Entrepreneur gives beleaguered and cash-strapped social enterprise owners three tips on how they can the monies they need to pursue their dreams of improving the planet while getting back their return on investments.
Social enterprises or companies that may have a more altruistic goal than the usual objective of money-making have a harder time sourcing funding. The sponsors and venture capitalists they approach must agree with their vision, and more important, give them the commitment to helping them realize it.
High-powered investors who have the resources that these social enterprises need would also have to be willing to put aside their desire to make money fast if it means giving the socially relevant dimensions or aspects of the business time to grow. Obviously, not all fund-raising firms or individuals that the social enterprise executive approaches will be open to this kind of deal.
The article also outlines a few of the obstacles that the social enterprise owner will have to hurdle. First, his vision necessitates that his company is there for the long haul; this contrasts with an investor’s constant desire to see an exit strategy in case the business does not cut it. Second, investors are not sure if the usual methods of risk assessment apply to social enterprises. Finally, they also look at business aspects like market opportunity and valuation levels which social enterprises sometimes are not quick to address.
Fortunately, there are still three main ways by which social enterprises can obtain their funding.
One way is to create business partnerships with like-minded individuals and companies and leverage on them. These entities would bring economic value to the enterprise such as an idea, a property, or a resource. This industrial kind of partnership would give the company more time to return its investment.
Another way is to tap into philanthropic organizations which give donations to causes that they find worthy. Some of them these days ask for metrics to show how the social enterprise is reaching its goals.
Finally, startup competitions and angel investors are other sources of funding that can give the social enterprise its initial capital without too much interference. These entities might even be as passionate as the social enterprise executives about their vision.
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