Building Infrastructure: Beginning with the End in Mind

Lauren SatoUncategorized1 Comment

Electric wheel grinding

Brad Harrison, Director of Strategy, Canopy

“Beginning with the end in mind.” We took this mindset when we launched Canopy a year ago. We outlined an ambitious plan to build – and in some cases re-build – the social and economic infrastructure to align capital markets with community outcomes. We have learned that building any type of infrastructure is messy, takes time, and getting it done right requires a diverse set of community stakeholders. Yet most importantly, we learned that infrastructure is simply a means to an end. So we began with this end in mind – community outcomes.

But what exactly is this “infrastructure”? Infrastructure, as defined, is the “basic, underlying framework or features of a system of organization”. Today, we are rolling out the first piece of infrastructure that will serve as the underlying framework for Canopy’s community-driven investment strategy – the 2016 Pacific Northwest Capital Scan.

Through a unique collaboration with the University of Oregon’s Business Innovation Institute and Threshold Group, the Pacific Northwest Capital Scan is our understanding of the capital flows – and gaps – within the regional economy. The Capital Scan, both broad and deep, tracks current capital flows by various investors and agencies into community-oriented investments (local crowd-funding and accelerators, regional private equity and venture capital, and so on). The University of Oregon researchers aggregated all available data – from a myriad of public and private databases – and summarized it in one report to help us better understand who is providing capital, where it’s going, and perhaps most importantly, where it’s not. Where are the gaps? Is it equitable? Could we, as regional investors, become more strategic, coordinated, and collaborative?

To answer these questions, we knew we needed to approach the very concept of building “community-oriented infrastructure” differently. The same infrastructure that led to hyper-diversification in global capital markets isn’t going to lead to equitable, resilient, and prospering local economies in the years ahead. To state the (hopefully) obvious, the result of the current market infrastructure has proven quite the opposite, largely to the detriment of local economies. We knew we needed a new way. So we turned to data.

Insisting on a data-driven, outcomes-oriented approach, we drew inspiration from one of Canopy’s initial investors who built a global investment firm focused on fiercely independent investment research and created global industry benchmarks, the Russell Indexes. Our team, along with the University of Oregon researchers, challenged the model of investment industry behemoths (read: “big banks”) and what they’ve done to small and local businesses – we were keenly aware that many of the global investment products and benchmarks do not account for social and racial inequities, environmental degradation, and community resilience.

With the end in mind, the Pacific Northwest Capital Scan focuses on outcomes, not simply outputs. The research uncovers the capital gaps and under-served segments of our regional economy. There are many. It also provides recommendations that now serve as the underlying framework for Canopy’s business strategy. This is our playbook on how we intend to dismantle the antiquated infrastructure sucking capital out of our local economies and rebuild it in a way that instead brings capital back to sound, place-based investments.

In the months ahead, we will be taking the results from this research and building the infrastructure to drive real, tangible outcomes. Here are a few of the specific actions we’re taking to fill these capital gaps, repatriate dollars, and build a more resilient regional economy:

Canopy PLACES  |   Ensuring the data in the Pacific Northwest Capital Scan is Transparent, Accessible, and Relevant

We realize that lengthy research reports like the Pacific Northwest Capital Scan are hard to digest and lose value over time. We have turned to technology to make the data transparent, accessible, and relevant. We are building a web-based technology platform to transpose this complex investment data into a simple-to-use online map – allowing investors to search and analyze investment opportunities, entrepreneurs to find investors, and enhance the overall transparency of a historically opaque marketplace. As a result, we are democratizing place-based investing with a goal of becoming the most relevant and accessible regional investment collaborative.

Canopy CAPITAL  |   Building a Resource Library to Accelerate New Fund Creation and Tech-Enabled Resources to Accelerate the Flow of Capital

We have learned that significant systemic barriers are prohibiting many well-qualified entrepreneurs from accessing “institutional investment” capital. Canopy was created, in part, as a response to this challenge and we are focused on cutting the costs and confusion out of new fund creation. To accomplish this goal we are building a resource library of model fund documents, including Standard Operating Procedures, Valuation Report Templates, Limited/ General Partnership Agreements, and Private Placement Memorandums to empower local entrepreneurs with the tools they need to launch community-first investment strategies. We have also built a robust pipeline, an online “deal room”, and a service provider directory for investors seeking to deploy capital locally. As a result, we’re becoming the go-to first stop on the path to regional investing.

Canopy CATALYST  |   Convening multi-stakeholder groups to design, incubate, and launch community-first investment opportunities

We realize that economic infrastructure alone is not enough to drive systems change; we’re also focusing on upgrading the social infrastructure necessary to drive efficiencies in the market, enhance coordination, and generate new collaboration. The Pacific Northwest Capital Scan is the most current overview of the Pacific Northwest regional economy. Research that was conducted through a multi-stakeholder approach involving academia, state and local governments, the private sector, and on-the-ground community leaders. Where this research highlights gaps, we see an opportunity to provide cross-sector convening and expertise in supporting communities as they seek to fill them.  As a result, Canopy CATALYST was created fill the capital gaps identified in this research, bring together community stakeholders, and tackle problems worth solving.

We realize that if we wanted to go fast, we’d go alone. But to go far, we’re going together. This is what we mean by “beginning with the end in mind”.

One Comment on ““Building Infrastructure: Beginning with the End in Mind”

  1. Terry Lawhead

    This report, and Canopy’s approach to the complex issues the region faces, are exciting contributions and, as far as I know, unprecedented. I have been talking up Canopy at recent events and all heads go down as people write notes to themselves.

    I hope projects can continue to flow toward Canopy for discussion and consideration and I also hope stories flow your direction. One of my old models I have tried to emulate is Global Business Network and how so many elements fused together, from scenario building and book reviews to specific consultant work. So many other initiatives have sprung out from GBN it is impossible to track. I sense Canopy has this creativity and strength to take in the staggering complexity and often contradictions in initiatives. We’re with you on this! Thanks.

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