubiquitous FICO Score, that data type is not helping you actually "build" credit en masse. Of course there are tons of exceptions where lenders, themselves, use non-traditional data.
I think "credit building" should mean contributing data that is used broadly by large and small lenders for underwriting purposes.
Suze Orman is well aware of this problem - and the opportunity. Despite the mountains of bad press her pretty progressive prepaid card has endured, two of the most interesting aspects relate to credit building (although she is careful not to mention that). The first is a free credit monitoring service, offered by TransUnion and presumably subsidized by Suze. It's equivalent to what you'd pay FreeCreditReport.com $15 per month for. Not a bad deal for $3/mo plus what amounts to a checkless checking account.
Free credit score pioneer, Credit Karma recently announced a free credit monitoring service, as well; also powered by TransUnion. See a trend?
So, now we can track our score for free. But what if it's not great or it's non-existent? How can we build it? Lenders have been reluctant to expand beyond traditional trade lines, largely for wont of homogeneity (magazine subscription data are quite different from your mortgage payment), scale (most alternative data resides with many parties each with smaller data-sets), efficacy (who cares if it exists if it isn't predictive?) and cost (buying a waterfall of data to underwrite a post-pay mobile plan can seriously erode a customer's long term value). Regulators aren't helping, yet. The CFPB announced last week it will start tracking the credit bureaus. I hope this will accrue to incentives for people to apply new forms of data and greater controls on what data are used and an expansion of what data may be used for credit underwriting purposes (currently largely covered under the Fair Credit Reporting Act).
I believe lenders are leaving billions of dollars on the table, and way too many consumers - who are stable, able and willing to repay many forms of debt - are denied access or are effectively subsidizing too many peers who default and therefore paying a lot.
Banks: Don’t bank the underbanked; bank businesses that serve them well
Reposted from BAI's Banking Strategies:
Banks have struggled serving the un- and underbanked for decades. By definition, one wonders how banks can ever serve the unbanked. Even so, to date, it seems that a majority of bank efforts to capture more customers from both segments falls into two categories that I’ll call “missionary” and “mercenary.” I believe neither works particularly well and will propose a different approach that is rarely discussed when it comes to this large and growing population.
The missionary efforts are largely Community Reinvestment Act (CRA)-driven. Banks in this category strive primarily to achieve a good rating from bank regulators as well as maintain positive community relations and involvement. Except for the small cottage industry of “community development banks,” which are essentially all-CRA institutions, most banks’ CRA-related lending represents a drop in the bucket. More importantly, these efforts are also tiny relative to the un- and under-banked market, which is basically one in every four adults. The missionary approach, while clearly important to almost all banks, and in most local communities, doesn’t move the needle enough in most banks’ profit & loss statement to warrant greater commitment of resources. There are exceptions, of course, but this has been overwhelmingly true since CRA was enacted in the 1970s.
The mercenary approach, on the other hand, is commercially motivated. Products such as overdraft protection, subprime mortgages and salary advances clearly address a consumer demand – especially among the un- and underbanked – but are loudly maligned as aggressive (even predatory) when it comes to economically fragile households. What regulatory action doesn’t limit, headline risk will. Few people realize, for example, that most overdraft fees compare very unfavorably to payday loans when you calculate the effective annual percentage yield. And few people know that big banks, including U.S. Bancorp and Wells Fargo & Co., offer products that function and cost basically the same as payday loans. The mercenary approach doesn’t work because it is perceived as… well, mercenary, although there are exceptions. Some products and services that serve the emerging mass market fairly, profitably and at some scale include Wells Fargo’s international money transfer program and Regions Financial Corp.’s Now suite of products (check out their funny TV commercial).
The model I would like to propose – as commercially attractive, scalable and responsible – is a business banking rather than retail banking approach. Retail banking, I fear, will remain caught in the missionary/mercenary dichotomy for a host of reasons. But consider the number of new non-bank niche experts who are able to work with this customer segment without worrying, as so many bankers do, about installing bullet proof glass in their branches. These companies have access to new channels, whether big-box retailers, small bodegas, or the right places online. They are carving out new products and creating unheard-of efficiencies. Why not target your underbanked initiatives at these specialists?
Examples to consider include offering a BIN-sponsorship (the right to issue credit or debit cards) to cutting edge prepaid program managers, like Plastyc; providing lending capital to responsible lenders, like Progreso Financiero; and offering banking services to progressive money services businesses, such as Papa Cash in Los Angeles. Banks could receive CRA credit for these activities, but these are big potential revenue generators in their own right. In any case, these nonbank companies, and many more like them, are starting to serve underbanked customers at scale and forging a new path between missionary and mercenary: visionary.
You Suze, you don’t lose: Approval for the Approved Card
Suze Orman today announced her new Approved Card, because in her words (and inflection), "You. Can. Always. Bank. On. Me." The card is the latest in a long line of prepaid cards, a relatively new financial instrument that functions basically like a checkless checking account, needn't be marketed by a bank, offers tremendous value to the un- and underbanked and is often maligned for an abundance and excess of fees.
The Approved Card, like others, offer the advantage of being accepted anywhere Visa orMasterCard are accepted without the ability to spend more than you have, as do both credit cards and debit cards with overdraft protection (and fees). To the 60 million underbanked in the US, prepaid cards offer a powerful alternative to traditional checking accounts and check cashers. In Suze's hands, the instrument could gain popularity also amongst the fully banked, but those (mostly women, I imagine) who need and want additional support of better money management.
Recent history is littered with terrible prepaid cards endorsed by celebrities - notably Lil Wayne, Russell Simmons and the vapid Kardashian sisters. Sadly, it's these celebrity cards that can be counted on to lead the way of high fees and poor disclosures, which represent a minority of cards in the market, but cause a majority of bad press about what is basically an important and positive financial innovation. Suze Orman's card is a pleasant departure from this trend.
For starters, it is a genuinely low fee card. For $3 per month you're in business - compared with $4-10 amongst scale players. ATM fees apply, but are modest. The Fees page is prominent and abundant with FREE things (although it does include some ugly big prices for things like expedited bill pay - $9.95 - which can readily be accessed for half that price). I'd love to see the monthly fees waved for direct depositors, as iBankUp, AccountNow and others offer (disclosure: we have invested in both). Still, it's an admirably low fee product.
Functionality wise, the card is pretty straight forward and basic. The two features of note are an emergency savings fund and credit/identity monitoring. The former is basically a separate place meant to be used to store money, not spend it. It would be awesome if it were interest bearing, like Mango and Netspend's 5% APY savings accounts, and make it hard to withdraw funds (to really help people save). Suze negotiated some favorable pricing with TransUnion for their FACO (or fake FICO) score and identity monitoring. You can use it free with no limits. This is arguably the most unique and coolest feature of the card.
Suze has clearly been dreaming of a digital cash world, one where you can only spend the cash you have, but without being tethered to the obvious limitations of physical cash. This is a powerful vision, really, especially prescient given the current financial crisis. But this digital cash mecca lacks access to one ingredient essential to modern American life: the credit report and credit score. They are not just used for accessing almost any form of credit, but now also used for employment, rental agreements, and insurance.
Even the formidable Suze Orman was not able to cajole TransUnion, Equifax, Experian or FICO into letting her report digital cash (or prepaid) data, let alone have the data be contemplated in a credit score. Instead, we're invited to her Credit Project, in which she will deliver anonymous transaction data from her card users to TransUnion for them to, "help us understand whether including this data in your credit report would impact your access to credit products." I happen to believe that Suze really wants to do the right thing here, although this solution smacks to me of a PR concession made by a credit bureau looking for pre-IPO good press.
As with almost everything in this Approved card, it's a step in the right direction. I approve!
Standards for Great Financial Services? We’re In!
Our venture fund, Core Innovation Capital, is singularly focused on investing in scalable financial technology companies that serve the American emerging market, the unbanked and underbanked. We have promised our investors (like Goldman Sachs) above market returns and we spend significant time analyzing the profit potential of each investment we make. That said, we also intend to invest in companies that will have a short- and long-term positive impact on the financial lives of the people they serve. We believe financial services have a significant role in anyone's upward mobility, and millions of responsible, hard working Americans are stuck in a vicious cycle where their financial tools erode, instead of enhance their net worth and financial capabilities.
CFSI's Compass Principles initiative is a bold and critical effort to set a standard for how financial services can and should function for people. It's critical because financial services are complicated. As we can see in the marketplace and Washington, D.C., the tug and pull of organizational priorities leaves both consumers and industry with unsatisfying results (mostly consumers, if you ask me). Our partners at CFSI established the Compass Principles to set an aspirational quality standard that serves both industry and people (also known as consumers).
This is not about concessions. This is about integrity. Given the apparent lack of clarity on what consumer finance with integrity means, it's high time to (re)establish some norms. CFSI's process for doing this is socratic, collaborative and inclusive. Ultimately, we believe the objective should be to settle on standards that are attainable and aspirational, and that consumer finance companies sign up, make commitments and elevate the industry to world-class best practices.
My partner, Mike Harris, and I are in. We're pre-committing (since there is no formal means by which to commit today). We're doing this not because we expect to agree with every last item, nor because we expect to already "comply" to all standards today, but because we agree with the vision and we trust CFSI and their approach. We're doing this because we exclusively invest in disruptive financial technology companies that we intend to set the new gold standard. Commitment isn't just saying so in a blog post. Starting in 2012, we commit to integrate the Compass Principles into our venture fund as follows:
- To participate in the dialogue to refine the meaning of the Principles
- To use the Principles in our underwriting of new potential investments
- To ask our portfolio companies to commit to the Principles
Our intent is to tighten the specificity of our Compass Principles commitment as the Principles become more specific and as we interact with our fund's stakeholders. And our hope is that our partnership and our portfolio companies will both lead the industry and be challenged to improve.
This was reposted from the Compass Principles blog.