EntrepreneurResources

List of funding resources for Social Entrepreneur from the Seed Money session at Socap08 

 

 

1. Grants from large foundations
2. Grants from family foundations
3. On-line contributions through giving sites
4. 3 F's - Friends, Family and Fools
5. Entrepreneur's cooperative or commons
6. Venture (vulture) capital
7. Angel investors
8. Become a subsidiary of a large corporation (intra-preneur)
9. Become a project of a larger not for profit
10. Equity Loans
11. Government Grants
12. Growth from inside using profit
13. Become part of a University department and go for their grants and support
14. Get a few partners who want to put in equity and sweat equity
15. Program related investments from the capital of a foundation (to be repaid or forgiven)
16. A recoverable grant from a corporation or foundation
17. Giving circles
18. University giving program
19. Hybrid of any of the above

 

 

Notes from the Blended Value Investment at Socap08 

 

 

Identifying and attracting blended value investors?

 

• Michael van Patten – building own database (CSR Wire, Responsible Wire Magazine, Clean Tech organizations, every social value fund, linked in, Craig’s List, Angel investors Association - List and Forum) – look at membership base
• Doesn’t think there is any aggregator, so he is building it himselfà not recruiting sales
• Private Equity Fund – can’t cold call and solicit (against the law)
• Challenge is that most actors can’t be public about their offerings (can’t offer private placement in a public forum) - illegal
• Need a Calvert like platform without going through Calvert as the vehicle (be more of a retail environment)
• Is there anyone who knows the blended investors who knows they
• How to find other private sector (fortune 500 actors) investors – suggested this could be CSR movement (I would argue that this movement doesn’t have the right people at the table)
• NFF Capital Partners and Sea Change will do some of the brokering (organizing) work for nonprofits but no-one doing the heavy lifting
• Can financial advisors help? In some circumstances, advisors understand investment model, but not the social enterprise, etc.sector
• One challenges is that the can’t sell away from UBS – could lose his license
• Suggestion: UBS should be establishing social investment funds
• Setting up as an exchange (gatekeepers, bringing investors to the system) – want to be able to work with broker/ dealers
• Private placement approaches have limitations – want to approach through a more regulated way
• Come to the exchange/vet the process/ broker-dealer then shows options to his client

Hybrid Models

 

• Pure play vs. hybrid models – really difficult to find patient venture funding/ capital – really hasn’t existed; have lots of angel investors, mostly under $50K – if want to grow a business need larger capital so have had to change business to attract next level of capital which is more “pure play”
• Leverage the B-Corp model to attract blended investors
• Good Capital – Estate Planners not really an option (don’t have enough contact with their clients to recommend new tracks); Financial Advisors require a lot of education to know the opportunities
• Challenge of how much time a pro-social fund should spend on education vs. just doing the business
• Very few examples of individuals making blended investments;
• Large public pension fund can’t have any association with Grameen bank because of their fiduciary responsibility
• Limitations of the definition of “fiduciary responsibility”
• Need a new market because there are governance roles that limit tools that can be used
• Article written about false perceptions of what constitutes fiduciary responsibility
• Grameen: each institution has its own definition; can be sued if investing deliberately in funds
• Very few examples of institutional investments at a market rate. PRI/ recoverable grants are the larger mechanism/ model – intentionally using assets of the foundation to make loans at a market rate (mostly collateralized) –

Venture Growth Funds

 

• See a lot of visionary CEOs with good core good board, staff, strong fundamentals,,etc. and existing or potential to develop broader funding base – can’t reach it because they don’t have the up front capital to develop it.
• Have raised $30-$40 million dollars for these efforts, takes longer to get there
• Build this into the model of the organization in the earlier stages – create a balance sheet that is much more sustainable for the long term
• Major limitation is that there is no exit
• Need to differentiate between different types of capital
• Start up for profit, project financing, etc. need different types of capital, established organizations have more ability to raise capital
• Disagreement on whether this is the case.
• There are 5 exit strategies to recover loans:
• Investors Circle – 30% of members are early stage and they do go on to get institutional investors, generate return that the angel’s are looking for, etc. – not necessarily “blended value” investments they may be mission-related investments/ have a specific cause
• Investor Circle  – variety of opinions of what constitutes an acceptable return for the angels in their fund