Thursday, March 3, 2011

The Need for Social Enterprise Start-up Venture Funds

I learned today of nobul, a new social enterprise that seeks to take a private equity approach to scaling businesses for community impact. The web site is new and promises more information soon. But I suspect they are going to be a social enterprise shining star with their soon to be announced leadership.

It's interesting how many people are starting or operating similar type of portfolios. The idea is one that we have played with ourselves at Belay over the last 16 years. But one thing I’ve noticed is that everyone wants to scale existing ventures. Very few portfolios are interested in assisting social enterprise start-ups where my passion lies.

Many see too much risk in that approach because of the high rate of start-up failure. Traditional venture capital uses stock options to overcome the risk of funding start-ups. One big success funds the nine other failures.

But in social enterprise, that windfall model often doesn’t exist because of the non-profit structure of the start-ups or the lower levels of profits due to the social mission. I hope others will continue to experiment with ways to encourage and fund scalable domestic business as mission start-ups. Do you know of an organization with an innovative approach?

As for me, I like keeping my hands dirty in the day to day activities of operating faith venture employment training businesses. Our organization also is developing a faithventure fund to resource start-ups with a vision for employing individuals rebuilding lives from addiction, homelessness or prison.

No comments: