social enterprise: supply & demand

At the Skoll World Forum in Oxford, talking supply (of capital) and demand (of the same) for/by social enterprises.

Very interesting session in which we ID'd issues on the demand and supply sides...as follows:

Demand issues

• issue of role models - in some communities and economies, there are very few social enterprise role models to follow - similar dynamic can happen in economically deprived areas with entrepreneurship in general
• smaller pool of potential entrepreneurs due to many social enterprises providing low/no financial upside to entrepreneur
• historical antagonism by non-profit / charity sector to market models
• need for "pre-finance" mentoring and business services to get social enterprises bankable and investment-ready
• Many potential social entrepreneurs can't afford start-up - have low funds to begin with
  

Supply issues

• Assumptions by investors that all social enterprise = less money to be made
• Philanthropic funders are risk-averse, due to governance issues (boards), skills issues (grant officers not experienced in deal structuring)
• Grantmakers seem happier taking -100% financial return than -15%, 0%, or +2% (see point above for possible reasons
• Need more forward thinking philanthropists to seed fund - see last "demand" point above
• Exit - some of this can be addressed through quasi-equity, which almost no one is doing (Bridges, Venturesome, and Acumen are exceptions)

We also discussed what I call the "ecosystem" of social enterprise - something I see in London but not many other places. It involves activity and commitment from public sector, private sector, charities, foundations, media coverage, competitions to spark ideas, schools to teach SE, awards and prizes, and the whole spectrum of social finance from grants to commercial investment.