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Social Venture Funds

Page history last edited by Christy Martell 12 years ago

SoCap Markets Conference 2008

 

Social Venture Funds 

 

FAQs 

 

1.       What is social venture capital (SVC)?

a.       Social venture capital is a form of venture capital investing that provides capital to businesses deemed socially and environmentally responsible. These investments are intended to both provide attractive financial returns to investors and to provide market-based solutions to social and environmental issues. SVCs are generally willing to consider unusual business models (i.e. fair trade goods importer, nonprofit-for-profit hybrid) that have lower initial margins. Venture Philantropy, on the other hand, applies venture capital strategies and approaches to charitable giving. 

 

2.       What is the difference between traditional venture capital and social venture capital?

a.       Venture capitalists earn high returns by understanding and managing risk as they guide a venture through a series of projects involved in the formation of a profitable firm. Social venture capitalists are similarly well-acquainted with risk and project management activities, although social venture capitalists will restrict their field of interest to those ventures whose rate of return is measured in terms of those metrics which best reflect the magnitude of socially positive results.

 

3.       What is socially responsible investing or “patient capital”?

a.       Socially responsible investing or “patient capital” is the capital supplied by socially-minded investors not looking to quickly turnover organizations for a profit as traditional venture firms often do. These investors usually would rather wait to sell the firm if selling dilutes the company’s social mission.

 

4.       What is the difference between microfinance and social venture capital?

a.       Microfinance generally refers to the provision of financial services (i.e., loans) to poor or low-income clients, including consumers and the self-employed. Social venture capital generally involves investments in businesses made of equity capital or leveraged debts (debt added on to equity investment to keep company ownership from being diluted).

 

5.       What is a portfolio company?

a.       A portfolio company is a company that a venture capital firm has invested in.

 

6.       How are SVC deals structured?

a.       Most venture deals involve venture firms taking equity or equity-like shares in a organization in exchange for their investment dollars and typically expect to receive certain rights regarding their investment, including the right to elect one or more directors to the organization’s board of directors; the right to be paid first if the company is sold; and the right to financial and other company information or reports.

 

7.       What is blended value?

a.       Value created by organizations regardless of legal form that consists of economic, social, and environmental value components. Investors simultaneously generate all three forms of value through providing capital to organizations. The outcome of all this activity is value creation and that value is itself non-divisible and, therefore, a blend of these three elements.

 

8.       Who are the some of the largest players in this space?

 

a.      Acumen Fund

b.      Aureos Capital Limited

c.      Calvert Group

d.      Social Venture Partners

e.      Good Capital (domestic only)

f.        Ignia Fund

g.      New Cycle Capital

h.      Triodos Bank

i.        The New Economics Foundation Social Venture Capital fund

j.        Venturesome fund

 

 
 
 

 

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