Social Entrepreneurship and Venture Capital

Social entrepreneurship which has been applied in so many different ways by so many different analysts that it’s depth of vast complexity is still being unraveled and it seems it is still in infancy. It is a multi-interpretable concept and although the use of the term is widespread its use is either overrated or misused. Hence, it is important to firstly understand what social entrepreneurship really is.

First, it is worth pointing out that many successful ventures receive no outside funding of any

The last twenty years the financial services industry encountered significant regulatory problems. Equity crowdfunding introduces an innovative manner to raise capital and provide greater societal benefits. Fundraising has been going on for hundreds of years, and crowdfunding is transforming the approach to developing funds. In American history, our railroads relied on private individuals to pay for the infrastructure and development (Davies, 2014). Railroad companies employed crowdfunding and investors had the incentive to contribute. Projections illustrate the equity-based crowdfunding industry in the United States (U.S.) will experience rapid growth because of regulatory changes stemming from the Jumpstart Our Business

Social enterprises run day to day operations just like a for profit business, but instead of dispersing all of the profits between shareholders and owners, the profits are sunk back into the company or the charity that they are supporting. Like any other business, social enterprises sell or offer goods and services at a price, and they are designed to help the community, a certain culture, and the environment. Similar to for profit businesses, social enterprises are faced with constraints and are required to overcome them in order to become successful. Some of these constraints include: Funding difficulties, and hardly any government support. Ways to overcome these constraints are to find stakeholders who understand your vision and what you are trying to do for the community, and get adequate funding. In order to get help from the government for funding purposes, then show the government people an understanding of your social enterprise, and how it is helping the

What sort of brands come to mind when talking about popular restaurants, clothing chains, airline travel, grocery shopping locations, or online stores? Chances are Chipotle, The North Face, REI, Southwest Airlines, Trader Joe’s, Costco, and Amazon all find their way into the conversation. What makes these companies so successful, even though many of them seem to rely on selling high priced goods? The answer is Conscious Capitalism. Conscious Capitalism is the new social entrepreneurship strategy that combines purpose and profit together to produce businesses that serve customers, communities, employees, and shareholders. Conscious Capitalism centered businesses will outperform businesses of similar purpose and size that do not practice Conscious Capitalism, and accelerator curriculums that promote Conscious Capitalism will produce more successful companies. In addition, it makes sense and is advantageous to expand these ideals to second-tier economic cities in order to promote growth.

In “Evidence from the National Assessment of the Social Innovation Fund (SIF)”, Zhang, Griffith, Pershing, Sun, Malakoff, Marsland, Peters, and Field (2017) empathize that SIF is a most lucrative and much-needed non-profit organization to support community and society in terms of youth development, job creation, and better futures. In order to execute its plans effectively, SIC collaborates and partners with other organizations to raise funds, and human resources to improve organizational capacity to create a solid fundamental strength. One of the most difficult challenges that SIC has to deal with is the financial obstacle during the economic recessions. Zhang et. al (2017) insist that in the 2008 and 2012,

Although social entrepreneurs usually start rather small their initiatives often have global relevance, issues such as unemployment, incarceration, disease, small business creation, access to clean water, renewable energy, waste management, etc. These issues and needs usually arise within a disenfranchised sector of society, and they are the drivers of social entrepreneurship. The desires or needs of the disadvantaged

Most companies today are intimately involved in social programs that have no direct connection with the bottom line. These programs include everything from support of the arts and urban renewal to environmental protection and education reform. But like all aspects of social management the act of social responsibility needs to be carried in an

Information problems such as asymmetric information and moral hazard are critical for innovative ventures, which can have a hard time forecasting future cash flow. The banks are usually less informed then the venture capitalists, which creates higher demands for returns from the entrepreneur in order to break even. (Masako Ueda, 2004, p. 601) The value added venture capitalists have a better understanding of the technical milestones and are therefore better equipped to monitor new ventures, which reduce the information problems. They may be willing to finance innovations that investors without expertise wouldn’t. Understandably, not all venture capitalist have technical expertise, but they can make up for this with a good network of experts. (Douglas Cumming, 2010, p. 307)

Governments around the globe have been trying to stimulate economic growth by encouraging entrepreneurship and creating innovations. Many entrepreneurs with brilliant ideas had limited availability of financial resources. For more then thirty years Venture Capital was able to match bright ideas of entrepreneurs with cash-rich investors, benefiting the economy by creating new jobs and generating wealth.

Venture capital has been the driving force behind some of the most vibrant sectors of the US economy over the past two decades. Venture capitalists were instrumental in fostering the tremendous growth of firms such as Microsoft, Compaq, Oracle, and Sun Microsystems, which were all founded less than 20 years ago, but have rapidly become dominant players in the high technology arena. While the contributions venture capital makes to the economy overall are underexplored, there exists a widespread belief that

The social innovation school of thought emphasizes that viewing social entrepreneurship is establishing new and effective ways to address societal problems. Irrespective the method they adopt and the way they function, ultimately the thing that matters the most is the social value that they create. It is all about innovation and impact, and not about commercial success or entrepreneurship. Though income strategies and bottom line are important and key to sustainability, it can never be more important than the desired or intended social

Economist Louis Kelso said, “The problem with capitalism is there are not enough capitalists”. This means that until recently, most people did not have direct access to equity, only the very rich were able to access equity from businesses. This changed on April 5th 2012, when the JOBS (Jumpstart Our Business Startups) Act of 2012. This bill allows for people to participate in “Crowd-Investing” or equity crowdfunding. This is very similar to rewards based crowdfunding except that instead of early access to a video game, or free product, investors get equity from the companies they choose. Equity crowdfunding platforms generated $2.1 billion in funding for start-ups in 2015. Moreover, the World Bank predicts that crowd-investing will be a

It is vital to take note of the theoretical contrasts between definitions. Meanings of social entrepreneurship normally allude to a procedure or conduct; meanings of social entrepreneurship people center rather on the author of the activity; and meanings of social endeavors allude to the unmistakable result of social enterprise. In spite of the huge number of definitions, precise endeavors to guide activities and definitions are uncommon (see Boschee (1995) and Waddock and Post (1995), for two exemptions). While integral definitions, every concentrating on various parts of the wonder, are not as a matter of course a hindrance in the quest for hypothesis, despite everything we don 't have a complete photo of the marvel and do not have an unmistakable comprehension of how social business

Research from the case shows that investment in Ed-tech space has seen a massive growth since 2009 and stood at $1.25Bn in 2013 with 70% of deals being finalized in the seed/angel round which is promising. Founders can seek to finance their start-ups from many sources such as individual or institutional investors, Venture Capital Funds or crowdfunding. However, the biggest challenge faced by them is convincing these investors that the idea is worthy enough to fund the project but without ceding too much control or diluting the product’s core proposition. For the purposes of my analysis I have decided to focus on crowdfunding and CVCs. This is because these are fairly contrasting approaches not only in terms of investor profile but also