As a new mentor at the Sustainability Innovation Lab at GSVlabs, I recently had the opportunity to speak there on a topic I am often asked about, namely—what are the essential things that founders should know about social entrepreneurship.
From the engaging follow-up questions and spirited conversation during the presentation, I thought it might be useful to share the key learnings here too (scroll down for a link to the slides).
1. There are legal structures for social entrepreneurship.
This topic was one of the inspirations of founding Innov8social—i.e. to follow the progress and explore the potential of various legal structures including benefit corporations, social purpose corporations, limited low-profit liability companies (L3C’s), and various combinations thereof.
These legal structures are intended to form companies founded on principles of creating impact as well as generating profit. These new structures serve to expand the ‘bottom line’ focus of a company to a double or triple bottom line (i.e. people, planet, profits) and in doing so, expand the stakeholders to which a company owes a legal duty from shareholders to stakeholders such as the environment and community as well.
2. There are business models for social entrepreneurship.
We often say that a legal structure is a “glove” meant to fit the business goals and model of a venture. With that in mind, founders should know that business models are emerging to serve social impact ventures. Models such as buy one give one, or 1%-1%-1%, or dedicating a percentage of revenue to non-profit/policy entities, or pay-what-you-can models are gaining ground as ways to easily explain and account for impact and profit.
3. There are funding options for social entrepreneurship.
Traditional funding options such as loans, grants, and venture capital can be applicable to social enterprises; however, sometimes the dual goals of impact and profit can make these hard sells for social ventures. There is also a growing body of funding options that can serve social entrepreneurs well—these include impact investors (who actively seek a return on impact and profit on their investments), Program-Related Investments (“PRI’s”) powered by foundations, and the use of crowdfunding (both donation-based and investment-based) to validate and fund social impact companies.
4. Social entrepreneurship isn’t just a way of doing business — it is also a mindset.
Since countries such as the US do not legally define social enterprise per se, that term along with social entrepreneurship and social innovation are often used to describe various legal structures and business models (for-profit and nonprofit). With this broad application, social entrepreneurship signifies a mindset as much as a specific type of venture. In fact, social entrepreneurs are often described as those seeking business-minded solutions to the world’s most pressing problems. They employ methodologies of entrepreneurship and a ‘lean’ approach to startups in building revenue models and impact potential. This mindset is a way to problem-solve and calls on the problem-solver to consider and account for multiple end goals, and to do so with accountability and transparency.
5. You are NOT alone!
If there is one thing to emphasize, it is that social entrepreneurs (and those aspiring to be) are NOT alone! Being an entrepreneur is challenging, add the additional goal of creating impact— and the path to success can feel distant and even lonely. However, there is an ever-strengthening ecosystem of support emerging and evolving to better meet the needs and challenges of social entrepreneurs.
Article Originally Written Neetal Parekh | Social Entrepreneur |Linkedin