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Funding for Social Enterprise: Myth or Reality?

May 29, 2012

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Recent federal legislation has focused on getting more capital into the hands of startup business ventures, with implications for the increased use of crowdfunding as a way of getting smaller investments from a larger number of investors. In addition, traditional venture capital firms are sharing space with social venture capital firms, who measure their investments on environmental and social impact rather than on financial ROI alone.

For social entrepreneurs, finding funds to start up or move a project to the next level can be challenging. Without nonprofit status, tax-deductible donations and grants are virtually out of the question.

Here's what impact investors are looking for in a social venture investment:

  • Acute pain in a large and growing market
  • A team with relevant experience
  • Intent + Measurability + Accountability
  • A business model consistent with impact
  • Paying clients
  • Data - personal stories, case studies

For crowdfunding, or "peerfunding", as Tom prefers, a good social business has these qualities:

  • An inspiring story about the future you are creating which people can visualize and understand
  • A video which presents authentically your vision and goals
  • A realistic budget
  • Good rewards which tie in to your project and give your supporters a sense of connection and express your appreciate of their support.

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Tom-Dawkins_small

Tom Dawkins is Co-Founder of startsomegood.com, a site helping social good initiatives raise funds and grow a community of supporters. Startsomegood has taken the crowdfunding model - which is growing in popularity world-wide - and customized it to reflect the unique needs of social entrepreneurs. The site taps into the power of the crowd, allowing social entrepreneurs to ask for small amounts of money from supporters from around the world. Tom is a serial social entrepreneur, previously founding Vibewire, and was the first Social Media Director at Ashoka.

Josh-Cohen_small

Josh Cohen is Managing Partner at City Light Capital, a venture capital firm investing in USA-based, high-growth companies dedicated to tackling some of society’s toughest challenges. City Light's success is measured by the financial returns they achieve and the impact their companies create through improvements in the ways we protect people, property and places, educate and inform ourselves, and consume energy and environmental resources, while promoting an open society. Josh is currently on the Boards of LicenseStream and City Light Carbon and is an Observer to the Boards of 2Tor and ShotSpotter.