Giving Compass’ Take:
• Filipe Santos explains that as social entrepreneurship makes progress in tackling issues and igniting innovative solutions, scaling impact needs to be a priority for entrepreneurs.
• What role can you play in supporting social entrepreneurs trying to achieve scale?
• Read more about scaling impact in the social sector.
The rise of the social entrepreneurship movement in the last twenty years unleashed a powerful engine of innovation for society. Thousands of engaged citizens – social entrepreneurs – construct and implement novel solutions to neglected societal problems, thus contributing to a more inclusive, equal and prosperous society.
Yet a key challenge for social entrepreneurs is scaling their solutions to achieve greater impact. While commercial entrepreneurs benefit from a deep and supportive ecosystem of venture capital, mentorship, and talent that helps them in building robust organizations and conquering their markets, social entrepreneurs are typically dependent on smaller and shorter-term funding based on awards, crowd funding, or grants.
The result is a fragmented sector with numerous but small and locally-focused social entrepreneurs with limited ambition, funding, and capabilities to scale.
The recent growth of impact entrepreneurship and impact investing is changing this situation. Recognising that social entrepreneurs can develop commercially viable ventures with business models that deliver significant impact, a new class of investors is emerging to invest in social enterprises and support the growth of these impact ventures.
With an investment proposition of achieving significant impact while delivering market-level returns from their investments, impact angels, family offices and new funds have been launched in the last decade, mobilizing more than $100 billion dollars for impact investing.
These funds are providing, for impact-oriented ventures, the supportive ecosystem that traditional entrepreneurs already benefit from, helping social entrepreneurs achieve greater scale and impact.
Not only should social entrepreneurs be aware of their pathways to scale, but social investors should also be clear about the most effective scaling pathways for their investees, understand what strategies and actions these entail, and support social entrepreneurs in this journey, instead of imposing a one-size-fits-all model of growing the organization to conquer the market.
Their focus should be on the social innovation as a solution to a societal problem and how it can scale, not on the needs of the social enterprise they financed. Thus, the social enterprise should not be seen as an end in itself, but merely as the mechanism to validate and disseminate a social innovation.
Read the full article about scaling pathways for impact by Filipe Santos at Alliance Magazine.
Interested in learning more about Impact Investing? Other readers at Giving Compass found the following articles helpful for impact giving related to Impact Investing.
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