Posted On: 2021-03-31 05:14:54
What is social entrepreneurship?
Social entrepreneurship (SE) holds a different meaning to different people in diverse places. But it can be summarised as an individual, group of individuals, or an organization seeking a business opportunity that works for social cause. This type of entrepreneurship is different from any other entrepreneurship as Social entrepreneurship prioritizes social welfare instead of profits. Social entrepreneurs start ventures aiming at the betterment of society with some efficient accumulation. Often this concept is mistaken with the idea of NGOs. The main difference between these two is that NGOs rely on public funding and charitable foundations while SE aims to generate enough revenue in the long run for the venture. SE believes in a steady stream of income through investors and loans.
Alok Dixit's “Chhav foundation” is a strong example of an NGO that works for the benefit of acid attack victims but now has started a social enterprise that has founded 'Sheroes' an organization that empowers women and in 2018 they opened a cafe for acid attack victims. In this way, Sheroes makes a profit while supporting a social cause.
A report by the OECD (Organisation for Economic Co-operation and Development) released in 2010 contains the main ideas that are considered to be special in the theory of social entrepreneurship. Firstly, it perceives that it can refer to both individuals and groups; secondly, it combines economic projects with social values; thirdly, it may belong to the public, private, or social sector; fourthly, that it can achieve an additional or extreme impact; and finally, that the extent of its impacts can be local or global. SE works in three steps where firstly people with similar interests come together and work as a group, selecting a particular crisis of the society that affects a larger group of people, and by creating partners to prevent abuse of power.
Challenges faced by Social Entrepreneurship
Self-doubt: Self-doubt is faced by almost every entrepreneur mostly at the start of the entrepreneurship or when the entrepreneurship faces loss in the initial phase of the startup. This acts as a major challenge as in most entrepreneurship self-doubt is the major reason behind people quitting the entrepreneurship or even starting one. This can be resolved with the support of friends and family and by mentors. Taking guidance and improving the plan will always result in a profitable outcome.
Building a business plan: Successful entrepreneurship needs a strong ground-up business plan. Planning a business is a difficult phase and acts as a hindrance when the entrepreneur has never worked in a business background or has little knowledge of the background work. This can be checked off the list when you have a mentor who can guide you and it is important to keep things in check from time to time while maintaining a business plan.
Investing in the right people: Handling entrepreneurship single-handedly stunts the growth of the enterprise and the same happens with a team that fails to understand the point of view of the entrepreneurs. Having a strong team with the same vision is impactful and grows the business. The entrepreneur should have their research done to help make a strong team with the present resources along with the experience every individual carries.
Planning the growth: Every business module's success lies in the planning of the growth. The growth depends on the target audience, planning, and management of the business plan. The plan of growth needs to fluctuate depending on the trends and needs to adapt policy that can give the best outcomes.
Balancing the vision with business: This is the challenge that is different from the challenges entrepreneurs from nonsocial fields face. Nonsocial entrepreneurship's only aim is to make a profit. While social entrepreneurs have two visions of social welfare and making a profit. These two visions oppose each other making it difficult to do social work while making a profit.
SE can also look like the type of entrepreneurship that gives recognition to the victims and inspires them to live their life on their terms by giving them work or financing their ideas where the vision can be balanced with business.
Funding in startups
In every type of Start-up, the primary source of the entrepreneurs' funds is their savings financing the start-up. Funds from family and friends are also known as 3F's (family, friends, and fools) are another source of collecting minimum funds. But these funds are rarely sufficient to cover the total capital needed for the growth of the start-up. Funding is scarce in almost every type of entrepreneurship due to the risk factor. Seeking sponsors acts as a significant barrier especially in social entrepreneurship as investors are more interested in gaining profits than social welfare. Projects of social nature are considered non-profitable to traditional investors as social causes act as a hindrance in maximizing the profit. Exercising loans from banks is an unsuitable option due to the absence of sufficient guarantees or collateral in SE. Another possible option for financing is through business angels or venture capitals. Where an individual or a company invests in entrepreneurship on an equity basis where their involvement is at a medium or low- risk level. This type of financing has become one of the main instruments among corporate finance in advanced economies. Though these business angels only finance particular entrepreneurship that attracts their interest.
Social Entrepreneurship with crowdfunding
Crowdfunding offers a suitable way of funding that is well suited and accessible to various types of entrepreneurship especially social entrepreneurship. Various crowdfunding platforms are growing rapidly and providing support to the campaigner along with their cause. These platforms act as a bridge between the people who 'need' help through the means of money and the people who 'can' help. Taking Massolution's classification into consideration, crowdfunding can be categorized into four classes. Equity-based, lending-based, reward-based, and donation-based crowdfunding. Equity-based crowdfunding where the investors invest in an early-stage unlisted company in exchange for shares in the company, lending-based crowdfunding works as a type of crowdfunding where the investors lend the money and the entrepreneurs are responsible to return the money sometimes with a particular interest and reward-based crowdfunding where the investors get a selective product or a gift on donation are the major types of crowdfunding that are practiced more in campaigns of social entrepreneurship. You can learn more about types of crowdfunding by visiting the following link https://filaantro.org/blog/2021/01/02/types-of-crowdfunding/
An entrepreneur can raise a campaign on the crowdfunding platform of their choice and after getting verified he can receive funds if the donors are interested in the idea. To know more about crowdfunding platforms, the risks, and benefits related to the platforms, and how can one raise a campaign, you can refer to https://filaantro.org/blog/2020/11/03/understanding-crowdfunding/
After raising the campaign, the entrepreneurship goes through a screening to know about the genuineness of the campaign. The pitch plays a really important part in attracting the investors where the entrepreneurs have to provide the appropriate documents, the information on the formulation of the entrepreneurship and if it is loan-based crowdfunding how the entrepreneur plans to return the investments along with the progress of the project along the way. Legitimacy plays an important role which is about making the investors believe in their project and cause. The legitimacy depends on the organization and also the organization's sector, in the case of social entrepreneurship the organization's sector is considered legitimized.
Successful Social Entrepreneurships supported by crowdfunding
Natalie Grillon and Shahd Al Shehail, two fellows "Global Fellows" with Acumen in Arabia started 'Project JUST' an ethical fashion and transparency technology company with the focus of empowering shoppers. They aim to not only sell clothes from the shoppers but share their stories too. In 'Project JUST' people can make conversations with each other as well as with the brand/shoppers which is innovative. They started working on the platform in 2012, raised a campaign on Kickstarter to accumulate money for the project where they made more than $45,000, and successfully launched 'Project JUST' in the year 2015.
Violet Palmer started ‘Violet Jay’ entrepreneurship of ethically-sourced hair extensions and organic products. She started this project because of the love she had for hair extensions. She believed in ethics and wanted to make an ethical hair extension chain. Violet got a loan from ‘Virgin start-up’ but at the same time approached a crowdfunding platform 'Crowdfunder.co.uk' as she saw an opportunity that she can advertise her products through reward-based crowdfunding while raising funds for her project. The campaign was a success and her entrepreneurship soon grew and continued her work in partnership with Virgin Startup.
Crowdfunding lends its help in almost every aspect of a needy person's life. Above mentioned entrepreneurships are just a few of the beneficials of online crowdfunding.
Visit our crowdfunding website today at https://filaantro.org/
‘A Social Entrepreneur knows how to balance a social cause and make enough profit in an entrepreneurship’
Author : Hritika Singh
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