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EntrepreneurResources
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Saved by Marc Dangeard
on October 22, 2008 at 9:50:12 pm
List of funding resources for Social Entrepreneur from the Seed Money session at Socap08
- Grants from large foundations
- Grants from family foundations
- On-line contributions through giving sites
- 3 F's - Friends, Family and Fools
- Entrepreneur's cooperative or commons
- Venture (vulture) capital
- Angel investors
- Become a subsidiary of a large corporation (intra-preneur)
- Become a project of a larger not for profit
- Equity Loans
- Government Grants
- Growth from inside using profit
- Become part of a University department and go for their grants and support
- Get a few partners who want to put in equity and sweat equity
- Program related investments from the capital of a foundation (to be repaid or forgiven)
- A recoverable grant from a corporation or foundation
- Giving circles
- University giving program
- 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 fu
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