15 Social Venture Capital Firms that You Should Know About

Unfortunately the playing field is far from level when it comes to social entrepreneurs looking for funding for their initiatives. There is still a relatively small pool of funders that will consider foregoing a significant ROI for a SROI.

That said, the pool is growing as social venture capitalism becomes a buzz concept in the sector, and these funders are involved in some of the most inspirational projects around the world.

If you are seriously considering venture capital, you should also check out this post from Joe Ippolito on Good Business about the pros and cons of VC for a social enterprise start up.

If you’re ready to go, Olivia Khalili at Cause Capitalism lists these as her top 15 social venture capital firms for social entrepreneurs looking for funding – from seed to late stage:

1. Acumen Fund: Focus on solving problems of global poverty through loans and equity in India, Pakistan and East and South Africa.
2. Big Issue Investment: Focus on medium-term growth capital.
3. Calvert Group: Early, direct investments.
4. Central Fund: Strong focus on sustainable jobs for low-income populations; services for distressed communities.
5. City Light Capital: Early stage, social mission-driven companies; focus on good financial returns.
6. Clean Technology Venture Capital: Invests in mid-sized alternative energy companies with promising exits.
7. First Light (an iniatitave of Gray Ghost Ventures): Incubator and investment partner to seed-stage, for-profit social ventures
8. Good Capital: Expansion fund; high-engagement, hands-on investment partner.
9. Gray Ghost Ventures: Early stage enterprises focused on low-income communities in emerging markets.
10. Investors’ Circle: Investors’ Circle matches social entrepreneurs with its circle of angel investors.
11. Root Capital: Focus on grassroots businesses in rural areas of developing countries.
12. Shared Interest: Invests in fair trade businesses.
13. TBL Capital: Focus on social enterprises in consumer products, service providers, software, clean technology, green building, health and wellness, and retail.
14. Triodos Bank: Equity and debt fundraising; Social Enterprise Fund and EIS Green Funds.
15. Underdog Ventures: Focus on natural and organic food, environment and conservation, socially responsible consumer products, and socially responsible investment companies.

Muhammad Yunus and the Perils of Making Money – can social business really change the world?

“I do things which I know nothing about and I throw myself at them.”

You have to admire the entrepreneurial spirit of Professor Muhammad Yunus, speaking two weeks ago at a convention in Bangkok to a gathering of 20,000 people.

Unremarkably I suppose, Prof Yunus’ speech was not unlike the lectures I had sat through during my college days, and I found myself scribbling down notes in short-hand, trying to capture the little gems of ideas that he so effortlessly tossed our way.

For those who don’t know (and you can catch yourself up here and here), Muhammad Yunus is the venerable ‘father of microfinance’ and founder of the Grameen Bank  – for which he and the Bank won the Nobel Peace Prize in 2006. Most recently, Prof Yunus has become a vocal proponent for what he calls ‘social business‘; creating businesses that exist to serve and employ the poor, rather than make profit.

After meeting the man himself and doing a little digging of my own, the question I am left with is this: is Yunus’ model of non-dividend, essentially non-profit social business the most efficient way to create social impact and help the poor, or is it really just a new form of charity?

Prof Yunus insists that investors in social businesses should only recoup the principal on their investments, without any profit. This is enshrined as one of the “seven principles of social business” he has crafted, where is states that, “Investors get back the investment amount only. No dividend is given beyond investment money”.

Some in the microfinance and social business space see this as a radical view, as many prefer to think of social business as a way that entrepreneurial individuals and companies can do good and make a profit.

Yunus gives examples of the numerous partnerships and joint ventures that he has brokered with big business – including venture between Danone and Grameen Bank to create dessert snacks rich in essential multivitamins for children, as well as the €1 Nike shoe and the affordable sanitary napkin designed by Uniqlo, all of which target the extreme poor.

Undoubtedly, these public-partnerships are transforming charity by approaching the poor as a customer – a far more empowering position than beneficiary. It is clear though that these are all global companies that can afford to do social business ‘at cost’, only recouping their initial investment and not making a profit on the products.

Yunus’ philosophy of social business is limited to the realm of the biggest and wealthiest companies with extra cash to spend to create social impact. Arguably, many more of these innovative joint ventures would occur with for-profit businesses of all sizes if they were able to measure their success by the social impact and the financial return. With 1.4 billion people still living in extreme poverty (that is less than US$1.25 per day), it is unclear how social business by Yunus’ definition can be scaled up to meet these needs.

On the other hand, the greatest challenge to social business as a profit-making venture is a moral one. For how can we ensure that business – which has traditionally been about maximizing profits regardless of the social or environmental impact – does not take advantage of the world’s poorest and most vulnerable people?

According to Elizabeth Rhyne, for-profit social enterprises are already challenging the assumption that non-profits are inherently more virtuous. Many microfinance institutions for example, have morphed from non-profit to for-profit enterprises to increase their access to capital and scale up their social impact. These for-profit enterprises write into their corporate documents a commitment to their customers (the extreme poor) as well as investors. While investors in these social enterprises may sometimes (though not necessarily) expect a below market rate of return, they do expect a significant SROI (social return on investment).

In the world of philanthropy, major foundations like the Bill and Melinda Gates Foundation regularly give grants to for-profit enterprises to create social impact, recognizing the valuable role that social entrepreneurs can play in scaling up business solutions to social problems, without relying on a constant stream of donor funding.

New for-profit legal structures for social enterprises like L3C (low-profit enterprise) or B Corp (benefit corporation) in the US also provide a vital legal framework and oversight of socially-conscious business practices to build trust in profitable businesses with a social mission. Below is B Corp’s ‘declaration of interdependence’ that its members commit to, placing business at the service of ‘shareholders and stakeholders’.

Prof Muhammad Yunus’ concept of social business that serves the poor as a customer and B Corps’ definition of enterprise that can serve ‘stakeholders and shareholders’ are both pushing towards a future where business and social impact collide. Yet in practical business terms, they differ greatly.

In my view, if we want to create a corporate landscape where businesses integrate being “good” into the core of their business, and charities find enterprising ways to fund their activities and attract and retain the best staff, “profit” – measured by a financial and social return – needs to be part of the equation.

When Professor Yunus ended his speech in Bangkok with the resounding call – “let’s decide to put poverty in the museum!” – it was certainly rousing. But we may disagree on how that is going to be achieved.

Heroic vs. Homegrown Entrepreneurs?

When we think of “social entrepreneurship”,we tend to focus on the really big organizations that have had a huge impact, groups like Teach for America or Grameen that are dealing with national or global issues of poverty, inequality and justice.

Yet research suggests that social entrepreneurship is also making an impact on the local economy. A study by Harvard Business School that analysed recent Echoing Green fellows found that many of the most promising social enterprises are not focused on changing the world, but rather on effecting change in their own backyards.

We have become intoxicated with “heroic entrepreneurs” that have set a course to the moon, but I believe that groups focused at the community level are just as deserving of our attention. These locally-focused initiatives show us a new way in which we can take the traditional model of business and turbo-charge it with a passion for social change that could revolutionize the US economy.

The research highlights the example of Bethel Erickson-Bruce, an Echoing Green fellow who founded an urban farm in Waco, Texas, to raise awareness of sustainable agriculture and train community members in how to start their own gardens. Built on a principle of collaboration and sharing knowledge, Bethel’s initiative is about giving farmers the tools to take advantage of the strategic opportunity of sustainable farming given the demand for organic produce.

Having a bold universe-changing idea is the hallmark of social entrepreneurship, and part of what I love about working in this space. And I believe that these locally-focused initiatives are universe-changing too. Homegrown entrepreneurs are helping to reshape the corporate landscape here in the US. They are pioneers that are taking advantage of the strategic opportunity in sustainable, socially-driven enterprise, and bringing others on the journey with them. Let’s not forget they are heroes too.

Inventing the Collaborative Workspace

We need a space like this in New York for social entrepreneurs. I totally believe in the power of the built environment to foster creativity and productivity. Who wouldn’t want to go to work everyday in a space like this?

Inventing the Collaborative Workspace – Adam Richardson – Harvard Business Review.

Of course, some incredible engineers are already way ahead of the curve and have invented “living buildings” that can actually absorb CO2 from the atmosphere, and store energy so that they are completely carbon neutral.

It is my dream to work in a living space rather than be surrounded by the heavy weight of dead walls that contain and constrict. Anyone else feel the same? Have you ever been in one of these buildings?

The Classroom of the Future

It seems like social media week in New York could pass by with a whisper, although with over 300 free events around the city, its a great opportunity for social entrepreneurs to get a fresh perspective on innovation in the 21st Century.

Yesterday morning I attended a panel discussion on ‘The Classroom of the Future‘ – a frontline perspective on using mostly free and readily-available technologies in the classroom to enrich the learning experience for kids.

The panel included some relatively big names: former government bureaucrat Carole Wacey and Columbia academic Sree Srrenivasan. But it was Melissa Seideman’s practical demonstration of how she uses social media in her classroom that alarmingly made me wish I was in 8th grade history again.

Melissa Seideman is the present-day architect of the classroom of the future. In her class in White Plains, New York, students tweet real-time questions about a film they are watching that appear on the whiteboard, parents participate in history lessons via sms, and student’s learning progress can be assessed by the quality of their blog posts.

At the panel event it was clear that this unassuming 8th grade history teacher from White Plains was using technology her fellow well-groomed panelists hadn’t even heard of – integrating tools such as My Big Campus, Edmodo and Socrative, to revolutionize the classroom dynamic. It can also save valuable time, as technologies such as GradeCam enables teachers to quickly grade their multiple choice tests and quizzes.

The hierarchical teacher-student relationship is losing relevance in Miss Seideman’s class, as kids teach each other in a media-rich environment, asking and answering each other’s questions through safe, controlled online forums by posting comments, links and photos.

Melissa Seideman – who aptly calls herself ‘Not Another History Teacher’ on her edu blog – highlights how “The classroom of the future” is an oxymoron, as social media means that learning is now taking place beyond the confines of a physical space. An example from one of her recent posts is ThinkBinder, technology that enables students to study for tests together online with space for group discussion, sharing notes and a whiteboard feature for solving problems together.

Social entrepreneurs can learn from Miss Seidman as they think about providing tools that educators need to flip the lid on students’ self-driven learning. On the other hand, hopefully it won’t be long until more teacher’s embrace this collaborative approach to learning by experimenting with the (mostly free) technology that already exists –  bringing the classroom of the future into the present.

Why we have too few women leaders

According to Sheryl Sandberg, the no.2 at Facebook, women are holding themselves back. It is an interesting message from a woman who has become such a poster-child for female empowerment in the workplace.

Although I find her message compelling, and at some points convincing, I can’t help but notice  there is an anti-feminist train in her thinking. Her argument is largely based on pop psychology and anecdotal evidence of how women act in the workplace, and she has three major points:

1. Sit at the table – don’t sit on the sidelines and let men take charge of meetings and decisions.

2. Make your partner a real partner – women earning the same amount as men do 2x the housework and 3x the childcare. But equal partnerships are happier and are 50% less likely to end in divorce, so make sure your partner does his share.

3. Don’t leave before you leave – women start planning for children long before they are pregnant, and consciously or sub-consciously do not put themselves forward for promotions. “Keep your foot on the gas pedal” till the last moment.

Do these stereotypes fit you? Do you relate to her argument? Are women our own worst enemy in the workplace?

All Volunteers Are Not Created Equal

If you are not following Rachael Cheong, the Founder and CEO of Catch a Fire, you should be. Apparently she is an absolute firecracker in person – and she has certainly set light to the idea that volunteers can be used much more effectively to cut non-profit budgets and increase impact.

The Catch A Fire website is packed full of great case studies, and her organization itself is a great example of a sustainable social enterprise. It provides a service the non-profit sector needs and is willing to pay for.

Her recent Huff post blog shows why it such a great business model:

Although more than one quarter of the American population volunteered in the last year, most volunteers don’t use their professional skills on behalf of nonprofits, even though those who do are more satisfied volunteers. The gross mismatch in the supply and demand of pro bono service is highlighted by the results of a recent Deloitte study in which 95% of nonprofit leaders indicate a need for more pro bono support, and yet 97% of those nonprofit leaders do not know who to approach to solicit skilled volunteers.

Do you have a non-profit that needs volunteers? Would you use Catch A Fire services to reduce costs?

via Rachael Chong: All Volunteers Are Not Created Equal.

Strategic Planning: When to be daring and when to be detailed

After a weekend of strategic planning with a non-profit seeking to make a big difference in the world, Seth’s Godin’s reflections sum up perfectly the different stages in planning – when to be bold and explorative, and when its time to get down to the hard and detailed work of planning how to reach out goals:

Nuance is the sign of an intelligent observer. Nuance shows restraint and maturity and an understanding of the underlying mechanics of whatever problem were wrestling with. After all, if the solution was simple, we would have solved it already.

On the other hand, resorting to nuance early and often can also be a sign of fear, of an unwillingness to go out on a limb and make a difference. Hence the reactions of boards hiring consultants and CEOs, or of passionate primary voters. “Dont tell me its complicated. Just show me the guts to make something happen.”

My vote: your goals and your strategy must be simple. You must have passion and certainty in order to make a difference as a leader. Your tactics, on the other hand, should be layered, multi-dimensional and reflect the patience of someone who cares about reaching a goal.

via Seths Blog: The waffle paradox.

Using a timeline with today’s date at one end and your vision at the other is a good place to start the process of creating your detailed roadmap to success. If you can fill out the activities you need to do over next 1-3 months in detail then you’ve got a good start.

Tensions of Starting a Social Enterprise | Echoing Green

Innovative start-up social enterprises build products and services that have to take people from where they are to quickly create the society that ought to be, a leap that requires a complex marketing message.

via Tensions of Starting a Social Enterprise | Echoing Green.

Simplifying complicated things

Steve Jobs: his life and career – video | Technology | guardian.co.uk

Steve Jobs kept two important principles in mind in delivering Apple products:

1. Simplify complicated things
2. Give customers what they want

Sometimes its tempting to want to complexify (made up word!) what we offer as a business for many reasons – to be all things to all people, to show we can do everything, to look smart. Simplicity is key, and people will pay for something that is simple and elegant to use and get value from.

Secondly, give the customer what they want. Don’t offer them a 12-month development plan to revolutionize their organization if all they want is a 2-day workshop.

Finally, be single-mindedly focused and determined! Jobs never compromised in his pursuit of these two ideals, and neither should we….expect the very best and you might just create it.