I really appreciate the honesty in this post about the unspoken but prevalent issues in social enterprise today.
One issue that is not explored enough is how to find the local entrepreneurs that nobody knows that are doing gamechanging work, without support or fancy titles.
“This results in seeking entrepreneurs within existing networks and therefore only exposing a very limited opportunity base. Investment deal flow will therefore be consistently limited, as we continually attract self-recognizable social entrepreneurs and individuals who fit a certain cultural box. Or, we will white wash it with a sub-standard entrepreneur to ensure the enterprise is racially or gender diverse. Meanwhile, no one has actively pulled up their sleeves and deeply penetrated new networks, associations, and cultures to truly source local winners.
We need to start finding real businesses, which might not be found through a business plan competition or pitch session, they might not culturally fit our educated, yet sophisticated backgrounds. But their potential for investment readiness, scale and impact are large.”
Another issue is that of impact accelerators and how to make them accountable and useful for social enterprises and deal flow. Daniel Epstein wrote a fantastic post on accelerators here that raises other important points that could apply to accelerators in the social space.
“Unlike tech accelerators in Silicon Valley, impact accelerators are mostly non-profits. Most of them raise third party grants from donors, they are not necessarily incentivized to the success of the business, they are under capitalized and forced to rely on interns and under-qualified human capital to drive these businesses. It also seems that many impact investors are unwilling to have serious conversations with them and form long-term partnerships.
Impact investors also raise grants for technical assistance, which often goes to expensive consultant resources incentivized to their day rate or short-term business development projects.
Given the success of accelerators in Silicon Valley, there are some principles that could apply in the impact investing universe. Impact accelerators need to be incentivized to the success of the business and align their services to the needs of the entrepreneur. There is a potentially important role for impact accelerators to combine local in country deal sourcing services, intense investment readiness incubation, small amounts of catalytic capital and provide “qualified” deal flow downstream to impact investors. There might even be a space for accelerators to take on early stage deals and exit into impact investors.”
Lessons from SOCAP: It’s Time to Get Serious