SOCAP17 EC Spotlight Sessions: Day 1 Reflections
The first day of SOCAP17’s early childhood Spotlight Sessions, curated by Gary Community Investments, brought the energy of the world’s largest impact investing conference to the early learning and development conversation. Each of Wednesday’s six sessions--which covered everything from how innovation can improve the sector to the mechanics of Pay for Success models--were buzzing, as attendees packed the rooms, eager to learn more about the value of investing in our youngest children.
Below are highlights and takeaways from this first day of content. And, in case you missed it, GCI announed the launch of our $1 Million Early Childhood Innovation Prize yesterday, which you can learn more about here.
The Future of Play & Learning: How Disruptive Technologies Could Revolutionize Early Childhood Development
Dr. Satya Nitta of IBM Watson’s Internet of Things kicked off the early childhood conversation from the Festival Main Stage, laying out a vision for how technology could revolutionize child development. The first five years is a critical period, with 700 neuronal connections created per second, yet children from low-income families are most at-risk of falling behind during this time. Dr. Nitta suggested that technology--and artificial intelligence in particular--could help level the playing field for children, especially as Sesame Workshop and IBM Watson pilot a generation of evidence-based smart toys, enabled by computer vision and speech recognition, that can have conversations with children that are tailored to their needs and surroundings. But technology alone is not enough--addressing early childhood development issues requires a community of people to come together, and, in particular, for investors to see the value in helping advance technology’s ability to give more children the chance to reach their fullest potentials.
The Case for Investing in Early Childhood: Why We Can’t Afford to Wait
Matthew Weatherly-White of the CAPROCK Group, who moderated this panel of early childhood experts, challenged the SOCAP17 community to understand that early childhood sits at the heart of what impact investing stands for: Investing capital today to ensure a better tomorrow for all.
Dr. Judy Cameron of the University of Pittsburg gave a crash course on brain development that emphasized the role parents play in creating strong brain connections in their children. Yet many parents--and especially those who are impacted by poverty, drug abuse, or incarceration--aren’t able to do enough to foster the brain growth that’s needed to give their children the skills to succeed in life.
This is especially concerning when considering that human capital is the key to developing a strong economy. Rob Grunewald of the Federal Reserve Bank of Minneapolis emphasized the impact of the earliest years on the long-term development of cognitive and social-emotional skills that create a strong future workforce. The benefits of investing in early childhood extend far beyond children and families to the public as a whole--taxpayers and the economy ultimately accrue the most from investing early, which makes good business sense from a societal perspective.
Omidyar Network’s Amy Klement explained how Omidyar began exploring investing in young children about a year ago and has discovered that early childhood sector has the highest ROI--with $7 returned on every $1 invested--while also creating the most impact. But early childhood is suffering from market failure, so impact investors must be patient and willing to catalyze a sector that needs extra support to reach its full potential.
Opportunities in Early Childhood: A Sector Ripe for Innovation
Innovation in early childhood is crucial to supporting young children. This panel, which included Dr. Judy Cameron, Henry Wilde of Acelero Learning and George Halvorson former CEO of Kaiser Permanente, emphasized that innovation is most needed in how we assess young children, how we interact with families and improve their behaviors, and how we leverage parent-facing technology to reinforce evidence-based models being taught in classrooms. But capital must be deployed more effectively to catalyze this type of innovation, especially for low-income children and families. Early childhood needs investors who care deeply about low-income children and are explicit about it, and who recognize market failure and understand that the sector requires market-based solutions, along with philanthropy, to truly advance.
Financial Innovation: Pay for Success and Other Capital Strategies for Our Youngest Children
With more than 25 Pay for Success (PFS) deals completed or in the pipeline, there is no better sector than early childhood to teach us about the mechanics of this complicated--but needed--model. Here’s what we learned from this panel of practitioners, which included Jim Sorenson of the Sorenson Impact Foundation, Debbie Kasemeyer of Northern Trust and Jennifer Kawar of the Nonprofit Finance Fund:
Early childhood is a natural fit for PFS because investment in effective interventions during the earliest years can change the trajectory of a child’s life, resulting in measurable cost-savings on special education, social services and improvements in school readiness and third-grade reading. But the sector suffers from a lack of investment readiness that prevents it from absorbing all the capital available.
While it can be difficult for philanthropic funders to get honest feedback from grantees, having private capital at the table changes the dynamic and conversations become more honest, allowing for a better understanding of what’s working, what’s not and why.
We need to advocate for federal legislation that will allow the federal government to participate as a payer in these models along with state and local governments.
Stories from the Field: Perspectives from Entrepreneurs and Researchers in the Early Childhood Sector
Three entrepreneurs who have broken into the early childhood market, including Nicola Boyd of Starling by Versame, Matt Glickman of BabyCenter and Luis Garza of Kinedu, shared what is needed to build a successful venture that serves young children.
Each panelist reinforced their deep belief in the importance of fostering the development of young children, particularly those from low-income families, by making their products accessible to as many parents as possible. But they acknowledged that distribution is difficult because there isn’t a dedicated channel, like K-12 school districts. Entrepreneurs, especially those interested in reaching low-income families, need to think more creatively about getting their products out through health care providers, early learning centers, Head Start and social service agencies.
Because early childhood is an evidence-based field, it can be difficult for funders and investors to accept risk and take chances on unproven products and technologies. Philanthropic foundations were challenged to pursue innovation that allows programs to scale while simultaneously supporting promising innovators who are braving the market. Additionally, impact investors were challenged to invest in the infrastructure needed to support the creation of new business models emerging in the sector, while being willing to take on initial risk to create and elevate the market so more companies and policymakers are inspired to join the field.
When entrepreneurs are designing solutions for low-income families, they must understand that these families already struggle to pay for necessities like rent and food. If a business is serious about reaching low-income families, it can’t expect the families to pay and must instead look to government and philanthropy for support. What’s the value proposition? As we already heard, the majority of investment in early childhood is captured by society rather than the individual, making it a win-win for kids and communities.