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Sir Ronald Cohen: Saving humanity in his autumn years

A peek into the life and times of Sir Ronald Cohen, author of bestselling book 'Impact'

Coffee with BS | venture capitalists | Impact investment

Anjuli Bhargava 

Illustration: Binay Sinha

At the tender age of 11, young Ronald Cohen appreciated loss better than most of his peers. As Egyptian President Gamal Abdel Nassar drove out its Jewish population in the aftermath of the Suez crisis in 1956, Cohen recalls vividly how he and his family lost everything. The visceral fear he felt as he watched his father crying on the plane, the stoicism with which his mother faced the changed circumstances and even his childlike fear at being parted from his precious stamp collection as his family braced itself to leave. In a flash, the Cohens found themselves bereft of all possessions, their nationality, their identity and a place to call home. 
When we connect over Zoom, Cohen is at his home in the South of France and I am in Altinho in Goa’s Panjim district. His new bestselling book Impact has been recently released, making waves around the globe, translated into 10 languages and judged one of the best books of the year in many countries. The post-pandemic timing of the book couldn’t have been better since the “idea of impact is being carried by the tide”, he points out.
To say that adversity builds character would be an understatement in reference to Cohen. Non-English speaking at the time, he found himself in a public school in England in 1957 and heard his father who’d arrived in the country with ten pounds in his pocket promise the headmaster that his son would work hard to top his class if he agreed to admit him. The words sank into him and despite the language hurdle he clearly faced, he ensured that he stood second within one year of his joining the school. 
Upon completing his schooling, a teacher who’d discerned that Cohen had a “rapier-like mind” encouraged him to read 200 books to clear the Oxford entrance, many far more complex than his peers were plowing through, helping him hone his critical thinking powers. This helped him sail through Oxford. When the philosophy tutor at his Exeter college interview asked him what he was currently reading, he replied “All and Everything”, to which the tutor said he meant a specific title. Cohen explained that he was specifically reading “All and Everything”, the trilogy by Gurdjieff, surprising the tutor as the tomes were far above his peer set. At Oxford, Cohen found himself drawn to debate and politics and soon went on to become the president of the Oxford union which gave him an opportunity to host lunches, talks and learn from the best world leaders. 
Our conversation takes place when America’s withdrawal from Afghanistan is hogging world attention so he narrates a conversation he had as a student at Oxford with the US President John Kennedy. The US was then still in Vietnam and considering withdrawal and the President asked Cohen what he would do if he was in his shoes. He said he would withdraw as “staying longer would worsen the situation”. The more things change, the more they stay the same, I think to myself.
Post Oxford, Cohen found himself at 22 at Harvard Business School (HBS) after he won the prestigious Henry fellowship. His first exposure to venture capital was when a French general visited and mentioned how his investment of $70,000 had multiplied into $100 million. Cohen, who was obligated by the fellowship to come back to the UK with something of value, picked venture capital, a relatively unknown animal in the UK in 1969. “When asked what his father does by the school’s headmaster, a rival’s young son said his father was an “adventure copulist”! That’s how little known venture capital was back then,” he laughs.
It was then that he came across Alan Patricof, a pioneer of venture capital in the US who helped him “persuade institutions in the UK that venture capital could work”. Maurice Schogel, who had risen from his position of messenger boy to lead Credit Lyonnais, the French bank, agreed to chair Cohen’s venture. Not only was Cohen responsible for bringing venture capital to the UK, he was the father of it, taking his company Apax partners from an average fund investment of 10 million pounds to an average fund of $13-14 billion forty years later. It now manages total assets of over $60 billion. Directly and indirectly, the funds created employment for many and didn’t invest in businesses he considered unworthy: gambling, liquor, weapons, guns – anything that ran contrary to his moral fibre and code of ethics. At 53, having earned more than he could spend in his lifetime, Cohen sold his shares in Apax to his partners and decided to free himself to focus on pressing social problems, including the Israel-Palestine crisis. 
In 2000, two years after he told his partners he was shifting gears, he got a fortuitous call from the British treasury saying that no matter how much money they threw at eradicating poverty, they were unable to dent it. I interrupt to ask what poverty meant at the time in the UK. For an Indian like me, poverty is “something else” and most in the UK would never have encountered it.
“Yes, poverty as you know it, doesn’t exist. But in the UK at the time the gap between the rich and the poor was widening and those who were left behind were stuck behind,” he explains. He chaired the committee and came to the conclusion that while the world had been very innovative in finding ways for those who want to multiply their wealth (venture capital, private equity, stocks), it had so far failed to find ways of funding for those who want to do good and make the world a better place. The report written two decades ago concluded that there must be ways to “connect those who want to improve lives to financial markets”, but the path was not yet clearly visible.
This is when the kernel of Impact was sown in his mind, although the soil perhaps wasn’t yet fully ripe for it. But as time went by, Cohen himself became increasingly convinced that innovation was the need of the hour. He set up Social Finance in 2007, a small outfit with 18 employees from diverse fields working together to do their bit to solve the world’s most pressing problems.
In 2010, two 30-year-olds walked into his office and said they had been trying to attract investment to fund initiatives that help reduce the number of people going back to jail once released. “What do you think if we link the reduction in those going back to jail to a financial return,” the duo asked. “It was as if a lightbulb went on in my brain,” says Cohen, visibly excited as he recalls the moment. The two youngsters had found the key to capital markets for social entrepreneurs to his mind. Till then, everyone had assumed you can’t measure anything in the area of impact but here was something that could be measured. 
That’s when the social impact bond came into being – The Peter Brook bond – and the UK government bought into it. Five million pounds was raised to fund charitable institutions working with the jails with the aim of reducing the numbers who found themselves back in jail post release over a five- to seven-year period. There was a 9.7 per cent reduction in the returnees and the investors got the 5 million pounds back with a 3.1 per cent annual return, proving that the impossible could be made possible if one thought out of the box.
How did the institutions manage this feat, I ask? What stopped them from doing it earlier? Once there were clearly defined targets, the approach was to tackle the menace holistically. Charitable institutions had been tackling one end of the problem or the other but not looking at the problem in its entirety. The team quickly realised that the whole is greater than the sum of its parts. Forty-two per cent of the prisoners had a drug habit, 38 per cent had broken families and nowhere to go and spend a night and on and on and on. “We brought all the tiny efforts under one umbrella,” he adds. I feel a sharp pricking of tears when he tells me there was for instance a higher probability of return for those who were not met at the gate upon release by kith and kin than for those who were met at the gate. The fact that someone cared was alone enough of a disincentive I find heart-rending.
With the Peter Brook bond, the social impact bond had proved its efficacy. Money had been raised to tackle a social problem and returns had been delivered to investors. “If need be, more money could be raised to solve this or other similar problems unlike with philanthropic funds which are limited by definition.” That’s when he was asked to set up National Advisory Boards in the G7 countries and Australia headed by people like himself who sympathise with such approaches. It was then they found that ESG investing was already very much prevalent in these economies as investors refused to invest in companies doing damage, the younger generation was making conscious choices and refusing products that were damaging the environment and refusing to work for companies that do harm. This impact investing sector grew from $10 trillion eight years ago to $40 trillion today. 

"Impact has brought in a second element that argues that “you can’t just make money but you also have to improve the world” and the future belongs to those who do this best."



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First Published: Fri, October 29 2021. 23:32 IST