Entrepreneurs face unequal challenges even before getting in an investor's door. Our data illustrates disparity, even in the field of social innovation.
Early Stage Impact Investing Must Deviate from Status Quo
2015 Climate Fellow Clementine Chambon, co-founder of Oorja: Em'power'ing Rural Communities
By Min Pease
Emerging social entrepreneurs need time, support, and financial “runway” to innovate on for-profit business models that deliver impact and financial returns. We just released a white paper to share insights into how and from where social entrepreneurs are growing their businesses at the earliest stages.
To shed more light on the types of investment readiness support and financing needed, for the first time Echoing Green shares insights from its Fellowship semifinalist applicants and Fellows seeking to change the world through for-profit business models.
Key takeaways include:
- Grants and similar types of flexible, risk-tolerant financing are critical at the seed stage for social enterprises operating in both developed and emerging markets.
- Diverse funding sources signal that there is a lack of large institutional seed funders of global for-profit social entrepreneurs. Only 7 percent of entrepreneurs focusing on developing countries reported having received impact investment, whereas 12 percent focusing on developed countries and 17 percent focusing on both developed and developing countries received it.
- Though most emerging social entrepreneurs have tried or are trying to get impact investment, they need basic education on impact investing and what it means for their organization. Founders of for-profits and hybrids indicate needing different types of support to become impact investment ready.
In addition to these takeaways, this report also presents data that highlight the funding approaches of entrepreneurs focusing on developing countries—who are a growing part of our Fellowship portfolio thanks to a “Priming the Pump" public-private partnership with USAID, General Atlantic, Newman's Own Foundation, The Pershing Square Foundation, and Rockefeller Philanthropy Advisors.
The paper is part of Echoing Green’s impact investing program, which shares what we've learned from our track record of finding, selecting, and supporting successful social entrepreneurs. By elevating the entrepreneurial perspective on raising start-up impact investment, trends in for-profit applications, and innovative models of early investment, we hope to inform and increase the flow of early-stage impact capital and investment readiness support.
This white paper is part of Echoing Green’s “Priming the Pump” public-private partnership with the U.S. Global Development Lab at USAID, General Atlantic, Newman’s Own Foundation, The Pershing Square Foundation, and Rockefeller Philanthropy Advisors. This partnership allows Echoing Green to achieve and diversify its growth, with a goal to support 100 organizations by 2016, including more people working in the developing world.
Bringing about dramatic and lasting social change requires lifelong leadership and learning lessons along the way.
Echoing Green focuses on finding stellar individuals who can carry their ideas and explain why they have what it takes to succeed.