Social venture capital

Investment involves the purchase of real estate property, bonds and stocks with the hope that it will generate an economic gain. Without any foundational funding from business investors, business chains in the society will not prosper.

The same theory of investment applies to social enterprises. Social enterprises at their embryonic stages require significant level of funding. Through business practices, social enterprises acquire their own business strategies. In order to do that, they need investment from various sources. However, the fact that many investors are long for profit makes social enterprises far-off from their sphere of business. But for some investors, like social venture capitalists and venture philanthropy companies, social enterprises are their main targets for investment.

Venture philanthropy companies and social venture capitalists have distinguishing criteria for assessing on which social ventures to invest. These criteria include strong social impact, scalability, and best-practice and financial capacity. While profit and risk is of paramount importance to the conventional investors, to what extent can a social enterprise deliver huge social impacts to our society is a key question for venture philanthropy companies.

Nowadays, some philanthropic ventures operate on regional basis. For example, the European venture philanthropy association and the Asian venture philanthropy network operate on regional basis to target specific social enterprises. Social venture capital corporations like Acumen Fund, Unitus Seed Fund, and Grassroots Business Fund also invest money on social enterprises by assessing the above criteria.

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